**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-KSB**

**[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF**

**[_]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT**

**OF      1934**

*Commission      File Number 000-49972*

**IN      VERITAS MEDICAL DIAGNOSTICS, INC.**

| **                 Colorado**                    |                  **84-1579760**      |
|-------------------------------------------------------|-------------------------------------------|
|                  (State or other jurisdiction of |                  (I.R.S. Employer    |
|                  incorporation or organization)  |                  Identification No.) |

|                                                                                                  |                             |
|-------------------------------------------------------------------------------------------------------|----------------------------------|
| **The                Green House, Beechwood Business Park North, Inverness,                Scotland** |  **IV2 3BL**                |
|                  (Address of principal executive offices)                                        |                  (Zip Code) |

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| **TABLE                OF CONTENTS**                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                     |   |
| ITEM                NUMBER AND CAPTION                                                                                                                                                                                   | PAGE |
|                                                                                                                                                                                                                     |   |
| Special                Note Regarding Forward-Looking Statements                                                                                                                                                         |   |
|                                                                                                                                                                                                                     |   |
| **                    PART                I**                                                                        |   |
|                                                                                                                                                                                                                     |   |
| 1.                Description of Business                                                                                                                                                                                | 3 |
|                                                                                                                                                                                                                     |   |
| 2.                Description of Property                                                                                                                                                                                | 14 |
|                                                                                                                                                                                                                     |   |
| 3.                Legal Proceedings                                                                                                                                                                                      | 14 |
|                                                                                                                                                                                                                     |   |
| 4.                Submission of Matters to a Vote of Security Holders                                                                                                                                                    | 14 |
|                                                                                                                                                                                                                     |   |
| **                      PART                II**                                                           |   |
|                                                                                                                                                                                                                     |   |
| 5.                Market for Common Equity and Related Stockholder Matters                                                                                                                                               |  15 |
|                                                                                                                                                                                                                     |   |
| 6.                Management's Discussion and Analysis or Plan of Operation                                                                                                                                              | 15 |
|                                                                                                                                                                                                                     |   |
| 7.                Financial Statements                                                                                                                                                                                   | 21 |
|                                                                                                                                                                                                                     |   |
| 8.                Changes in and Disagreements with Accountants on Accounting and Financial                Disclosure                                                                                                    | 22 |
|                                                                                                                                                                                                                     |   |
| 8A.                Controls and Procedures                                                                                                                                                                               | 22 |
|                                                                                                                                                                                                                     |   |
| 8B.                Other Information                                                                                                                                                                                     | 22 |
|                                                                                                                                                                                                                     |   |
| **                         PART                III**                                        |   |
|                                                                                                                                                                                                                     |   |
| 9.  Directors,                Executive Officers, Promoters, Control Persons and Corporate Governance;                Compliance with Section 16(a) of                    the Exchange Act | 23 |
|                                                                                                                                                                                                                     |   |
| 10.                Executive Compensation                                                                                                                                                                                | 23 |
|                                                                                                                                                                                                                     |   |
| 11.                Security Ownership of Certain Beneficial Owners and Management and                Related                Stockholders                                                                                 | 25 |
|                                                                                                                                                                                                                     |   |
| 12.                Certain Relationships and Related Transactions, and Director                Independence                                                                                                              | 26 |
|                                                                                                                                                                                                                     |   |
| 13.                Exhibits                                                                                                                                                                                              | 26 |
|                                                                                                                                                                                                                     |   |
| 14.                Principal Accountant Fees and Services                                                                                                                                                                | 28 |
|                                                                                                                                                                                                                     |   |
| **SIGNATURES**                                                                                                                                                                                                           | 29 |

----

**PART      I**

**Item      1. DESCRIPTION OF BUSINESS**

**General      Overview**

**Background**

| ·   | issued                to the former holders of 8,000,000 shares of In Vivo DE preferred                stock,                an aggregate of 34,343,662 shares of our 4% voting redeemable convertible                preferred stock (the "4% Preferred                Stock"); |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | issued                to the former holders of shares of In Vivo DE common stock, an aggregate                of 38,636,453 shares of our common                stock; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | issued                1,636,233 additional shares of our common stock to holders of $467,495                of                promissory notes ($450,000 of which was converted by July 31, 2004),                issued by In Vivo DE's wholly owned subsidiaries, Hall Effect Technologies                Ltd. and Jopejo Ltd., in exchange for the cancellation of such notes;                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | agreed                to cause the resignation of all current members of our board of directors                and appoint new directors as designated by certain shareholders or                affiliates of In Vivo DE. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Recent      Developments**

----

**Issuance      of Secured Subordinated Convertible Debentures to Longview Fund,      L.P.**

**Issuance      of Secured Subordinated Convertible Notes to Triumph Small Cap Fund      Inc.**

**Amendment      to Westek Loan Agreement**

**Termination,      Settlement, and Forbearance Agreement**

| ·   | We                shall pay Montgomery an aggregate of $348,000.00 (the "Funds") which                represents all amounts owed by us to Montgomery under the Debenture                as of                the date hereof including outstanding principal and interest. We                shall pay                the Funds to Montgomery monthly at the rate of $29,000.00 ("Monthly                Payment") per calendar month, with the first payment being due and                payable                on November 15, 2006 and each subsequent payment being due and payable                on                the first business day of each subsequent month until the Funds are                repaid                in full. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Montgomery                shall continue to have valid, enforceable and perfected first-priority                liens upon and security interests in the Pledged Property and the                Pledged                Shares (each as defined in the Purchase Agreement transaction                documents). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company and Montgomery agree that during the term of the Settlement                Agreement, the Debenture shall not bear any interest and no liquidated                damages shall accrue under any of the financing                documents. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Conversion Price (as set forth in the Debenture) in effect on any                Conversion Date (as set forth in the Debenture) from and after the                date                hereof shall be adjusted to equal $0.05, which may be subsequently                adjusted pursuant to the other terms of the                Debenture. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Montgomery                shall retain the Warrants issued in accordance with the Securities                Purchase Agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company and Cornell agree to terminate the Distribution Agreement                and                related transaction documents. Cornell shall retain the 472,000 shares                of                the Company's common stock. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Royalty      Participation Agreements**

**Our      Subsidiaries**

**Our      Business**

----

**Intellectual      Property and Product Development**

**Commercial      Contracts**

**Product      Descriptions**

----

| **Technology**                                 | **Product**                                                                                                                                        | **Key                Applications/Market**                                                                                                                                                                        | **Advantage**                                                                                                                                                                     |
|------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Blood                Analyte measurement       | Prothrombin                Blood Clotting measuring device**Status:***Completed                and about to be released to global markets*         | Minimally-Invasive,                Accurate and Safe, Characteristic measuring device for heart attack                and                Stroke sufferers                                                         | Small,                Cheap device with rapid measurement using world leading blood sample                size                                                                    |
| Disposable                Digital Strip Reader | Digital                read out of Immunoassay Lateral flow Strip Results**Status:***In                Final Stage of Development*                 | All                YES / NO Immunoassay applications                                                                                                                                                              | Accurate,                Low cost and Eco friendly                                                                                                                                |
| Labor                Predictor                 | Predictor                of Labor Onset **Status:***Ready                for Licensing / extended clinical trials*                            | Accurate                prediction of onset labor from 6 weeks out. Consumer device for maternity                planning. Professional care for mothers identified at risk for pre-term                delivery. | High                negative and positive predictive success. Ease o use. No competition                exists either in professional medical or consumer                markets. |
| Blood                Analyte measurement       | Biomarker                monitor**Status:***In                Development – Assay platform available at demonstration                level*. | Accurate                measurement using very low blood volume of a number of Biomarkers                including Heart attack, HIV, Cholesterol and Cancer                                                 | Highly                sensitive, very low cost in comparison to any competitive system.                Multiple                measurements with one blood sample.                |
| Blood                Analyte measurement       | Blood                Glucose monitor **Status:***In                Research*                                                                  | Non-Invasive,                Accurate and safe, Glucose (and other) concentration continuous bulk                measuring device                                                                                 | Small,                Inexpensive device with rapid assay                                                                                                                         |
| Medical                Imaging                 | Digital                Scanning Machine**Status:***In Research*                                                                                    | Non-Invasive,                Safe, High Resolution alternative 2D X-Ray scanning                                                                                                                                  | Portable,                Inexpensive, continuous display, No Ionizing radiation                                                                                                   |
| Bone                Density Monitor            | Osteoporosis                detection and monitoring device                                                                                        | Non-invasive                instant display of Bone mineral density of osteoporosis                patients                                                                                                       | No                ionizing radiation. Inexpensive and                accurate                                                                                                     |

**The      advantages of our technology can be summarized as follows**

| ·   | our                devices represent the transfer of known technology from physics to                medicine; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | our                technology can measure non-invasively or with very low analyte/sample                size; |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | the                magnetic fields applied to human use are benign and                safe; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | our                devices can be produced and sold at a much lower cost than most                competitive products; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | our                devices give 'next generation' technical superiority                by: |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | operating                from direct current to high alternating current                frequencies; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | measuring                very low levels of displacement;                and |
|--------------------|------------------------------------------------------------------------------|

| ·   | working                with low level magnetic fields. |
|--------------------|--------------------------------------------------------|

**Scientific      Platform**

**The      Hall Effect and Magnetic Systems**

**Advanced      Electronics and Signal Management**

----

**Intellectual      Property**

| ·   | to                work at an appropriate physical level to specify magnetic                systems |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | to                develop high sensitivity Hall Effect devices using Molecular Beam                Epitaxy                (manufacturing) techniques; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | to                use the Hall Effect in high precision proportional measurement                applications; |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | to                provide advanced signal processing and control techniques to extract                low                level signals in biological systems;                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | to                establish techniques for measuring low-level effects with high levels                of                precision. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| Patents                                                                                              | Pending                                                                         | Granted |
|------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|---------|
| Blood                  Coagulation (Unipath)                                                         | China,                  European Patent, Japan, US                              |    |
| PCT/GB2004/02401                                                                                     |                                                                            |    |
| Blood                  Coagulation                                                                   | China,                  Europe, Japan, US                                       |    |
| PCT/GB2005/002427                                                                                    |                                                                            |    |
| Blood                  Coagulation (low volume)                                                      | China,                  Europe, Japan, US                                       |    |
| PCT/GB2006/000964                                                                                    |                                                                            |    |
| Blood                  Coagulation (low volume)  China, Europe, Japan,                  US |                                                                            |    |
| PCT/GB2006/005076                                                                                    |                                                                            |    |
| Magnetic                  Scanner                                                                    | China,                  Europe, Japan, US                                       | Europe  |
| PCT/GB01/01136                                                                                       |                                                                            |    |
| Labour                  Prediction (updated                                                          | First                  filing                                                   |    |
| software)                                                                                            |                                                                            |    |
| UK0605950.5                                                                                          |                                                                            |    |
| Blood                  Monitor                                                                       | China,                  European Patent, Japan, US    China |    |
| (Susceptibility)                                                                                     |                                                                            |    |
| PCT/GB02/01953                                                                                       |                                                                            |    |
| Labor                  Prediction                                                                    | European                  Patent, Japan                                         | United  |
| PCT/GB02/04880                                                                        | Kingdom,                US                                                      |    |
| Magnetic                  Separation                                                                 | First                  Filing                                                   |    |
| (Immunoassay)                                                                                        |                                                                            |    |
| PCT/GB2005/002427                                                                                    |                                                                            |    |
| Immunoassay                  - measurement of                                                        | First                  Filing                                                   |    |
| Presence                  and concentration                                                          |                                                                            |    |
| Of                  compounds in fluids                                                              |                                                                            |    |
| Supersedes                  Magnetic                                                                 |                                                                            |    |
| Seperation                                                                                           |                                                                            |    |
| UK0615738.2                                                                                          |                                                                            |    |
| Hand                  Held Digital Strip Reader                                                      |                                                                            |    |
| Assay                  reading                                                                       | First                  Filing                                                   |    |
| Apparatus                  and method                                                                |                                                                            |    |
| Ref:                  UK0619585.3                                                                    |                                                                            |    |
| Yes                  / No magnetic immunoassay                                                       |                                                                            |    |
|                                                                                                 |                                                                            |    |

**Path      from Research to Products**

----

**Initial      Commercialization Strategy**

**Products**

**Prothrombin      Blood Coagulation Time Measuring Device**

**Market      for PT Monitors**

| Feature                         | CoaguChek                                          | IVMD                                       |
|---------------------------------|----------------------------------------------------|--------------------------------------------|
| Pain                  of use    | Inhibitive                                         | Micro-lance                  - `pin-prick' |
| Blood                  volume   | 20                  micro liters                   | <3                  micro liters        |
| Ease                  of use    | Complex                  & error prone process | Easy                  simple process       |
| Size                  of device | Desk                  top                          | Hand-held;                  mobile phone   |
| Cost                  of device | $1,295                                             | <$30                                    |
| Cost                  of strip  | $4.83                                              | <0.50c                                  |

| Cost                of strip | $4.83 | <0.50c |
|------------------------------|-------|-----------|

----

**Labour      Onset Device**

**Market      for Fetal Monitoring Devices**

**Our      Suite of Labour Onset Products**

**Products      - In Research**

----

**The        Market for Immunoassay**

**Non-Invasive      Blood Analyte Measurement Products**

**The      Market for Glucose Measuring Devices**

----

|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | No                of              |   |   |   | 25                year           |   |   |   | Memo:                          |   |   |                          | Memo:                 |   |   |   Target                  use        |   |   |   |  Target                  sales  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------------|--------|--------|-------------------------------|-------------------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|--------|--------|-------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | diagnosed                                                                                     |   |   |   |   predicted                                                         |   |   |   | Self                 |   |   |                          |  Self                      |   |   |   within                                                      |   |   |   |  volume                  by     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | diabetics                                                                                |   |   |   | growth                                                                        |   |   |   | monitoring           |   |   |                          | monitoring                           |   |   |  diabetic                                                                    |   |   |   |  year                  5        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |  (`000)                                                                   |   |   |   |  (%)                                                                |   |   |   | market                  size        |   |   |                          | market                     |   |   |  population                  at                                         |   |   |   |   (`000)*                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |                                                                                               |   |   |   |                                                                               |   |   |   |   ($m)     |   |   |                          |   forecast                 |   |   |                                                                              |   |   |   |                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |                                                                                               |   |   |   |                                                                               |   |   |   |                                     |   |   |                          |   year                  5  |   |   |                                                                              |   |   |   |                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |                                                                                               |   |   |   |                                                                               |   |   |   |                                     |   |   |                          | growth                  (%)          |   |   |                                                                              |   |   |   |                                      |   |
| UK                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 1,440                                                                                              |   |   |   | 27                                                                                 |   |   |   | 154.4                                    |   |   |                          | 16.0                                      |   |   | 1                  in 15                                                          |   |   |   | 96                                        |   |
| USA                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 10,300                                                                                             |   |   |   | 47                                                                                 |   |   |   | 1001.6                                   |   |   |                          | 13.8                                      |   |   | 1                  in 15                                                          |   |   |   | 687                                       |   |
| W.                  Europe                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 7,100                                                                                              |   |   |   | 35                                                                                 |   |   |   | 982.4                                    |   |   |                          | 16.0                                      |   |   | 1                  in 25                                                          |   |   |   | 355                                       |   |
| Other                  Regions**                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 30,400                                                                                             |   |   |   | 32                                                                                 |   |   |   | 639.2                                    |   |   |                          |                                      |   |   | 1                    in 100                                                       |   |   |   | 304                                       |   |
| India                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 22,900                                                                                             |   |   |   | 150                                                                                |   |   |   |                                     |   |   |                          |                                      |   |   | 1                  in 200                                                    |   |   |   | 115                                       |   |
| China                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 18,600                                                                                             |   |   |   | 102                                                                                |   |   |   |                                     |   |   |                          |                                      |   |   | 1                  in 250                                                    |   |   |   | 75                                        |   |
| Memo:                  World Total                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 154,400                                                                                            |   |   |   | 94                                                                                 |   |   |   | 2777.6                                   |   |   | $6.4                  billion |                                      |   |   |                                                                              |   |   |   |                                      |   |
|                                                                       |   |   |                                                                                               |   |   |   |                                                                               |   |   |   |                                     |   |   |                          |  by                year 5            |   |   |                                                                              |   |   |   |                                      |   |   |

**Other      Potential Products**

| ·   | Oxygen                - continuous oximetry |
|--------------------|---------------------------------------------|

| ·   | Estrogen                - fertility measurement |
|--------------------|-------------------------------------------------|

| ·   | Protein                markers - for gene evaluation / modification                programs |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Drugs |
|--------------------|-------|

| ·   | Alcohol |
|--------------------|---------|

**Medical      Imaging**

----

|                                                                                                                                                                                                              |   | 1999                  $ million |   |   | %                  Market Share 1999 |   |   | 2004                  $ million |   |   | %                  Market Share 2004 |   |   | AAGR                  %1999-2004 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|-------------------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------------------|--------|--------|----------------------------------|--------|
|                                                   |   |                            |   |   |                                      |   |   |                            |   |   |                                      |   |   |                             |   |
| X-                  ray and                                                                                                                                                                                                                                                                            |   |                            |   |   |                                      |   |   |                            |   |   |                                      |   |   |                             |   |
| digital                  X-ray                                                                                                                                                                                                                                                                         |   |                            | 1923.5 |   |                                      |   | 47.3   |                            |   |   | 2794.5                                    |   |   |                             | 52.1   |   |   |   | 7.8 |   |
| CT                  and ultrasound                                                                                                                                                                                                                                                                     |   |                            | 1707.2 |   |                                      |   |   |                            |   |   | 2091.1                                    |   |   |                             |   |   |   |   | 4.1 |   |
| Nuclear                  medicine                                                                                                                                                                                                                                                  |   |                            | 401.7  |   |                                      |   |   |                            |   |   | 474.4                                     |   |   |                             |   |   |   |   | 3.4 |   |
| Total                                                                                                                                                                                                                                                                                                  |   |                            | 4033.4 |   |                                      |   |   |                            |   |   | 5360.0                                    |   |   |                             |   |   |   |   | 5.9 |   |

**Bone      Mineral Densitometry**

**Product      Summary - Technologies and Applications Currently in      Development**

|  Phase              1                                                              |   | Phase              2                                                                          |   | Phase              3                                                                                                                                                                                                                    |   | Phase              4                                                                                                                                                                                                                            |   | Phase              5                                                   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
| Concept              Proving                                                            |   | Functiona                demonstration                                                   |   | Semi                - engineered   prototypes                                                                                                                                                                            |   | Fully                - engineered       prototypes                                                                                                                                                                |   | Volume              Production                                         |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
| Bench                and laboratoryto                substantiate hypothesis  |   | Bench                simulator \which can  demonstrate capabilities  |   | Batch                productionto                finished  design                using some   production  materials                and  techniques                                              |   | As                final productionversion                used forfield                trials inmarket                                                                                                                                                |   | For              sale to market                                        |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
|                                                                                    |   |                                                                                          |   | 3                and 4 may       concurrently         confidence  materials                and       techniques |   | run       depending                on       levels                in      production           |   | Tooling                will start in                advance of... |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
| 0+              6 months                                                                |   | 0+              10 months                                                                |   |  0+              16 months                                                                                                                                                                                                         |   | 0+20              months                                                                                                                                                                                                                             |   | 0+24              months                                               |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
| Capability:                                                                             |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |
| IVMD  -              current                                                  |   | IMDV              + resource                                                                  |   | Small                consortiumCurrent                market player                                                                                                                                                                     |   | Larger                consortiumCurrent                market player                                                                                                                                                                                 |   | Current                marketplayer                                    |
|                                                                                    |   |                                                                                          |   |                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                 |   |                                                                   |

|  **The              current product development status of our technology may be summarized              as              follows:**    |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
|  Technology                                                                                                                                     |   | Product                                                                                                                                     |   | Key              Applications                                                                             |   | Development                Stage |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 1.              Blood analyte                                                                                                                   |   | Fast,                sensitive low cost   Biomarker                measurement                                                                                                                     |   | Cardiac,                HIV, Drug diagnosis      and                measurement                                          |   |  2 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 2.              Blood glucose monitor                                                                                            |   | Non-invasive,                accurate      Point                of                care                                                      |   | Routine                measurement of glucose   For                self                management        Of                glucose      |   | 1 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 3.              Digital Strip Reader                                                                                        |   | Low                cost, hand held yes/no  reader                for immunoassay testing                                                                                                                                              |   | various              threshold assays                                                                                                                                           |   | 3 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 4.              BAM (minimally invasive)                                                                                                                  |   | Point              of care blood                                                                                                                                                                                                           |   | minimally                invasive,                monitoring        Of                clinical conditions such As                coagulation time |   |  3 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                   |   |                                                                                                                                                                                           |   |   |   |
| 5.              Medical              imaging                                                       |   | Professional                medical scannerPortable                imaging device     Dental                imaging device                                                                                        |   | Non-invasive,                safe, high - quality                alternative to 2D X- ray                scanning                                                                    |   | 3 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 6              Medical imaging                                                                                                                  |   | Bone                densitometry Professional medical Non-invasive  and                safe 1 densitometer measurement of onset andOTC                variant for home use status of osteoporosis(esp.                for female use) |   |                                                                                                                                                                                           |   | 2 |   |
|                                                                                                                                                      |   |                                                                                                                                                                                                                                            |   |                                                                                                                                                                                           |   |   |   |
| 7              Labor predictor                                                                                                                            |   | Labor                predictor-OTCLabor                predictor- professional                medical                                                                                                                                      |   | Accurate                prediction of onset  of                labor from 6 weeks out                                                                                                |   | 3 |   |

----

**PRODUCT      DESIGN, PROTECTION, MANUFACTURING AND PRODUCTION**

| ·   | Chinese                manufacturing – IVMD is active in manufacturing and assembling products                via a number of manufacturers in China, particularly “King-I” and “Hen                Young” Manufacturing in the Don Guan                province. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Patent/IPR                management – IVMD uses Wilson Gun McCaw and Novagraaf to construct and                manage its patent process. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

**Government      Regulation**

**Personnel**

**Seasonality**

**Item      2. DESCRIPTION OF PROPERTY**

**Item      3. LEGAL PROCEEDINGS**

**Item      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

None.

----

**PART      II**

**Item      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER      MATTERS**

**Market      Information**

|                         |   | Fiscal                2007 |   |   | Fiscal                2006 |   |   | Fiscal                2005 |   |
|------------------------------|--------|----------------------------|--------|--------|----------------------------|--------|--------|----------------------------|--------|
| Quarter                Ended |   | High                       |   |   | Low                        |   |   | High                       |   |   | Low |   |   | High |   |   | Low |   |
| October                31    |   | $                          | 0.110  |   |                       | $      | 0.450  |                       |   | $ | 0.280 |   |   | $ | 0.130 |   |   | $ | 3.200 |   |   | $ | 1.800 |   |
| January                31    |   | $                          | 0.730  |   |                       | $      | 0.030  |                       |   | $ | 0.013 |   |   | $ | 0.030 |   |   | $ | 2.250 |   |   | $ | 0.920 |   |
| April                30      |   | $                          | 0.038  |   |                       | $      | 0.008  |                       |   | $ | 0.140 |   |   | $ | 0.065 |   |   | $ | 1.270 |   |   | $ | 0.630 |   |
| July                31       |   | $                          | 0.013  |   |                       | $      | 0.003  |                       |   | $ | 0.015 |   |   | $ | 0.070 |   |   | $ | 0.810 |   |   | $ | 0.340 |   |

**Number      of Stockholders**

**Dividend      Policy**

**Recent      Sales of Unregistered Securities**

**Item      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF      OPERATION**

**Forward-Looking      Statements**

----

**Plan      of Operation**

**Overview**

**Intellectual      Property and Product      Development**

**Results      of Operations for the Fiscal Year Ended July 31, 2007 as Compared To the Fiscal      Year Ended July 31, 2007**

**Revenues**

**Research      & Development Expenses**

**Depreciation      Expenses**

**General      & Administrative Expenses**

----

**Officer's      Salaries**

**Stock      Based Compensation**

**Stock      Options Expense**

**Legal      and Professional**

**Net      Income (Loss)**

**Liquidity      and Capital Resources**

**Off      Balance Sheet Arrangements**

**Recently      Issued Accounting Pronouncements**

*The Fair Value        Option for Financial Assets and Financial Liabilities - Including an Amendment        of FASB Statement No. 115.*
**.**

*Employers'        Accounting for Defined Benefit Pension and Other Postretirement Plans — An        Amendment of FASB Statements No. 87, 88, 106, and 132R.*
*a*
*b*
*c*
**.**

*Fair Value        Measurements*
**.**

*Accounting for Servicing of        Financial Assets - An Amendment of FASB Statement No. 140.*
*Accounting for Transfers and        Servicing of Financial Assets and Extinguishments of Liabilities.*
**.**

*Accounting for Certain        Hybrid Instruments.*
*Accounting for Derivative Instruments and Hedging Activities,*
*Accounting for Transfers and Servicing of Financial Assets and        Extinguishments of Liabilities.*
**.**

*Accounting for Uncertainty in        Income Taxes - An Interpretation of FASB Statement No. 109,*
*Accounting for Income Taxes.*

----

**RISK      FACTORS**

**Risks      Related to Our Business**

----

----

| ·   | technological                innovations or new products and services by us or our                competitors; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | additions                or departures of key personnel; |
|--------------------|----------------------------------------------------------|

| ·   | sales                of our common stock; |
|--------------------|-------------------------------------------|

| ·   | our                ability to integrate operations, technology, products and                services; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | our                ability to execute our business                plan; |
|--------------------|-------------------------------------------------------------------------|

| ·   | operating                results below expectations; |
|--------------------|------------------------------------------------------|

| ·   | loss                of any strategic relationship; |
|--------------------|----------------------------------------------------|

| ·   | industry                developments; |
|--------------------|---------------------------------------|

| ·   | economic                and other external factors; and |
|--------------------|---------------------------------------------------------|

| ·   | period-to-period                fluctuations in our financial                results. |
|--------------------|---------------------------------------------------------------------------------------|

----

**Item      7. FINANCIAL STATEMENTS**

----

**IN          VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A            Development Stage Company)**

**Index            to Financial            Statements**

|                                                                                                                | **Page** |
|---------------------------------------------------------------------------------------------------------------------|----------|
| Report                    of Independent Registered Public Accounting Firm.                                         | F-1      |
|                                                                                                                |     |
| Consolidated                    Balance Sheet at July 31, 2007.                                                     | F-2      |
|                                                                                                                |     |
| Consolidated                    Statements of Operations for the years                                              |     |
|      ended                    July 31, 2007 and 2006 and for the period                    |     |
|      from                    March 26, 1997 (Inception) through July 31, 2007              | F-3      |
|                                                                                                                |     |
| Consolidated                    Statements of Accumulated Other Comprehensive Loss for the                    years |     |
|      ended                    July 31, 2007 and 2006 and for the period                    |     |
|      from                    March 26, 1997 (Inception) through July 31, 2007....          | F-4      |
|                                                                                                                |     |
| Statement                    of Changes in Shareholders' Deficit for the period from                                |     |
|      March                    26, 1997 (Inception) through July 31, 2007                   | F-5      |
|                                                                                                                |     |
| Consolidated                    Statements of Cash Flows for the years                                              |     |
|      ended                    July 31, 2007 and 2006 and for the period                    |     |
|      from                    March 26, 1997 (Inception) through July 31, 2007              | F-6      |
|                                                                                                                |     |
| Notes                    to Consolidated Financial Statements                                                       | F-7      |

----

**Report              of Independent Registered Public Accounting Firm**

----

----

**IN          VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A          Development Stage Company)**

**Consolidated           Balance Sheet**

**July          31, 2007**

|                                                                                                              |   |                            |                |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------------------|
|                                                                                                              |   | **July                    31,** |                |
|                                                                                                              |   | **2007**                        |                |
| **Assets**                                                                                                        |   |                            |                |
| Current                    assets:                                                                                |   |                            |                |
| Prepaid                    expenses and other                                                                     |   | $                               | 11,151              |   |
| Total                    current assets                                                                           |   |                            | 11,151              |   |
| Property                    and equipment, net                                                                    |   |                            | 5,251               |   |
| Intangible                    assets:                                                                             |   |                            |                |   |
| Patent                    costs (note 3)                                                                          |   |                            | 95,545              |   |
|                                                                                                              |   |                            |                |   |
|                                                                                                              |   | $                               | 111,947             |   |
|                                                                                                              |   |                            |                |   |
| **Liabilities                    and Shareholders’ Deficit**                                                |   |                            |                |   |
|                                                                                                              |   |                            |                |   |
| Current                    liabilities:                                                                           |   |                            |                |   |
| Accounts                    payable                                                                               |   | $                               | 1,209,162           |   |
| Overdraft                                                                                                         |   |                            | 1,187               |   |
| Accrued                    interest payable                                                                       |   |                            | 665,411             |   |
| Accrued                    liabilities                                                                            |   |                            | 928,958             |   |
| Indebtedness                    to related parties (note 2)                                                       |   |                            | 215,163             |   |
| Current                    portion of Long Term Notes Payable                                                     |   |                            |                |   |
| (net                    of unamortized discount of $114,843) (note 9)                                             |   |                            | 1,208,957           |   |
| Notes                    payable, related party  (note 9)                                                    |   |                            | 1,800,000           |   |
| Short                    term advance from Related Party (note 9)                                                 |   |                            | 353,460             |   |
| Short                    term advance                                                                             |   |                            | 80,000              |   |
| Total                    current liabilities                                                                      |   |                            | 6,462,298           |   |
|                                                                                                              |   |                            |                |   |
| Long-term                    debt:                                                                                |   |                            |                |   |
| Royalty                    Participation Agreement advances (note 9)                                              |   |                            | 657,630             |   |
| Total                    liabilities                                                                              |   |                            | 7,119,928           |   |
|                                                                                                              |   |                            |                |   |
| Shareholders’                    deficit:                                                                   |   |                            |                |   |
| Preferred                    stock, $.001 par value, 50,000,000 shares authorized                    (aggregate   |   |                            |                |   |
| liquidation                    preference of $8 million)                                                          |   |                            |                |   |
| Series                    A Preferred stock, 34,343,662 shares issued and outstanding (note                    8) |   |                            | 34,344              |   |
| Common                    stock, $.001 par value, 500,000,000 shares authorized,                                  |   |                            |                |   |
| 86,103,457                    shares issued, 25,685,000 held in escrow, and                                       |   |                            |                |   |
| 60,418,457                    shares outstanding                                                                  |   |                            | 86,103              |   |
| Stock                    issued as security for convertible debentues (note 8)                                    |   |                            | (3,339,050          | ) |
| Additional                    paid-in capital                                                                     |   |                            | 9,119,868           |   |
| Accumulated                    other comprehensive loss- foreign currency adjustment                              |   |                            | (483,112            | ) |
| Deficit                    accumulated during the development stage                                               |   |                            | (12,426,134         | ) |
|                                                                                                              |   |                            |                |   |
| Total                    shareholders' deficit                                                                    |   |                            | (7,007,981          | ) |
|                                                                                                              |   | $                               | 111,947   |   |
|                                                                                                              |   |                            |                |   |
|                                                                                                              |   |                            |                |   |

----

**IN            VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A            Development Stage Company)**

**Consolidated  Statements              of Operations**

|                                                              |   |                                                   |       |   |                              |   |       | March                          26, 1997 |   |
|-------------------------------------------------------------------|--------|--------------------------------------------------------|------------|--------|-----------------------------------|--------|------------|-----------------------------------------|--------|
|                                                              |   |                                                   |       |   |                              |   |       | (Inception)                             |   |
|                                                              |   | Years                          ended    |       |   | Through                           |   |
|                                                              |   | July                          31,       |       |   | July                          31, |   |
|                                                              |   | 2007                                                   |       |   | 2006                              |   |       | 2007                                    |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |
| Net                          sales and gross revenues:            |   |                                                   |       |   |                              |   |       |                                    |   |
| Net                          sales                                |   | $                                                      | —    |   |                              | $      | 1,271,130  |                                    |   | $ | 3,571,807 |   |
| Cost                          of sales                            |   |                                                   | —    |   |                              |   | —    |                                    |   |   | 242,097 |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Gross                          profit                             |   |                                                   | —    |   |                              |   | 1,271,130  |                                    |   |   | 3,329,710 |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Operating                          expenses:                      |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Research                          and development                 |   |                                                   | 711,327    |   |                              |   | 1,306,542  |                                    |   |   | 5,701,048 |   |
| Legal                          & Professional                 |   |                                                   | 409,583    |   |                              |   | 160,567    |                                    |   |   | 1,394,643 |   |
| Selling                          and marketing                    |   |                                                   | 280,196    |   |                              |   | 286,097    |                                    |   |   | 622,750 |   |
| General                          and administrative               |   |                                                   | 1,316,552  |   |                              |   | 476,984    |                                    |   |   | 6,290,492 |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Total                          operating expenses                 |   |                                                   | 2,717,658  |   |                              |   | 2,230,190  |                                    |   |   | 14,008,933 |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Loss                          before other income                 |   |                                                   | (2,717,658 | )      |                              |   | (959,060   | )                                       |   |   | (10,679,223 | ) |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Nonoperating                          income (expense):           |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| UK                          government grant (Note 1)             |   |                                                   | —    |   |                              |   | 96,502     |                                    |   |   | 291,398 |   |
| Interest                          expense                         |   |                                                   | (953,106   | )      |                              |   | (428,215   | )                                       |   |   | (1,611,863 | ) |
| Loan                          Finance issue costs                 |   |                                                   | —    |   |                              |   | (307,360   | )                                       |   |   | (708,279 | ) |
| Costs                          of aborted financing               |   |                                                   | —    |   |                              |   | (113,400   | )                                       |   |   | (113,400 | ) |
| Compensation                          payment to former director  |   |                                                   | —    |   |                              |   | (135,000   | )                                       |   |   | (135,000 | ) |
| Gain                          (loss) on foreign exchange          |   |                                                   | —    |   |                              |   | 2,264      |                                    |   |   | (132,378 | ) |
| Gain                          (loss) from extinguishments of debt |   |                                                   | —    |   |                              |   | —    |                                    |   |   | 662,611 |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Loss                          before income taxes                 |   |                                                   | (3,670,764 | )      |                              |   | (1,848,797 | )                                       |   |   | (12,426,134 | ) |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Income                          tax provision                     |   |                                                   | —    |   |                              |   | —    |                                    |   |   | — |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Net                          loss                                 |   | $                                                      | (3,670,764 | )      |                              | $      | (1,848,797 | )                                       |   | $ | (12,426,134 | ) |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Loss                          applicable to common stock          |   | $                                                      | (3,670,764 | )      |                              | $      | (1,848,797 | )                                       |   |   |   |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Basic                          and diluted loss per share         |   | $                                                      | (0.06      | )      |                              | $      | (0.03      | )                                       |   |   |   |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| Weighted                          average number of common shares |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |
| outstanding                                                       |   |                                                   | 59,146,019 |   |                              |   | 55,094,879 |                                    |   |   |   |   |
|                                                              |   |                                                   |       |   |                              |   |       |                                    |   |   |   |   |

----

**IN          VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A          Development Stage Company)**

**Consolidated  Statements            of Accumulated  Other Comprehensive Loss**

|                                                     |   |   |                                                                             |       |   |                        |       |       | March                    26, 1997 |   |
|----------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------|------------|--------|-----------------------------|------------|------------|-----------------------------------|--------|
|                                                     |   |   |                                                                             |       |   |                        |       |       | (Inception)                       |   |
|                                                     |   |   |                                                                             |       |   | Through                     |       |
|                                                     |   |   | Period                      ended  July                      31,  |       |   | July                    31, |       |
|                                                     |   |   | 2007                                                                             |       |   | 2006                        |       |       | 2007                              |   |
|                                                     |   |   |                                                                             |       |   |                        |       |       |                              |   |
| Net                    loss                              |   |   | $                                                                                | (3,670,764 | )      |                        | $          | (1,848,797 | )                                 |   | $ | (12,426,134 | ) |
|                                                     |   |   |                                                                             |       |   |                        |       |       |                              |   |   |   |   |
| Other                    comprehensive loss, net of tax: |   |   |                                                                             |       |   |                        |       |       |                              |   |   |   |
| Cumulative                    translation adjustment     |   |   | (34,135                                                                          | )          |   |                        | (79,486    | )          |                              |   | (483,112 | ) |
|                                                     |   |   |                                                                             |       |   |                        |       |       |                              |   |   |   |   |
| Comprehensive                    loss                    |   | $      | (3,704,899                                                                       | )          |   | $                           | (1,928,283 | )          |                              | $      | (12,909,246 | ) |
|                                                     |   |   |                                                                             |       |   |                        |       |       |                              |   |   |   |   |
|                                                     |   |   |                                                                             |       |   |                        |       |       |                              |   |   |   |   |

----

**IN          VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A          Development Stage Company)**

**Consolidated  Statements            of Changes in Shareholders' Deficit**

|                                                                                                                                        |                       |   | Preferred                    Stock Outstanding       |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      | Accumulated                  |   |       |              |   |   |                            |    |
|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|--------|------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------|---------|---------|--------|--------|----------|------------------------------|--------|--------|---------|---------|--------|--------------------------------------------------------------------|------------|-----------|------------------------------|--------|------------|-------------------|--------|--------|---------------------------------|---------|
|                                                                                                                                        |                       |   | Series                    A                                         |    |   | Series                    B    |    |    |   |   |     |  Common                 |   |   |    |    |   |                                                               |       |      |                         |   |       | Deficit           |   |   | Accumulated                     |    |   |   |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                         Stock Shares |       |      |                         |   |       | Additionalpaid-in |   |   | Stock                    issued |    |   | DuringDevelopment |   |   | OtherComprehensive |   |   |   |   |
|                                                                                                                                        |                       |   | Shares                                                                             |    |   | Par                    Value                  |    |    | Shares |   |     | Par                    Value |   |   | Issued  |    |   | Outstanding                                                        |       |      | Par                    Value |   |       | capital           |   |   | as                    security  |    |   | Stage |   |   | Loss |   |   | Total |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |
| Balance,                    March 26, 1997                                                                                                  |                       |   | —                                                                            |    |   | $                                             | — |    |   |   | —  |                         |   | $      | — |    |   |                                                               | —    |      |                         |   | —    |              |   | $      | —                         |    |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | - |   |
| October                    2000, sale of stock, ($0.0035/share)                                                                             |                       |   | 4,366,377                                                                          |    |   |                                          | 4,366   |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 10,874 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 15,240 |   |
| December                    2001, sale of stock, ($0.0035/share)                                                                            |                       |   | 6,545,703                                                                          |    |   |                                          | 6,546   |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 16,301 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 22,847 |   |
| October                    2001, sale of stock, ($0.0202/share)                                                                             |                       |   | 23,431,582                                                                         |    |   |                                          | 23,432  |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 448,906 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 472,338 |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       | —   |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                    currency                                                                                                         |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  translation                    adjustment                                                                                             |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 21,203 |   |   |   | 21,203 |   |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (1,350,829 | ) |   |   | — |   |   |   | (1,350,829 | ) |
| Balance,                    July 31, 2001                                                                                                   |                       |   | 34,343,662                                                                         |    |   |                                          | 34,344  |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 476,081 |   |   |   | — |   |   |   | (1,350,829 | ) |   |   | 21,203 |   |   |   | (819,201 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                    currency                                                                                                         |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  translation                    adjustment                                                                                             |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (140,377 | ) |   |   | (140,377 | ) |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (1,007,362 | ) |   |   | — |   |   |   | (1,007,362 | ) |
| Balance,                    July 31, 2002                                                                                                   |                       |   | 34,343,662                                                                         |    |   |                                          | 34,344  |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 476,081 |   |   |   | — |   |   |   | (2,358,191 | ) |   |   | (119,174 | ) |   |   | (1,966,940 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       | —   |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                    currency                                                                                                         |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               | —    |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  translation                    adjustment                                                                                             |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (185,391 | ) |   |   | (185,391 | ) |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (1,080,619 | ) |   |   | — |   |   |   | (1,080,619 | ) |
| Balance,                    July 31, 2003                                                                                                   |                       |   | 34,343,662                                                                         |    |   |                                          | 34,344  |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 476,081 |   |   |   | — |   |   |   | (3,438,810 | ) |   |   | (304,565 | ) |   |   | (3,232,950 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       | —   |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger                    with HEMP (Note 8)                                                                                                |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 38,397,164 |      |                         |   | 38,397,164 |              |   |   | 38,397                          |    |   |   | (29,397 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 9,000 |   |
| July                    2004, merger with SIPC                                                                                              |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 10,550,000 |      |                         |   | 10,550,000 |              |   |   | 10,550                          |    |   |   | (10,688 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (138 | ) |
| July                    2004, issuance of common                                                                                            |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  stock                    for bridge loans, ($0.2750/share)                                                                            |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 1,636,233  |      |                         |   | 1,636,233  |              |   |   | 1,636                           |    |   |   | 448,364 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 450,000 |   |
| July                    2004, issuance of common                                                                                            |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  stock                    for services, ($0.4093/share)                                                                                |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 239,289    |      |                         |   | 239,289    |              |   |   | 239                             |    |   |   | 97,702 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 97,941 |   |
| Foreign                    currency                                                                                                         |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  translation                    adjustment                                                                                             |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (339,570 | ) |   |   | (339,570 | ) |
| Reclassification                    of debt forgiveness                                                                                     |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  by                    Westek (Notes 2 and 9)                                                                                          |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 2,030,298 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,030,298 |   |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (1,016,972 | ) |   |   | — |   |   |   | (1,016,972 | ) |
| Balance,                    July 31, 2004                                                                                                   |                       |   | 34,343,662                                                                         |    |   |                                          | 34,344  |    |   |   | —  |                         |   |   | — |    |   |                                                               | 50,822,686 |      |                         |   | 50,822,686 |              |   | $      | 50,822                          |    |   | $ | 3,012,360 |   |   | $ | — |   |   |   | (4,455,782 | ) |   | $ | (644,135 | ) |   | $ | (2,002,391 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| August                    2004, additional paid in capital from bridge                                                                      |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  loans                    exchanged for shares                                                                                         |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 17,495 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 17,495 |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | (6,000 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (6,000 | ) |
| Conversion                    of Preferred Stock into Debenture                                                                             |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 694,550    |      |                         |   | 694,550    |              |   |   | 695                             |    |   |   | 427,695 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 428,390 |   |
| December                    2004, issuance of stock for interest on                                                                         |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 60,096     |      |                         |   | 60,096     |              |   |   | 60                              |    |   |   | 76,100 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 76,160 |   |
|  bridge                    loan                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March                    2005, issuance of stock for services                                                                               |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 100,000    |      |                         |   | 100,000    |              |   |   | 100                             |    |   |   | 62,880 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 62,980 |   |
| April                    2005, issuance of stock warrants for                                                                               |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        | services                   |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | 17,295 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 17,295 |   |
| April                    2005, sale of preferred Series B stock                                                                             |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  net                    of $97,995 offering costs ($.001 par),                                                                         |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | - |   |
| ($0.65/share)                                                                                                                               |                       |   | —                                                                            |    |   |                                          | — |    |   |   | 617,692  |                         |   |   | 618     |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 302,887 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 303,505 |   |
| April                    2005, issuance of stock for                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  debt                    forgiveness                                                                                                   |                       |   | —                                                                            |    |   |                                          | — |    |   |   | 246,152  |                         |   |   | 246     |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 159,754 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 160,000 |   |
| June                    2005, issuance of stock options for                                                                                 |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  services                                                                                                                              |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 35,403 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 35,403 |   |
| Reversal                    of conversion of                                                                                                |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               | —    |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  convertible                    preferred shares                                                                                       |                       |   | (1,301,178                                                                         | )       |   |                                          | (1,301  | )       |   |   | —  |                         |   |   | — |    |   |                                                               | 1,301,178  |      |                         |   | 1,301,178  |              |   |   | 1,301                           |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | - |   |
| July                    2005, issuance of stock for services                                                                                |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 120,000    |      |                         |   | 120,000    |              |   |   | 120                             |    |   |   | 35,288 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 35,408 |   |
| July                    2005, issuance of stock for conversion                                                                              |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        | of                    debt |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | 1,162,791 |                         |   |       | 1,162,791         |   |   |                            | 1,163   |   |   |   | 278,047 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 279,210 |   |
| Foreign                    currency translation adjustment                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 274,643 |   |   |   | 274,643 |   |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (2,450,792 | ) |   |   | — |   |   |   | (2,450,792 | ) |
| Balance                    July 31, 2005                                                                                                    |                       |   | 33,042,484                                                                         |    |   |                                          | 33,043  |    |   |   | 863,844  |                         |   |   | 864     |    |   |                                                               | 54,261,301 |      |                         |   | 54,261,301 |              |   |   | 54,261                          |    |   |   | 4,419,204 |   |   |   | — |   |   |   | (6,906,574 | ) |   |   | (369,492 | ) |   |   | (2,768,694 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                    of common stock into debentures                                                                               |                       |   | —                                                                            |    |   |                                          | — |    |   |   | (863,844 | )                            |   |   | (864    | )       |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | (555,636 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (556,500 | ) |
|  (Note                    10)                                                                                                          |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                    of preferred stock into common stock                                                                          |                       |   | 1,301,178                                                                          |    |   |                                          | 1,301   |    |   |   | —  |                         |   |   | — |    |   |                                                               | (1,301,178 | )         |                         |   | (1,301,178 | )                 |   |   | (1,301                          | )       |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | - |   |
| Shares                    issued as security for convertible debtures                                                                       |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 25,685,000 |      |                         |   | —    |              |   |   | 25,685                          |    |   |   | 3,313,365 |   |   |   | (3,339,050 | ) |   |   | — |   |   |   | — |   |   |   | - |   |
|  (Notes                    5 and 10)                                                                                                   |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                    Issued for services (August 2005)                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 28,000     |      |                         |   | 28,000     |              |   |   | 28                              |    |   |   | 3,612 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 3,640 |   |
| Stock                    Issued for services (August 2005)                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 472,000    |      |                         |   | 472,000    |              |   |   | 472                             |    |   |   | 60,888 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 61,360 |   |
| Stock                    Issued for services (September 2005)                                                                               |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 805,000    |      |                         |   | 805,000    |              |   |   | 805                             |    |   |   | 132,020 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 132,825 |   |
| Stock                    Issued for services (September, 2005)                                                                              |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 750,000    |      |                         |   | 750,000    |              |   |   | 750                             |    |   |   | 254,250 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 255,000 |   |
| Stock                    Issued for services (May 2006)                                                                                     |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 875,000    |      |                         |   | 875,000    |              |   |   | 875                             |    |   |   | 86,625 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 87,500 |   |
| Stock                    Issued for services (June 2006)                                                                                    |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 83,334     |      |                         |   | 83,334     |              |   |   | 83                              |    |   |   | 8,251 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 8,334 |   |
| Foreign                    currency translation adjustment                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (79,486 | ) |   |   | (79,486 | ) |
| January,                    2006, Issuance of stock options for                                                                             |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        | services                   |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | 62,379 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 62,379 |   |
| September                    2006 issuance of stock warrants                                                                                |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  in                    connection with financing                                                                                       |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 45,164 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 45,164 |   |
| Net                    loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (1,848,797 | ) |   |   | — |   |   |   | (1,848,797 | ) |
| Balance                    July 31, 2006                                                                                                    |                       |   | 34,343,662                                                                         |    |   |                                          | 34,344  |    |   |   | —  |                         |   |   | — |    |   |                                                               | 81,658,457 |      |                         |   | 55,973,457 |              |   |   | 81,658                          |    |   |   | 7,830,122 |   |   |   | (3,339,050 | ) |   |   | (8,755,370 | ) |   |   | (448,977 | ) |   |   | (4,597,275 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount                    on issue of loan note (Note 9)                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 62,640 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 62,640 |   |
| Issuance                    of stock for services (October, 2006)                                                                           |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 1,000,000  |      |                         |   | 1,000,000  |              |   |   | 1,000                           |    |   |   | 67,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 68,000 |   |
| Issuance                    of stock for services (October, 2006)                                                                           |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 1,250,000  |      |                         |   | 1,250,000  |              |   |   | 1,250                           |    |   |   | 148,749 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 149,999 |   |
| October,                    2006 issuance of stock options for services                                                                     |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 223,844 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 223,844 |   |
| Foreign                    currency translation adjustment                                                                                  |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (34,135 | ) |   |   | (34,135 | ) |
| Net                    Loss                                                                                                                 |                       |   |                                                                               | — |   |                                          |    | — |   |   |     | —                      |   |   |    | — |   |                                                               |       | —   |                         |   |       | —           |   |   |                            | — |   |   |   | — |   |   |   | — |   |   |   | (3,670,764 | ) |   |   | — |   |   |   | (3,670,764 | ) |
| Partial                    conversion of Convertible Loan Note into Common Stock (Dec. 2006)                    (Note                    5) |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 1,000,000  |      |                         |   | 1,000,000  |              |   |   | 1,000                           |    |   |   | 49,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 50,000 |   |
| Stock                    Option Expense                                                                                                     |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 466,624 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 466,624 |   |
| Beneficial                    conversion discount underlying Convertible Loan Notes (Notes                    2 &                    9) |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | 283,874 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 283,874 |   |
| Stock                    issued for services (December 2006)                                                                                |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 850,000    |      |                         |   | 850,000    |              |   |   | 850                             |    |   |   | 51,000 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 51,850 |   |
| Cashless                    conversion - Montgomery                                                                                         |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | 345,000    |      |                         |   | 345,000    |              |   |   | 345                             |    |   |   | (345 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | - |   |
| Imputed                    discount cancelled due to loan default                                                                           |                       |   | —                                                                            |    |   |                                          | — |    |   |   | —  |                         |   |   | — |    |   |                                                               | —    |      |                         |   | —    |              |   |   | —                         |    |   |   | (62,640 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (62,640 | ) |
| Balance                    July 31, 2007                                                                                                    |                       |   | 34,343,662                                                                         |    |   | $                                             | 34,344  |    |   |   | —  |                         |   | $      | — |    |   |                                                               | 86,103,457 |      |                         |   | 60,418,457 |              |   | $      | 86,103                          |    |   | $ | 9,119,868 |   |   | $ | (3,339,050 | ) |   | $ | (12,426,134 | ) |   | $ | (483,112 | ) |   | $ | (7,007,981 | ) |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |                       |   |                                                                               |    |   |                                          |    |    |   |   |     |                         |   |   |    |    |   |                                                               |       |      |                         |   |       |              |   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**IN            VERITAS MEDICAL DIAGNOSTICS, INC.**

**(A            Development Stage Company)**

**Consolidated  Statements              of Cash Flows **

**Years          ended July 31, 2007 and 2006**

|                                                                   |   |                             |       |   |   |   |       | March                      26, 1997 |   |
|------------------------------------------------------------------------|--------|----------------------------------|------------|--------|--------|--------|------------|-------------------------------------|--------|
|                                                                   |   |                             |       |   |   |   |       | (Inception)                         |   |
|                                                                   |   | Years                      ended |       |   |   |   |       | Through                             |   |
|                                                                   |   | July                      31,    |       |   |   |   |       | July                      31,       |   |
|                                                                   |   | 2007                             |       |   | 2006   |   |       | 2007                                |   |
|                                                                   |   |                             |       |   |   |   |       |                                |   |
| Cash                      flows from operating activities:             |   |                             |       |   |   |   |       |                                |   |
|                        Net loss                                   |   | $                                | (3,670,764 | )      |   | $      | (1,848,797 | )                                   |   | $ | (12,426,135 | ) |
| Adjustments                      to reconcile net loss to net cash     |   |                             |       |   |   |   |       |                                |   |   |   |   |
| used                      by operating activities:                     |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Depreciation                      and amortization                     |   |                             | 8,319      |   |   |   | 16,436     |                                |   |   | 159,853 |   |
| Retirement                      of patents (written off)               |   |                             | 72,571     |   |   |   | —    |                                |   |   | — |   |
| Intercompany                      interest income                      |   |                             | —    |   |   |   | 98,000     |                                |   |   | 242,382 |   |
| Interest                      imputed (non cash)                       |   |                             | 195,190    |   |   |   | 29,000     |                                |   |   | 224,190 |   |
| Prepaid                      element of expenses and beneficial        |   |                             | —    |   |   |   | —    |                                |   |   | — |   |
| discounts                      on loan note conversions                |   |                             | 169,031    |   |   |   | —    |                                |   |   | 169,031 |   |
| Stock                      issued for compensation and services        |   |                             | 960,317    |   |   |   | 656,202    |                                |   |   | 2,195,995 |   |
| Stock                      issued for interest                         |   |                             | —    |   |   |   | —    |                                |   |   | 86,160 |   |
| Gain                      (loss) on debt forgiveness                   |   |                             | —    |   |   |   | —    |                                |   |   | (662,610 | ) |
| Changes                      in operating assets and liabilities:      |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Receivables                                                            |   |                             | 198,511    |   |   |   | (166,999   | )                                   |   |   | (21,927 | ) |
| Prepaid                      expenses and other current assets         |   |                             | 28,567     |   |   |   | 29,275     |                                |   |   | 11,099 |   |
| Deferred                      debt issue costs                         |   |                             | —    |   |   |   | —    |                                |   |   | — |   |
| Accounts                      payable                                  |   |                             | 206,730    |   |   |   | 250,137    |                                |   |   | 1,169,523 |   |
| Accrued                      expenses                                  |   |                             | 1,086,850  |   |   |   | 140,514    |                                |   |   | 1,778,046 |   |
| Accounts                      payable (related party)                  |   |                             | 16,963     |   |   |   | 178,192    |                                |   |   | 138,697 |   |
|                         Other                                |   |                             | —    |   |   |   | (24,516    | )                                   |   |   | 45,304 |   |
| Net                      cash used in                                  |   |                             |       |   |   |   |       |                                |   |   |   |   |
| operating                      activities                              |   |                             | (727,715   | )      |   |   | (642,556   | )                                   |   |   | (6,890,392 | ) |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Cash                      flows from investing activities:             |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Acquisition                      of patents                            |   |                             | (69,039    | )      |   |   | (38,339    | )                                   |   |   | (168,117 | ) |
| Acquisition                      of equipment                          |   |                             | —    |   |   |   | —    |                                |   |   | (151,209 | ) |
| Net                      cash used in                                  |   |                             |       |   |   |   |       |                                |   |   | — |   |
| investing                      activities                              |   |                             | (69,039    | )      |   |   | (38,339    | )                                   |   |   | (319,326 | ) |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   | — |   |
| Cash                      flows from financing activities:             |   |                             |       |   |   |   |       |                                |   |   | — |   |
| Advances                      from affiliates                          |   |                             | —    |   |   |   | —    |                                |   |   | 4,378,963 |   |
| Proceeds                      from debenture issue                     |   |                             | 335,000    |   |   |   | —    |                                |   |   | 335,000 |   |
| Repayment                      of advances from affiliates             |   |                             | —    |   |   |   | —    |                                |   |   | (728,426 | ) |
| Advances                      from related parties                     |   |                             | 353,460    |   |   |   | —    |                                |   |   | 436,510 |   |
| Proceeds                      from issuance of preferred stock         |   |                             | —    |   |   |   | —    |                                |   |   | 813,930 |   |
| Discount                      on notes payable                         |   |                             | —    |   |   |   | —    |                                |   |   | 144,382 |   |
| Proceeds                      from Royalty Participation Agreement     |   |                             | —    |   |   |   | 450,000    |                                |   |   | 450,000 |   |
| Proceeds                      from issue of Loan Notes                 |   |                             | —    |   |   |   | 300,000    |                                |   |   | 1,262,495 |   |
| Repayment                      of notes payable                        |   |                             | —    |   |   |   | (10,000    | )                                   |   |   | (10,000 | ) |
| Short                      term advances                               |   |                             | 80,000     |   |   |   | —    |                                |   |   | 80,000 |   |
| Net                      cash provided by                              |   |                             |       |   |   |   |       |                                |   |   |   |   |
| financing                      activities                              |   |                             | 768,460    |   |   |   | 740,000    |                                |   |   | 7,162,854 |   |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   | — |   |
| Effect                      on cash from foreign currency translation  |   |                             | (34,135    | )      |   |   | 121        |                                |   |   | (26,894 | ) |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   | — |   |
| Net                      change in cash and                            |   |                             |       |   |   |   |       |                                |   |   | — |   |
| cash                      equivalents                                  |   |                             | (62,428    | )      |   |   | 59,226     |                                |   |   | (73,758 | ) |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Cash                      and cash equivalents:                        |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Beginning                      of period                               |   |                             | 61,241     |   |   |   | 2,015      |                                |   |   | — |   |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   | — |   |
| End                      of period                                     |   | $                                | (1,187     | )      |   | $      | 61,241     |                                |   | $ | (73,758 | ) |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Supplemental                      disclosure of cash flow information: |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Cash                      paid during the year for:                    |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Income                      taxes                                      |   | $                                | —    |   |   | $      | —    |                                |   | $ | — |   |
| Interest                                                               |   | $                                | —    |   |   | $      | —    |                                |   | $ | — |   |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Non-cash                      financing activities:                    |   |                             |       |   |   |   |       |                                |   |   |   |   |
| Conversion                      of note payable to common stock        |   | $                                | 50,000     |   |   | $      | 250,000    |                                |   | $ | 700,000 |   |
| Conversion                      of interest to common stock            |   |                             | —    |   |   |   | 86,160     |                                |   |   |   |   |
| Conversion                      of preferred stock into debentures     |   |                             | —    |   |   |   | —    |                                |   |   | 86,160 |   |
| Stock-based                      compensation                          |   |                             | 466,624    |   |   |   | 579,476    |                                |   |   | 1,702,302 |   |
|                                                                   |   | $                                | 516,624    |   |   | $      | 915,636    |                                |   | $ | 2,488,462 |   |
|                                                                   |   |                             |       |   |   |   |       |                                |   |   |   |   |

----

**Note          1:                      Summary          of Significant Accounting Policies**

***Organization          and Basis of Presentation***

***Background***

***Principles          of consolidation***

***Basis          of presentation***

----

***Use          of Estimates***

***Cash          and Cash Equivalents***

***Property          and Equipment***

***Patent          Costs***

----

***Impairment          of Long-Lived Assets***

***Deferred          Offering Costs***

***Income          Taxes***

*Accounting for Income Taxes*

***Revenue          Recognition***

***Financial          Instruments and Concentration of Credit Risk***

***Stock          based Compensation***

----

***Foreign          Currency Translation***

***Research          and Development Costs***

***Earnings          (Loss) per Share***

**Note          2:  Related Party Transactions**

| Related                    Party              |   | Purchases                    year ended July 31, 2007 |    |   | Purchases                    year ended July 31, 2006 |   |
|-----------------------------------------------|--------|-------------------------------------------------------|---------|--------|-------------------------------------------------------|--------|
| Westek                    Ltd                 |   | $                                                     | -0-     |   |                                                  | $      | 23,301 |   |
| The                    ARM Partnership        |   | $                                                     | 180,049 |   |                                                  | $      | 175,042 |   |
| Sound                    Alert Technology Ltd |   | $                                                     | -0-     |   |                                                  | $      | 119,352 |   |
| AWY                    Ltd                    |   | $                                                     | 116,471 |   |                                                  | $      | 25,801 |   |
|                                          |   | $                                                     | 296,520 |   |                                                  | $      | 305,788 |   |

| Officers                    name | Title                                                                                 | Compensation                    Year                    endedJuly                    31, 2007 | Compensation                    Year                    endedJuly                    31, 2006 |
|----------------------------------|---------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
| Graham                    Cooper | President                    and Chief Executive Officer from June, 2006 and Chairman | $116,471                                                                                      | $27,000                                                                                       |
|                             |                                                                                  |                                                                                          |                                                                                          |
| Martin                    Thorp  | Chief                    Financial Officer                                            | $-0-                                                                                          | $-0-                                                                                          |

----

| Risk                      Free Interest Rate | 4.7 | % |
|----------------------------------------------|-----|---|
| Dividend                      Yield          | 0   | % |
| Volatility                      Factor       | 314 | % |

**Note 3:          Intangible Assets – Patent Costs**

|                                                |   |  July                       31, 2007 |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| Cost                      - start of year                                                                                                                                                                                                                                            |   | $                                              | 99,077  |   |
| Costs                      incurred during the year                                                                                                                                                                                                                                  |   |                                           | 69,039  |   |
| Amortization                                                                                                                                                                                                                                                                         |   |                                           | 0       |   |
| Retirements                                                                                                                                                                                                                                                                          |   |                                           | (72,571 | ) |
| Cost                      - end of year                                                                                                                                                                                                                                              |   | $                                              | 95,545  |   |

**Note          4:  Preferred Stock**

***4%          Convertible Preferred Stock***

----

**Note          5:  Common Stock**

|                                                   |   | July                    31, 2007 |      |   | July                    31, 2006 |   |
|--------------------------------------------------------|--------|----------------------------------|-----------|--------|----------------------------------|--------|
|                                                   |   | Number                           |      |   | Fair                    Value    |   |   | Number |   |   | Fair                    Value |   |
|                                                   |   | of                    Shares     |      |   | of                    Shares     |   |   | of                    Shares |   |   | of                    Shares |   |
| Shareholder                                            |   | Issued                           |      |   | Issued                           |   |   | Issued |   |   | Issued |   |
| CLX                    & Associates Inc            |   |                             |      |   |                             |   |   | $ | 750,000 |   |   | $ | 255,000 |   |
| Sichenzia                    Ross Friedman Ference LLP |   |                             |      |   |                             |   |   |   | 1,680,000 |   |   |   | 220,325 |   |
| Cornell                    Capital Partners LP         |   |                             |      |   |                             |   |   |   | 472,000 |   |   |   | 61,360 |   |
| Monitor                    Capital Inc                 |   |                             |      |   |                             |   |   |   | 28,000 |   |   |   | 3,640 |   |
| Crown                    Capital Group Ltd             |   |                             | 1,000,000 |   |                             |   | 68,000 |   |   |   |   |   |   |   |   |   |
| UTEK                    Corporation                    |   |                             | 1,250,000 |   |                             |   | 150,000 |   |   |   | 83,334 |   |   |   | 8,334 |   |
| Sichenzia                    Ross Friedman Ference LLP |   |                             | 850,000   |   |                             |   | 51,850 |   |   |   |   |   |   |   |   |   |
|                                                   |   |                             | 3,100,000 |   |                             | $      | 269,850 |   |   |   | 3,013,334 |   |   | $ | 548,659 |   |

----

**Note          6:  Stock Options**

|   | · | During                    May 2004, the Company granted 9,659,000 common stock options                    to two                    officers with an exercise price of $1.00per share. The Company's                    common                         stock had no traded market value on the date of grant. The                    market value of                    the stock was determined to be $1.00 per share based on estimates                    made by                    the directors at that time. In March 2006 one of the officers                    resigned and                    the 4,829,500 options granted to him lapsed. Under the terms                    of the option                    award the remaining 4, 829,500 options vest in three equal installments                    of                    1,609,834 each in May 2006, 2007 and 2008, subject to certain                    operating                    performance criteria having been met. The performance criteria                    have not                    been met and therefore the options which were due to vest in                    2006 and 2007                    have lapsed. Management is of the view that the performance criteria                    are                    unlikely to be met by each of the future vesting                    periods. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                    June 1, 2005, the Company issued 650,000 options to its staff                    under the                    plan, with an exercise price of $0.55 per share. The market price                    on June                    1, 2005 was also $0.55 per share. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                    January 3, 2006, the Company issued 725,000 options to its staff                    under the                    plan, with an exercise price of $0.10 per share. The market price                    on                    January 3, 2006 was also $0.10 per                    share. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                    October 10, 2006, the Company issued 16,015,000 options to its                    staff under                    the plan, with an exercise price of $0.065per share. The market                    price on                    October 10, 2006 was also $0.065 per share. The vesting date                    of these                    options varies as set out in the table below: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Vesting                    Date       |   | No                    of options |       |
|---------------------------------------|--------|----------------------------------|------------|
| October                    10, 2006   |   |                             | 2,500,000  |   |
| November                    30, 2006  |   |                             | 500,000    |   |
| December                    31, 2006  |   |                             | 150,000    |   |
| September                    30, 2007 |   |                             | 5,515,000  |   |
| September                    30, 2008 |   |                             | 3,750,000  |   |
| September                    30, 2009 |   |                             | 3,600,000  |   |
| Total                                 |   |                             | 16,015,000 |   |

|                                                              |   | Grant                    Date |   |
|-------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                              |   | May,                    2004  |   |   | June,                    2005 |   |   | January,                    2006 |   |   | October,                    2006 |   |
| Risk                    Free Interest Rate                        |   |                          | 2.3    | % |   |   | 4.4 | % |   |   | 4.4 | % |   |   | 4.7 | % |
| Dividend                    Yield                                 |   |                          | 0      | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |
| Volatility                    Factor                              |   |                          | 0      | % |   |   | 55 | % |   |   | 88 | % |   |   | 314 | % |
| Weighted                    Average Expected Life (yrs)           |   |                          | 5      |   |   |   | 5 |   |   |   | 5 |   |   |   | 5 |   |
| No                    of options expected to vest on vesting date |   |                          | 0      |   |   |   | 650,000 |   |   |   | 725,000 |   |   |   | 16,015,000 |   |
| Value                    of one option (Black Scholes)            |   | $                             | 0.000  |   |   | $ | 0.289 |   |   | $ | 0.070 |   |   | $ | 0.065 |   |
| Value                    of option grant (aggregate)              |   | $                             | 0      |   |   | $ | 187,850 |   |   | $ | 50,750 |   |   | $ | 1,040,975 |   |

|                                                       |   | For                      The Years Ended    |       |
|------------------------------------------------------------|--------|------------------------------------------------------------|------------|
|                                                       |   | July                      31,               |       |
|                                                       |   | 2006                                                       |       |   | 2005 |   |
| Net                      loss, as reported                 |   | $                                                          | (1,848,797 | ) |   | $ | (2,483,429 | ) |
|                                                       |   |                                                       |       |   |   |   |   |   |
| Pro                      forma net loss                    |   | $                                                          | (1,958,103 | ) |   | $ | (2,483,429 | ) |
|                                                       |   |                                                       |       |   |   |   |   |   |
| Basic                      and diluted net loss per common |   |                                                       |       |   |   |   |   |   |
|    share,                      as reported. |   | $                                                          | (0.03      | ) |   | $ | (0.05 | ) |
|                                                       |   |                                                       |       |   |   |   |   |   |
| Pro                      forma basic and diluted net loss  |   |                                                       |       |   |   |   |   |   |
|    per                      common share.   |   | $                                                          | (0.04      | ) |   | $ | (0.05 | ) |

----

***Stock          Warrants***

| Risk-free                      interest rate        |   |                         | 4.35   | % |
|-----------------------------------------------------|--------|------------------------------|--------|---|
| Dividend                      yield.                |   |                         | 0.00   | % |
| Volatility                      factor              |   |                         | 55.10  | % |
| Weighted                      average expected life |   | 5                      years |   |

|  Risk-free                    interest rate        |   |                       | 4.18   | % |
|---------------------------------------------------------|--------|----------------------------|--------|---|
|  Dividend                    yield                 |   |                       | 0.00   | % |
|  Volatility                    factor              |   |                       | 88.40  | % |
|  Weighted                    average expected life |   | 3                    years |   |

|                                        |   |                                   |            |                              |   | Weighted                          |   | Weighted                            |        |      |   |
|---------------------------------------------|--------|----------------------------------------|-----------------|-----------------------------------|--------|-----------------------------------|--------|-------------------------------------|-------------|-----------|--------|
|                                        |   | Options                    Outstanding |            | Average                           |   | Average                           |   |   Aggregate               |        |
|                                        |   | Number                    of           |            | Exercise                    Price |   | Exercise                    Price |   | Remaining                           |        | Intrinsic |   |
|                                        |   | Shares                                 |            | Per                    Share      |   | Per                    Share      |   | Contractual                    Life |        | Value     |   |
| Balance                    at July 31, 2006 |   |                                   | 4,996,436       |                              | $      | 0.001-$1.50                       |   | $                                   | 0.750       |      |   |   |   |   |   |   |
|                                        |   |                                   |            |                              |   |                              |   |                                |        |      |   |   |   |   |   |   |
| Awards                    Granted to Staff  |   |                                   | 16,015,000      |                              | $      | 0.065                             |   | $                                   | 0.065       |      |   |   |   |   |   |   |
| Awards                    cancelled/expired |   |                                   | 1,609,833  |                              | $      | 1.000                             |   | $ $                            | 1.000  |      |   |   |   |   |   |   |
| Warrants                    exercised       |   |                                   | (350,000        | )                                 | $      | 0.001                             |   | $                                   | 0.001       |      |   |   |   |   |   |   |
|                                        |   |                                   |            |                              |   |                              |   |                                |        |      |   |   |   |   |   |   |
| Balance                    at July 31, 2007 |   |                                   | 19,401,603      |                              | $      | 0.055-$1.50                       |   | $                                   | 0.1636      |      |   | 8.06                    years |   | $ | 1,296,238 |   |
|                                        |   |                                   |            |                              |   |                              |   |                                |        |      |   |   |   |   |   |   |
| Awards                    exercisable at    |   |                                   |            |                              |   |                              |   |                                |        |      |   |   |   |   |   |   |
| July                    31, 2007            |   |                                   | 4,586,769       |                              | $      | 0.550-1.50                        |   | $                                   | 0.1586      |      |   | 6.91                    years |   | $ | 460,949 |   |

**Note          7:  Income Taxes**

|                                                                  |   | Years                      Ended |   |   |   |   |
|-----------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------|--------|
|                                                                  |   | July                      30,    |   |   |   |   |
|                                                                  |   | 2007                             |   |   | 2006   |   |
| U.K.                      statutory federal rate                      |   |                             | 30.00  | %      |   |   | 30.00 | % |
| Net                      operating loss for which no tax              |   |                             |   |   |   |   |   |   |
|    benefit                      is currently available |   |                             | -30.00 | %      |   |   | -30.00 | % |
|                                                                  |   |                             | 0.00   | %      |   |   | 0.00 | % |
|                                                                  |   |                             |   |   |   |   |   |   |

**Note          8:  Acquisitions**

***July          22, 2004***

----

***July          30, 2004***

**Note          9: Financings**

***April          2005, Financing***

***September          2005 Financing and subsequent restructurings***

 redemption          or on the date redemption is made exceeds the conversion price then in          effect.          Redemption of Debentures is to be calculated at 112% of the Debentures'          face          value.

----

|   | · | The                    Company shall pay Montgomery an aggregate of $348,000 (the "Funds")                    which                    represents the agreed amounts owed by the Company to Montgomery                    under the                    Debenture as of October 19, 2006 including outstanding principal                    and                    interest. The Company shall pay the Funds to Montgomery monthly                    at the                    rate of $29,000 ("Monthly Payment") per calendar month, with                    the first                    payment being due and payable on November 15, 2006 and each subsequent                    payment being due and payable on the first business day of each                    subsequent                    month until the Funds are repaid in                    full. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Montgomery                    shall continue to have valid, enforceable and perfected first-priority                    liens upon and security interests in the Pledged Property and                    the Pledged                    Shares (each as defined in the Purchase Agreement transaction                    documents). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                    Company and Montgomery agree that during the term of the Settlement                    Agreement, the Debenture shall not bear any interest and no liquidated                    damages shall accrue under any of the financing                    documents. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                    Conversion Price (as set forth in the Debenture) in effect on                    any                    Conversion Date (as set forth in the Debenture) from and after                    the date                    hereof shall be adjusted to equal $0.05, which may be subsequently                    adjusted pursuant to the other terms of the                    Debenture. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Montgomery                    shall retain the Warrants issued in accordance with the Securities                    Purchase Agreement. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                    Company and Cornell agree to terminate the Distribution Agreement                    and                    related transaction documents. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                    the event that the Company defaults under the terms of this agreement                    penalties and redemption premiums payable under the original                    agreement                    shall be reinstated. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Secured                    convertible note in the principal amount of $261,300 issued in                    exchange                    for the interest and principal outstanding under the Debenture                    previously                    issued to Longview under the terms of the Accredited Investor                    Purchase                    Agreement. The note (a) matures on April 30, 2008; (b) bears                    interest at                    the rate of 18% per annum, which is payable in accordance with                    the                    repayment provisions described in the Note and (c) is convertible                    at                    Longview's option, into shares of the Company’s common stock at a                    conversion price of $0.05 per share. Minimum repayments are due                    under the                    note as follows: (i) two installments of $12,500 each were due                    to be paid                    on or before February 28, 2007 and March 30, 2007; (ii) monthly                    installments of $15,000 commencing on November 30, 2007; and                    (iii) the                    remaining principal balance plus unpaid interest on the maturity                    date. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Secured                    convertible note in the principal amount of $48,000 was issued                    in exchange                    for liquidated damages payable as result of the default on the                    Debenture                    previously issued to Longview under the terms of the Accredited                    Investor                    Purchase Agreement. This note has the same interest and conversion                    terms                    as described above, but is repayable on maturity (principal and                    interest). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Risk                      Free Interest Rate | 4.7 | % |
|----------------------------------------------|-----|---|
| Dividend                      Yield          | 0   | % |
| Volatility                      Factor       | 413 | % |

| Risk                      Free Interest Rate | 4.7 | % |
|----------------------------------------------|-----|---|
| Dividend                      Yield          | 0   | % |
| Volatility                      Factor       | 314 | % |

|                               |   | Beneficial |    |   |   |   |    | Unamortized |   |
|------------------------------------|--------|------------|---------|--------|--------|--------|---------|-------------|--------|
|                               |   | Discount   |    |   | Charge |   |    | Amount      |   |
| Westek                    (note 2) |   | $          | 113,400 |   |   | $      | 56,700  |        |   | $ | 56,700 |   |
| Triumph                            |   | $          | 0       |   |   | $      | 0       |        |   | $ | 0 |   |
| Cornell                            |   | $          | 146,160 |   |   | $      | 92,880  |        |   | $ | 53,280 |   |
| Longview                           |   | $          | 24,314  |   |   | $      | 19,452  |        |   | $ | 4,863 |   |
|                               |   | $          | 283,874 |   |   | $      | 169,032 |        |   | $ | 114,843 |   |

***Royalty          Participation Agreement (May to November, 2006)***

----

***Secured          Subordinated Convertible Loan Notes (November 2006)***

***Related          Party Loans - Westek Limited***

***Short          Term Advance from Loan Note Holder***

**Presentation          of Financings in the Financial Statements**

**Accounting          for the Royalty Participation Agreement (May - July, 2006          Financings)**

| Total                    Amount Advanced                               |   | $ | 450,000 |   |
|------------------------------------------------------------------------|--------|---|---------|--------|
| Interest                    Imputed from inception until July 31, 2007 |   | $ | 207,630 |   |
| Included                    in Long Term Debt at July 31, 2007         |   | $ | 657,630 |   |

**Accounting          for September, 2005 Financing and subsequent          restructurings**

|                                                         |   | Total                    Principal |      |
|--------------------------------------------------------------|--------|------------------------------------|-----------|
|                                                         |   | Outstanding                        |      |
|                                                         |   |                               |      |
| Montgomery                    Capital Partners               |   |                               | 348,000   |   |
| Triumph                    Small Cap Fund                    |   |                               | 450,000   |   |
| Longview                                                     |   |                               | 309,300   |   |
| Other                    Accredited Investors*               |   |                               | 216,500   |   |
| Total                    Notes payable                       |   |                               |      |   |
| (before                    beneficial conversion discount**) |   |                               | 1,323,800 |   |

**Beneficial          Conversion Rights**

----

**Note          10: Defaults upon Senior Securities**

**Note          11: Recent developments**

----

**Item      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE**

**Item      8A. CONTROLS AND PROCEDURES**

----

**PART      III**

**Item      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE      WITH      SECTION 16(a) OF THE EXCHANGE ACT**

**Directors      and Executive Officers**

| **Name**                |   |   |                  **Age** |   |   |                  **Position**                                                                      |
|------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------|
| Graham                Cooper |   |   | 60                            |   |   | Chief                Executive Officer, President and Chairman of the Board of                Directors |
| Martin                Thorp  |   |   | 56                            |   |   | Chief                Financial Officer and Director                                                     |
| John                Fuller   |   |   | 47                            |   |   | Director                 (Non-Executive)                                                           |

**Graham      Cooper**

**Martin      Thorp**

**John      Fuller**

**Audit      Committee**

**Code      of Ethics**

**Compliance      with Section 16(a) of the Exchange Act**

**Item      10. Executive Compensation**

----

**Executive      Compensation Table**

| Name                & Principal Position       |   | Year   |   |    | Salary($                ) |   |   | Bonus($                ) |   |   | StockAwards($                ) |   |   | Option                Awards# |   |   | Non-Equity                Incentive Plan Compensation ($ ) |   |   | Change                in Pension Value and Non-Qualified Deferred Compensation Earnings                ($                ) |   |    | All                Other Compensation ($ ) |   |    | Total                ($ ) |   |
|----------------------------------------------------|--------|--------|--------|---------|---------------------------|--------|--------|--------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|---------|--------------------------------------------|--------|---------|---------------------------|--------|
|  Graham                Cooper (1)             |   | 2007   |   | $       | 116,471                   |   |   |                     |   |   |                           |   |   | Note                4         |   |   |                                                       |   |   |                                                                                                                       |   |    | Note                5                      |   | $       | 116,471                   |   |
| Chief                Executive Officer             |   | 2006   |   | $       | 27,000                    |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 27,000                    |   |
| President                and Chairman of the Board |   | 2005   |   | $       | 27,000                    |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 27,000                    |   |
|                                               |   |   |   |    |                      |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   |    |                      |   |
| John                Fuller                         |   | 2007   |   | $       | 220,604                   |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 220,604                   |   |
| Director                (2)                        |   | 2006   |   | $       | 225,000                   |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 225,000                   |   |
| Former                President and CEO            |   | 2005   |   | $       | 270,000                   |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 270,000                   |   |
|                                               |   |   |   |    |                      |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   |    |                      |   |
| Brian                Cameron (3)                   |   | 2007   |   | $       | 0                         |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   |  $ | 0                         |   |
| Chief                 Operation Officer       |   | 2006   |   |  $ | 180,000                   |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |  $ | 135,000                               |   | $       | 315,000                   |   |
|                                               |   | 2005   |   | $       | 270,000                   |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 270,000                   |   |
| Martin                Thorp (6)                    |   | 2007   |   | $       | 0                         |   |   |                     |   |   |                           |   |   | 7,850,000                     |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 0                         |   |
| Chief                Financial Officer, Director   |   | 2006   |   | $       | 0                         |   |   |                     |   |   |                           |   |   | 200,000                       |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 0                         |   |
|                                               |   | 2005   |   | $       | 0                         |   |   |                     |   |   |                           |   |   |                          |   |   |                                                       |   |   |                                                                                                                       |   |    |                                       |   | $       | 0                         |   |

**Options      Grants in Last Fiscal Year**

**Aggregate      Option Exercises In Last Fiscal Year and Fiscal Year End Option      Values**

----

|                                                                                                                                                                                                           |   |                                       |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |   |                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|-------------|--------|--------|------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------|--------|--------|----------------------|-----------|--------|------------------------|--------|
|                                                                                                                                                                                       |   |                                       |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |   |                   |   |
|                                                                                   |   |                                       |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |   |                   |   |
|                                                                                                                                                                                                                                              |   |                                       |   |   |             |   |   |  Number                  of Securities Underlying Unexercised Options at July 31,                  2007 |   |   |  Value                of In The Money Options At July 31, 2007 |   |
|                                                                                                                                                                                                                                                                                                                              |   |  Shares                  Value        |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |
|            Name                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Acquired                    onExercise (#) |   |   | Realized($) |   |   | Exercisable                  (#)                                                                                       |   |   | Unexercisable                   (#)                                      |   |   | Exercisable (#) |      |   | Unexercisable (#) |   |
| John                  Fuller                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       | 0      |   |        |   | 0      |                                                                                                                   |   |   | 6,939,437                                                                     |   |   |                 | 3,109,834 |   |                   |   | 0 |   |   |   | 0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                       |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |   |                   |   |   |   |   |   |   |   |
| Graham                  Cooper                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                       | 0      |   |        |   | 0      |                                                                                                                   |   |   | 0                                                                             |   |   |                 | 0         |   |                   |   | 0 |   |   |   | 0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                       |   |   |        |   |   |                                                                                                                   |   |   |                                                                          |   |   |                 |      |   |                   |   |   |   |   |   |   |   |
| Martin                  Thorp                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                       | 0      |   |        |   | 0      |                                                                                                                   |   |   | 2,250,000                                                                     |   |   |                 | 7,800,000 |   |                   |   | 0 |   |   |   | 0 |   |

**Item      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT**

|       Name                  of Beneficial                  Owner                                                                                     |   Number                  of Shares  Beneficially Owned   |   Class                  of Stock    |  Percentage                  Outstanding (1) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------|
|                                             |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Abacus                  Trust Company Limited (2)                                                                                                                                                                                                                  | 19,328,381                                                                              | Preferred                  Stock               | 20.4%                                             |
| Unit                  2, Taurus Park                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Europa                  Boulevard                                                                                                                                                                                                                                  |                                                                                    |                                                          |                                              |
| Warrington                  WA5 7YT                                                                                                                                                                                                                                |                                                                                    |                                                          |                                              |
| England                                                                                                                                                                                                                                                            |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Rodney                  Philip Jackson                                                                                                                                                                                                                             | 6,392,695                                                                               | Preferred                  Stock                    | 6.7%                                              |
| The                  Green House                                                                                                                                                                                                                                   |                                                                                    |                                                          |                                              |
| Beechwood                  Business Park North                                                                                                                                                                                                                     |                                                                                    |                                                          |                                              |
| Inverness,                  Scotland IV2 3BL                                                                                                                                                                                                                       |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| HEMP                  Trustees Limited                                                                                                                                                                                                                             | 12,799,055                                                                              | Common                  Stock                       | 13.5%                                             |
| 10                  Foster Lane                                                                                                                                                                                                                                    |                                                                                    |                                                          |                                              |
| London,                  England                                                                                                                                                                                                                                   |                                                                                    |                                                          |                                              |
| EC2V                  6HR                                                                                                                                                                                                                                          |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Rubin                  Family Irrevocable Stock                                                                                                                                                                                                                    | 4,674,541                                                                               | Common                  Stock                       | 4.9%                                              |
| Trust                  (3)                                                                                                                                                                                                                                         |                                                                                    |                                                          |                                              |
| 25                  Highland Boulevard                                                                                                                                                                                                                             |                                                                                    |                                                          |                                              |
| Dix                  Hills, New York 11730                                                                                                                                                                                                                         |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| John                  Fuller (4)                                                                                                                                                                                                                                   | 7,537,487                                                                               | Common                  Stock                                 | 7.9%                                              |
| Easter                  Shian, Glen Quaich                                                                                                                                                                                                                         |                                                                                    |                                                          |                                              |
| Amulree,                  Perthshire                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| PH8                  0DB                                                                                                                                                                                                                                           |                                                                                    |                                                          |                                              |
| Scotland                                                                                                                                                                                                                                                           |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Brian                  Cameron (5)                                                                                                                                                                                                                                 | 6,513,335                                                                               | Common                  Stock                       | 6.9%                                              |
| Campbell                  Cairns, Craigellachie                                                                                                                                                                                                                    |                                                                                    |                                                          |                                              |
| Aberlour,                  Banffshire                                                                                                                                                                                                                              |                                                                                    |                                                          |                                              |
| Scotland                                                                                                                                                                                                                                                           |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Graham                  Cooper  (2)                                                                                                                                                                                                                      | 0                                                                                       | Common                  Stock                       | *                                                 |
| Rock                  Cottage                                                                                                                                                                                                                                      |                                                                                    |                                                          |                                              |
| Finsthwaite                                                                                                                                                                                                                                                        |                                                                                    |                                                          |                                              |
| Cumbria                                                                                                                                                                                                                                                            |                                                                                    |                                                          |                                              |
| United                  Kingdom                                                                                                                                                                                                                                    |                                                                                    |                                                          |                                              |
| LA12                  8BH                                                                                                                                                                                                                                          |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| Martin                  E. Thorp (6)                                                                                                                                                                                                                               | 4,200,000                                                                               | Common                  Stock                  | 4.2%                                              |
| 31                  Vogan's Mill Wharf                                                                                                                                                                                                                             |                                                                                    |                                                          |                                              |
| 17                  Mill Street,                                                                                                                                                                                                                                   |                                                                                    |                                                          |                                              |
| St                  Savior's Dock                                                                                                                                                                                                                                  |                                                                                    |                                                          |                                              |
| Tower                  Bridge                                                                                                                                                                                                                                      |                                                                                    |                                                          |                                              |
| London                  SE1 2BZ7                                                                                                                                                                                                                                   |                                                                                    |                                                          |                                              |
|                                                                                                                                                                                                                                                               |                                                                                    |                                                          |                                              |
| All                  directors and executive                                                                                                                                                                                                                       |  31,065,868                                                                        | Common                  stock                            | 32.8%                                             |
| officers                  as a group (3 persons)                                                                                                                                                                                                                   |                                                                                    |                                                          |                                              |

----

**Item      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Item      13. EXHIBITS**

| Exhibit                  Number                              |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 2.1                                                          |   | Share  Purchase  Agreement,  dated                    as of June 30,  2004,  among Sports                    Information  and  Publishing  Corp.,  Michael  Tanner,  HEMP  Trustees                    Limited  (as                    the  corporate  trustee  of                    the  HEMP  Employees  Benefit Trust), John                    Fuller,  Brian Cameron,  Westek Limited and other                    holders of securities of In Veritas Medical Diagnostics, Inc.                    (as                    incorporated by  reference  to Form                    8-K,  filed with                    the  Securities  and  Exchange Commission                    on August 10, 2004).                                                                                                  |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 2.2                                                          |   | Amendment                    No. 1 to Share Exchange Agreement,  effective as of July                    31,2004,  among  Sports  Information  and  Publishing  Corp.,  Michael                    D. Tanner,  HEMP Trustees  Limited (as the                    corporate  trustee of the HEMP Employees Benefit Trust), John                    Fuller,  Brian Cameron,  Westek Limited and the other                    holders of  securities  of In Vivo                    Medical  Diagnostics, Inc.  (formerly  Hall                    Effect  Medical  Products)                    (as  incorporated  by  reference  to                    Form  8-K/A,  filed  with                    the  Securities  and  Exchange Commission                    on February 3, 2005). |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.1                                                          |   | Articles                    of Incorporation  (as incorporated by reference to Form                    SB-2,  filed with                    the  Securities  and  Exchange  Commission  on                    January  24, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.2                                                          |   | Articles                    of Amendment of Articles of  Incorporation,  dated as                    of July  22, 2004 (as  incorporated  by                    reference to the Annual  Report on Form 10-KSB,  filed                    with the Securities and Exchange Commission on February 3,                    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.3                                                          |   | Articles  of  Amendment  of  Articles  of  Incorporation,  dated                    as of September 20, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.4                                                          |   | By-Laws                    (as  incorporated  by reference  to Form                    SB-2,  filed with the Securities and Exchange Commission on                    January 24, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1                                                         |   | Employment                    Agreement among Hall Effect Technologies Limited, a companyregistered                    in                    England,  Jonathan Andrew Fuller and Hall Effect                    Medical Products Inc., a                    Delaware  corporation.  (as incorporated by reference                    to the Annual  Report on Form 10-KSB,  filed with                    the  Securities  and Exchange Commission on February                    3, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.2                                                         |   | Employment                    Agreement among Hall Effect Technologies Limited, a company registered                    in                    England,  Brian Cameron and Hall Effect Medical                    Products Inc., a                    Delaware  corporation.  (as  incorporated  by                    reference to the Annual Report on Form 10-KSB,  filed with                    the  Securities and Exchange Commission on February 3,                    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3                                                         |   | Research  and  Development  Agreement  dated                    July 1, 2002 between Hall Effect Technologies  Limited and                    Unipath Limited.  (as incorporated by reference to the                    Amended  Annual Report on                    Form  10-KSB/A,  filed with the Securities and                    Exchange Commission on August 15, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.4                                                         |   | Patent                    License Agreement dated September 1, 2002 between Hall Effect                    Technologies   Limited  and  Unipath  Limited.   (as  incorporated  by                    reference to the Amended  Annual Report on                    Form  10-KSB/A,  filed with the Securities and                    Exchange Commission on August 15, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5                                                         |   | Subscription  Agreement,  dated                    December 22, 2004 by and among In Vivo Medical                    Diagnostics,  Inc. and NITE Capital,  L.P. (as                    incorporated                    by reference  to  Form  8-K,  filed  with  the  Securities  and  Exchange                    Commission on December 29, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6                                                         |   | Registration                    Rights Agreement, dated December 22, 2004 by and among In Vivo                    Medical                    Diagnostics, Inc. and NITE Capital, L.P. (as                    incorporated by  reference  to Form                    8-K,  filed with                    the  Securities  and  Exchange Commission                    on December 29, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.7                                                         |   | Form  of  8%  Promissory  Note  issued  to  NITE  Capital,   L.P.  (as incorporated  by                    reference to Form 8-K,  filed with the Securities andExchange                    Commission on December 29, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.8                                                         |   | Certificate                    of the Powers, Designations, Preferences and Rights of the Series                    B                    Preferred  Stock                    (As  incorporated  by  reference to Form 8-K                    filed with the Securities and Exchange Commission on April 21,                    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.9                                                         |   | Form                    of  Subscription  Agreement - April                    2005  private  placement  (As                    incorporated  by reference to Form 8-K filed with                    the  Securities  and Exchange Commission on April 21,                    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.10                                                        |   | Form                    of Common Stock Purchase  Warrant - April 2005                    private  placement (As  incorporated  by                    reference to Form 8-K filed with the  Securities and Exchange                    Commission on April 21, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.11                                                        |   | Form                    of Unit Warrant - April 2005 private  placement                    (As  incorporated by  reference  to Form                    8-K  filed  with                    the  Securities  and  Exchange Commission                    on April 21, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.12                                                        |   |  Form                    of Registration  Rights Agreement - April 2005                    private  placement (As  incorporated  by                    reference to Form 8-K filed with the  Securities and Exchange                    Commission on April 21, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.13                                                        |   |    Secured                    Convertible  Debenture issued to Montgomery dated September 7,                    2005 (as incorporated by reference to the Company's  Current                    Report on Form  8-K,  filed  with                    the  Securities  and  Exchange  Commission  on                    September 13, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.14  |   | Warrant                    issued to Montgomery  dated September 7, 2005 (as incorporated                    by reference to the Company's  Current  Report on Form                    8-K, filed with the Securities and Exchange Commission on September                    13,                    2005).                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.15  |   | Form                    of Convertible Debenture dated September 7, 2005 (as incorporated by                    reference to the Company's  Current  Report on Form                    8-K, filed with the Securities and Exchange Commission on September                    13, 2005).                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.16  |   | Investor  Registration                    Rights Agreement dated September 7, 2005 by and between the Company                    and  Montgomery (as  incorporated  by                    reference to the Company's  Current  Report on                    Form 8-K,  filed with the Securities and Exchange Commission on                    September 13, 2005).                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.17  |   | Pledge                    and Escrow  Agreement  dated September 7, 2005 by and                    among the                    Company,   Montgomery   and  David   Gonzalez  as  escrow   agent  (as                    incorporated by reference to the Company's Current Report on                    Form 8-K,                    filed with the  Securities  and                    Exchange  Commission  on September                    13,2005). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.18  |   | Securities  Purchase  Agreement                    dated September 7, 2005 by and betweent he  Company                    and  Montgomery  (as  incorporated  by  reference  to                    the Company's  Current  Report on Form                    8-K,  filed with the Securities and Exchange Commission on                    September 13, 2005).                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.19  |   | Security  Agreement                    dated September 7, 2005 by and between the Company and Montgomery                    (as                    incorporated by reference to the Company's  Current Report on                    Form 8-K, filed with the Securities and Exchange  Commission on                    September 13, 2005).                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.20  |   | Standby                    Equity  Distribution  Agreement dated September 7,                    2005 by and between the Company and Cornell                    (as  incorporated  by reference to                    the Company's  Current  Report on Form                    8-K,  filed with the Securities and Exchange Commission on                    September 13, 2005).                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.21  |   | Registration  Rights  Agreement                    dated September 7, 2005 by and betweenthe and Cornell (as incorporated                    by                    reference to the Company's Current Report on Form 8-K, filed                    with the                    Securities and Exchange  Commission on September 13,                    2005).                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.22  |   | Placement  Agent  Agreement                    dated September 7, 2005 by and between the Company and Monitor                    Capital,                    Inc. (as incorporated by reference to                    theCompany's  Current  Report on Form                    8-K,  filed with the Securities and Exchange Commission on                    September 13, 2005).                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.23  |   | Intercreditor  Agreement  dated  September  7,  2005                    by and  among the Company, Montgomery and the investors                    identified in Schedule I thereto (as incorporated by reference to the                    Company's  Current Report on Form  8-K, filed with                    the  Securities  and Exchange  Commission on                    September  13, 2005).                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.24  |   | Investor  Registration                    Rights Agreement dated September 7, 2005 by and                    between  the  Company  and  the  investors   identified   thereto  (as incorporated                    by reference to the Company's Current Report on Form 8-K, filed                    with                    the  Securities  and                    Exchange  Commission  on September                    13, 2005).                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.25  |   | Securities                    Purchase Agreement dated September 7, 2005 by and between the                    Company and                    the investors identified thereto (as incorporated by reference                    to the                    Company’s Current Report on Form 8-K, filed with the Securities and                    Exchange Commission on September 13, 2005).                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.26  |   | Security                    Agreement dated September 7, 2005 by and between the Company and the                    investors identified thereto (as incorporated by reference to                    the                    Company’s Current Report on Form 8-K, filed with the Securities and                    Exchange Commission on September 13, 2005).                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.27  |   | Royalty  Participation  Agreement  dated                    May 3, 2006 by and between In                    Veritas  Medical  Diagnostics,  Inc. and The                    Rubin Family  Irrevocable Stock Trust                    (as  incorporated  by reference to                    the  Company's  Current Report on Form 8-K filed with                    the Securities  and Exchange  Commission on May 11,                    2006.                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.28  |   | Termination,  Settlement                    and  Forbearance  Agreement dated October 19,2006                    between In Veritas Medical                    Diagnostics,  Inc.,  Montgomery Equity Partners                    Ltd. and Cornell  Capital  Partners L.P.                    (as  incorporated by reference to the                    Company's  Current Report on Form 8- K filed with                    the Securities and Exchange Commission on October 25                    2006.             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.28  |   | Amendment                    No.  1  to  Loan  Agreement   between  In  Veritas  Medical  Diagnostics,                    Inc. and Triumph Small Cap Fund, Inc. (as incorporated by                    reference  to                    the  Form  8-K  filed  with                    the  Securities  &  Exchange Commission                    on November 21, 2006)                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.29  |   | Purchase                    Agreement between In Veritas Medical Diagnostics, Inc. and Triumph                    Small                    Cap Fund, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.30  |   | Exchange                    Agreement between In Veritas Medical Diagnostics, Inc. and Triumph                    Small Cap Fund, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.31  |   | Form                    of 8% Secured Subordinated Convertible Debenture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.32  |   | Subordinated                    Security Agreements between In Veritas Medical Diagnostics, Inc.                    and                    Triumph Small Cap Fund, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.33  |   | Modification                    Agreement dated January 11, 2007, between In Veritas                    Medical Diagnostics, Inc. and Longview Fund L.P. (as incorporated by                    reference to the Company’s Current Report on Form                    8-K,  filed  with                    the  Securities  and Exchange Commission on January                    18, 2007).                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.34  |   |   18%                    Secured Subordinated Convertible Debenture issued to Longview                    Fund                    L.P.dated January 11, 2007 (as incorporated by reference to the                    Company’s                    Current Report on Form 8-K,  filed  with                    the  Securities  and  Exchange Commission on                    January 18, 2007).                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.35  |   |   18%                    Secured Subordinated Convertible Debenture issued to Longview                    Fund                    L.P.dated January 11, 2007 (as incorporated by reference to the                    Company’s                    Current Report on Form 8-K,  filed  with                    the  Securities  and  Exchange Commission on                    January 18, 2007).                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 14.1   |   |  Code                    of Ethics and Business Conduct for Officers, Directors and                    Employees.  (as incorporated by reference to the Annual Report                    on Form 10-KSB,  filed with the Securities and Exchange                    Commission on February 3, 2005).                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 21     |   | List                    of  Subsidiaries  (as  incorporated  by  reference  to                    the Annual                    Report  on  Form  10-KSB,  filed  with  the  Securities  and  Exchange                    Commission on February 3, 2005).                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1   |   | Certification                    by Graham Cooper, President and Chief Executive Officer, pursuant                    to                    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2   |   | Certification                    by Martin Thorp,  Chief                    Financial  Officer,  pursuant to Section 302 of the                    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1   |   | Certification                    by Graham Cooper, President and Chief Executive Officer, pursuant                    to                    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.2   |   |  Certification                    by Martin Thorp,  Chief                    Financial  Officer,  pursuant to  Section 906 of                    the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                  |

----

**Item      14. Principal Accounting Fees      and Services**

**Audit      fees**

**Audit-Related      Fees**

**Tax      Fees**

**All      Other Fees**

----

**SIGNATURES**

**IN      VERITAS MEDICAL DIAGNOSTICS INC.**

|                                                           |   |                                               |
|----------------------------------------------------------------|--------|----------------------------------------------------|
|                                                           |   |                                               |   |
| Dated:   November                __, 2007  | By:    | /s/ Graham              Cooper                |   |
|                                                           |   | Graham              Cooper                         |   |
|                                                           |   | President              and Chief Executive Officer |   |
|                                                           |   | (Principal              Executive Officer)         |   |

|                                                     | **Company              Name** |                                                                                         |
|----------------------------------------------------------|-------------------------------|----------------------------------------------------------------------------------------------|
|                                                     |                          |                                                                                         |   |
| Dated:   November                __, 2007 | By:                           | /s/ Martin              Thorp                                                           |   |
|                                                     |                          | Martin              Thorp                                                                    |   |
|                                                     |                          | Chief              Financial Officer  (Principal Financial and Accounting Officer) |   |
|                                                     |                          |                                                                                         |   |

| NAME                   |   | TITLE                                                   | DATE                           |
|---------------------------------------|--------|-------------------------------------------------------------------|--------------------------------|
|                                  |   |                                                              |                           |
|  /s/              Graham Cooper  |   | President,              Chief Executive Officer and Chairman | November              __, 2007 |
|  Graham              Cooper      |   | (Principal              Executive Officer)                        |                           |
|                                  |   |                                                              |                           |
|  /s/              Martin Thorp   |   | Chief              Financial Officer and Director                 | November              __, 2007 |
|  Martin              Thorp  |   | (Principal              Financial and Accounting Officer)         |                           |