EXHIBIT 10.16





                                   HEMOBIOTECH


                            TEXAS TECH - HEMOBIOTECH

                             JOINT BLOOD SUBSTITUTE

                                     PROJECT







                                   PHASE III:

                          IND PROCESS AND HEMOTECH(TM)

                                  MANUFACTURING







                          JANUARY 2006 - DECEMBER 2006


<PAGE>

<TABLE>
<S>                                        <C>
PROJECT TITLE:                             TEXAS TECH-HEMOBIOTECH JOINT BLOOD SUBSTITUTE PROJECT
                                           PHASE III: IND PROCESS AND HEMOTECH(TM) MANUFACTURING

PROJECT DIRECTOR (at HemoBioTech, Inc.):   ARTHUR P. BOLLON, PHD
                                           Chairman, President & CEO
                                           HemoBioTech, Inc.
                                           14221 Dallas Parkway Suite 1500
                                           Dallas, TX 75254
                                           Tel: 214-540-8411; Fax: 214-540-8416
                                           e-mail: arthurb@flash.net
                                           http://www.hemobiotech.com

PROJECT PRINCIPAL                          JAN SIMONI, DVM, PHD
INVESTIGATOR                               Co-Inventor of HemoTech(TM)
(at TTUHSC):                               Associate Research Professor of Surgery and Internal
                                           Medicine
                                           Texas Tech University Health Sciences Center
                                           School of Medicine
                                           3601 4th Street, Office 3A119A
                                           Lubbock, TX 79430-8312
                                           Tel: 806-743-2460 x 246; Fax: 806-743-2113
                                           e-mail: jan.simoni@ttuhsc.edu

DATES OF THE ENTIRE PROPOSED PERIOD:       January 1, 2006 - December 31, 2006

TOTAL DIRECT COST REQUESTED                The down payment of approx. $286,999 will initiate Phase III of
FOR THE PROJECT: INITIAL DOWN              the SRA Project. The exact cost of the entire Phase III will be
PAYMENT OF $286,999                        determined during the course of the Project. The budget will be
                                           adjusted  at least  semi-annually  and will  reflect the dollar
                                           amount necessary to cover the costs of the procedures needed to
                                           comply with any CRO and FDA  recommendations  regarding the IND
                                           and clinical  trial stages.  Since,  as of December  2005,  the
                                           Texas Tech SRA Team and  HemoBioTech,  Inc.  are unaware of any
                                           outcomes  of the  future  FDA  meetings,  it is  impossible  to
                                           predict  the  exact  cost of  Phase  III of the  Project.  This
                                           includes,  but  is not  limited  to,  the  total  costs  of any
                                           consumables,  equipment, services, labor compensation,  related
                                           overhead   and  any  other   relevant   expenses   needed   for
                                           satisfactory completion of the Project. However, the total cost
                                           should not exceed  the  amount  presented  in the budget of the
                                           Business Plan.

PERFORMANCE SITES:                         Department of Surgery, Division of Blood Substitutes
                                           Department of Surgery
                                           Texas Tech University Health Sciences Center
</TABLE>

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<PAGE>


<TABLE>
<S>                                        <C>
                                           3601 4th Street, 3A119A, 3A131, 3A134, 3A135 & 3A136
                                           Lubbock, TX 79430, and
                                           Texas Tech New Deal Farm
                                           East of New Deal, TX 79405

APPLICANT ORGANIZATION:                    Texas Tech University Health Sciences Center
                                           Lubbock, TX 79430

TYPE OF ORGANIZATION:                      State

ORGANIZATIONAL COMPONENT TO                School of Medicine
RECEIVE CREDIT FOR GRANT:

OFFICIAL SIGNING FOR APPLICANT             BARBARA C. PENCE, PhD, Assoc. Dean/Assoc. VP
ORGANIZATION:                              Office of Research and Graduate School
                                           Texas Tech University Health Sciences Center
                                           3601 4th Street, Room ZB.106
                                           Lubbock, TX 79430-6206
                                           Tel:  806-743-2556; Fax: 806-743-2656
                                           Email:   Barbara.Pence@ttuhsc.edu
                                           Signature:
                                           Date:

OFFICIAL IN BUSINESS OFFICE TO BE          JUNE HOWARD, Director
NOTIFIED ABOUT THIS FUNDING:               Office of Sponsored Program, TTUHSC
                                           3601 4th Street, Office 2B107
                                           Lubbock, TX 79430-6271
                                           Tel:  806-743-2960; Fax: 806-743-2656
                                           Signature:
                                           Date:

PRINCIPAL
INVESTIGATOR                                Date:
SIGNATURE:
</TABLE>


1.       PROJECT DESCRIPTION:

The proposed project represents a continuation of the joint effort between Texas
Tech University  Health Sciences Center (TTUHSC) and  HemoBioTech,  Inc. with an
objective  to  commercialize  HemoTech(TM),   the  Texas  Tech  developed  blood
substitute product. The legal basis for such an



                                        2
<PAGE>

activity is the Sponsored Research Agreement (SRA) and License Agreement between
Texas Tech University  Health Sciences Center (a licensor) and HemoBioTech,  Inc
(a licensee).

After successful completion of PHASE 1(2002-04) of the project that included:

      o  creation of a company structure;

      o  development of the business plan; and

      o  intellectual/scientific/technical   support   during  the   process  of
         searching for an initial venture capital;

the Texas  Tech SRA team led by Dr.  Simoni,  completed  in 2005 PHASE II of the
Project, which consisted of:

      o  completion and submission to the U.S. Patent and Trademark  Office of a
         new  patent  on  the  method  for   stimulating   erythropoiesis   with
         HemoTech(TM) (PROJECT I),

      o  transfer  of the CMC,  pre-clinical  and  clinical  research  data into
         digital pdf format (PROJECT II),

      o  analysis  and  summarization  of the  CMC,  pre-clinical  and  clinical
         research data for IND application (PROJECT III),

      o  renovation and sanitation of the Texas Tech Blood Substitute Production
         Facility (PROJECT IV), and

      o  establishment of the animal blood donor facility (PROJECT V).

Each project in Phase I and II was done at Texas Tech University using the Texas
Tech intellectual and technical resources. Phase II was paid for by HemoBioTech,
Inc. in the amount of $230,503. Texas Tech did not charge HemoBioTech,  Inc. for
Phase I of the Project. Any unused funds (approx. $41,500) from Phase II will be
automatically  transferred  to the budget of Phase III.


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<PAGE>

On November 11, 2005 the SRA Team was asked to provide further assistance to the
licensee,  HemoBioTech,  Inc. As  requested by Dr.  Arthur P. Bollon,  Chairman,
President & CEO of HemoBioTech, Inc., new services provided by Texas Tech to the
company should include:


PROJECT I: CONTINUATION OF THE NECESSARY ACTIVITIES  ASSOCIATED WITH MAINTAINING
THE ANIMAL BLOOD DONOR  FACILITY IN  COOPERATION  WITH THE  DEPARTMENT OF ANIMAL
SCIENCES AT TTU.

         This  facility,  which is housing [*] cows,  was  established  in March
         2005,  is located at [*] and  supervised  by Dr.  Simoni.  The detailed
         maintenance  budget for the period  January 1, 2006 - December 31, 2006
         is presented as ATTACHMENT 1. The maintenance  budget for the period of
         January 1, 2007 - December 31, 2007,  and beyond if necessary,  will be
         presented at the end of 2006.

PROJECT II:  PARTICIPATION  IN THE IND  PROCESS  THAT WILL  INCLUDE,  BUT NOT BE
LIMITED TO:

         1.    Scientific  and  technical  interaction  with and  support of CRO
               groups, which will represent HemoBioTech, Inc. at the FDA level.

         2.    Manufacturing  [*] HemoTech(TM) to conduct possible  pre-clinical
               experiments  if  mandated  by  the  CRO  or  FDA.  3.  Conducting
               additional IN VIVO animal pre-clinical  studies with HemoTech(TM)
               if mandated by the CRO or FDA.

         4.    Conducting   additional   IN  VITRO   preclinical   studies  with
               HemoTech(TM)  if mandated by the FDA.

         5.    Collaborating  with the [*] through a contact with [*] to conduct
               all necessary histopathological

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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

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<PAGE>

               examinations of the  pre-clinical  material  collected during the
               European IND, if recommended by the CRO group.

         6.    Conduct  more studies on the  interaction  of  HemoTech(TM)  with
               automated  analytical  clinical  tests, if recommended by the CRO
               group.

         7.    Any other activities  requested by CRO groups,  the FDA, or other
               involved parties.

         These activities, according to HemoBioTech's plan, should take place in
         the first half of 2006. The time for completion of particular tasks can
         vary  and can be  more  precisely  determined  after  learning  the FDA
         rulings.  The SRA Team will do  everything  possible to  supervise  and
         expedite these  protocols.  The successful  realization of these tasks,
         however,  will depend on the  availability  of adequate  funds. At this
         moment it is impossible to predict the exact cost of these  activities,
         because the recommendations of the FDA have to be released.

PROJECT III:  MANUFACTURING OF CLINICAL-GRADE HEMOTECH(TM)

         The animal blood donors and the  HemoTech(TM)  production  facility are
         generally ready to be used for this activity. The patented HemoTech(TM)
         manufacturing  technology,  developed at TTUHSC, will be implemented in
         this  process.  HemoTech(TM)  manufacturing  process will be similar to
         that  described in the CMC documents  and will include (see  ATTACHMENT
         2):

         o   [*]

         o   [*]

         o   [*]

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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

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<PAGE>

         o   [*]

         o   [*]

         o   [*]

         o   [*]

         o   [*]

         o   [*]

         [*].  The FDA  decisions  will  dictate  future  activities  and  their
         associated  costs. The exact cost of Project III will depend on the FDA
         recommended size and number of the HemoTech(TM)  [*]. If, for instance,
         the FDA will recommend [*] larger than [*] liters,  the SRA Team should
         be furnished  with the  necessary  funds to scale up the  manufacturing
         process.  The  budget  presented  in the  Business  Plan  contains  the
         provisions for such an  eventuality.  The scale up process will require
         purchasing of the necessary production equipment and probably expansion
         of the production  facility within the TTUHSC  building.  (see BUSINESS
         PLAN)

         The number of [*] will depend on the scope of the clinical applications
         and number of patients  selected for  HemoTech(TM) in Phase I and Phase
         IIA of the clinical trials. The FDA recommendations  will determine the
         organizational  structure of the  HemoTech(TM)  production  team. As of
         December 2005, HemoBioTech, Inc. is reimbursing only [*] hours per week
         for P.I.J. Simoni, [*] hours per week for Sr. Res. Assoc. J.F. Moeller,
         and [*] hours per week for Med. Res.  Assist.  G. Simoni.  Our 21 years
         plus experience in the  manufacturing of blood  substitutes  teaches us
         that  its  production  requires  a  24/7  commitment.   Therefore,  the
         successful completion of this task

----------
*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

                                       6
<PAGE>

         will  depend  on the  ability  of  HemoBioTech,  Inc.  to  provide  the
         necessary  funds  to  adequately  compensate  the SRA Team  during  the
         manufacturing of clinical-grade product. Moreover, as presented in 2003
         to   HemoBioTech's    Executives   the   personnel   requirements   for
         manufacturing  of  clinical-grade   HemoTech(TM)   (ATTACHMENT  3)  can
         increase.  If  necessary,  the SRA Team should have access to funds for
         hiring of new employees to  accommodate  the  anticipated  expansion as
         presented  previously.  Therefore,  for the  above-mentioned  and other
         reasons it is impossible to predict the exact costs of Project III. The
         necessary budget should include, but not be limited to have free access
         to funds for any consumables,  new production and analytical equipment,
         services,  labor compensation,  related overhead and any other relevant
         expenses needed for satisfactory completion of Project III. However, we
         are  almost  sure that the total  cost  should  not  exceed  the amount
         presented in the budget of the Business  Plan.  Therefore,  Project III
         can only be  completed  successfully  if the  initial  down-payment  of
         $286,999 will be followed by continuous  funding  necessary to complete
         this  manufacturing  work. This task will be initiated in early [*] and
         completed as Phase IIA becomes resolved.

PROJECT IV: ADDITIONAL R&D ON HEMOTECH(TM)

         As recommended by Dr. Bollon,  legal protection for HemoTech(TM) should
         be continued. After successful completion of the patent application for
         HemoTech's(TM)  related [*]  property,  which  according  to the patent
         lawyers,   will  provide   HemoTech(TM)   with  another  [*]  years  of
         protection,  the SRA Team already initiated the process of patenting of
         other therapeutic properties of HemoTech(TM).

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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

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<PAGE>

         Project IV will  include  the  completion  of patent  applications  for
         HemoTech(TM)  induced [*] and  HemoTech(TM)  [*] property.  These tasks
         should be completed in the year [*]. The cost of these tasks should not
         exceed $[*] for research expenses excluding labor and patenting costs.

PROJECT V: Will  contain any other  unlisted  and as  yet unknown  intellectual,
         scientific,  technical,  managerial and manufacturing activities, which
         will  result  from  conducting  the  Phase HI of this  project  between
         January 1, 2006 and December 31, 2006.

TECHNICAL AND MANAGERIAL RESOURCES: Texas Tech University Health Sciences Center
         with twenty years of experience in the blood  substitute  field has all
         intellectual  and  almost  all  technical   resources  to  successfully
         complete Phase III of the Project.  If scale-up will be recommended new
         production  equipment,  facility  expansion and hiring of new personnel
         must be funded.

FUNDING REQUESTS:  The total funds requested for Phase III of the Project cannot
         be determined  at the present  time.  The down payment of $286,999 will
         only initiate Phase III of the SRA Project.

         The exact cost of the entire  Phase Ill will be  determined  during the
         course  of  the   Project.   The  budget  will  be  adjusted  at  least
         semi-annually and will reflect the dollar amount necessary to cover the
         costs of the procedures  needed to comply with any FDA  recommendations
         regarding  the IND and clinical  trial  stages.  Since,  as of December
         2005, the Texas Tech SRA Team and HemoBioTech,  Inc. are unaware of any
         outcomes

----------
*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

                                       8
<PAGE>

         of the future FDA meetings,  it is impossible to predict the exact cost
         of Phase III of the Project. This includes,  but is not limited to, the
         total   costs   of  any   consumables,   equipment,   services,   labor
         compensation,  related overhead and any other relevant  expenses needed
         for  satisfactory  completion of the Project.  However,  the total cost
         should not exceed the amount  presented  in the budget of the  Business
         Plan.

         The budget  for Phase III of the  Project  includes  [*]%  overhead  as
         mandated by the Sponsored Research  Agreement.  This [*]% overhead will
         cover  use  of  the  TTUHSC   facilities  during  the  funding  period.
         (ATTACHMENT 4)


SUBMITTED BY:

JAN SIMONI, DVM, PHD

Associate Research Professor of Surgery and Internal Medicine
P.I. of Sponsored Research Agreement
TTUHSC, School of Medicine

Lubbock, TX 79430



SIGNATURE: /s/ Jan Simoni                                    DATE: 1/03/06












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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

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<PAGE>


APPROVED BY:

BARBARA C. PENCE, PH.D.

Associate Vice President for Research and
Associate Dean for Research and the Graduate School

Office of Research and the Graduate School, TTUHSC Lubbock, TX 79430

SIGNATURE: /s/ Barbara Pence                         DATE: 1/09/06

MS. JUNE HOWARD

Director, Office of Sponsored Programs
TTUHSC, Lubbock, TX 79430

SIGNATURE: /s/ June Howard                           DATE: 1/09/06

LANCE ANDERSON, JD

Director, Office of Technology Transfer and Intellectual Properties
TTU & TTUHSC, Lubbock, TX 79414



SIGNATURE: /s/ Lance Anderson                        DATE: 1/09/06







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ATTACHMENT 1.

ANIMAL BLOOD DONOR FACILITY MAINTENANCE BUDGET:

From:             Johnson, Jay W
To:               Simoni, Jan
Cc:
Subject: budget
Sent:             12/14/2005 2:00 PM
Importance:       Normal

Dr. Simoni, Here is the proposed budget
Thanks for working with us and have a great Christmas and a Happy Holiday.
Jay W Johnson

Assistant Professor
Beef Cattle
Texas Tech University
806/742-2805 ext 253
806/742-2335
Proposed Budget.doc



                                 Proposed Budget
                              HemoBio Tech Project

                                                               AMOUNT
                                                               ------
               1.   Salary and Wages
                    Animal Technician
                    $[*] @ [*] Time                            $[*]
               2.   Fringes                                    $[*]
               3.   Feed & Care of cattle                      $[*]
               4.   Maintenance & Supplies                     $[*]
                        Subtotal Total                         $[*]
               5.   F&A @ [*]                                  $[*]
                                                               ------
                    Total Direct & Indirect Costs              $[*]

                               Budget Summary

         The exact  cost of the  budget  for the year  2006  will be  determined
through the course of the project. The budget will be adjusted  semi-annually to
cover costs of any additional  activities needed to comply with any FDA or other
government entity recommendations.

         As of December 2005, the Texas Tech  University  team is unaware of any
future FDA outcome meetings;  thus it is impossible to predict if the purchasing
of any new animals will be needed.  Future  purchases,  which will  increase the
number  of  animals  available  for use,  will be based  upon FDA  requirements.
Subsequently,  if new animals are warranted, the budget will be increased to not
only cover these purchases,  but any  compensation,  related  overhead,  and any
relevant expenses needed for satisfactory completion of the project.



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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

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<PAGE>


ATTACHMENT 4.

INITIAL DOWN PAYMENT FOR PHASE III: $286,999

PROJECT TITLE:   The Texas Tech-HemoBioTech Joint Blood Substitute Project.
                 Phase III: IND Process and HemoTech(TM) Manufacturing.
PROJECT DIRECTOR (at HemoBioTech, Inc.):  Dr. Arthur P. Bollon
PROJECT PRINCIPAL INVESTIGATOR (at TTUHSC):  Dr. Jan Simoni
DETAILED BUDGET FOR PHASE II OF THE PROJECT
FROM: January 1, 2006                                 THROUGH: December 31, 2006
SALARY:

<TABLE>
<CAPTION>
                                                                      DOLLAR AMOUNT REQUESTED
NAME                ROLE ON                     TYPE%       SALARY        SALARY         FRINGE       TOTAL
                    PROJECT           APPT      EFF         BASE          REQUESTED      (includ.4%for infl.)
                                      (mo)
<S>                 <C>                  <C>       <C>      <C>           <C>             <C>          <C>
SIMONI, Jan         P.I.                 12        [*]%     [*]           [*]             [*]          [*]
MOELLER, John F.    Sr.Res.Assoc         12        [*]%     [*]           [*]             [*]          [*]
SIMONI, Grace       Med.Res.Asst         12        [*]%     [*]           [*]             [*]          [*]
To be hired         Animal Tech.         12        [*]%     [*]           [*]             [*]          [*]
Additional Compensation During HemoTech(TM) Manufacturing and QC/QA
(Over-Time; HSC OP: [*])                                                  [*]             [*]          [*]
SALARY SUBTOTALS:                                                         [*]             [*]          [*]
CONSULTANTS:                                                              [*]             [*]          [*]
EQUIPMENT (ITEMIZE):
Phase III of this project will require:         QC Analytical Equipment (GC)                           [*]
                                                Electronic Signature Labeling System                   [*]
                                                Co-oximeter                                            [*]
                                                HemoScan                                               [*]
TOTAL:                                                                                                 [*]
SUPPLIES: (Itemize by category):
Initial payment for production of [*]:                                                                 [*]
Initial payment for production of HemoTech(TM)                                                         [*]
Cattle care and feed:                                                                                  [*]
Other Supplies for cattle care feed                                                                    [*]
[*] Supplies:                                                                                          [*]
Analytical Chemistry Interference with HemoTech(TM) Supplies:                                          [*]
Initial payment for new [*]:                                                                           [*]
TOTAL:                                                                                                 [*]
ALTERATIONS AND RENOVATIONS:                                                                           [*]
OTHER EXPENSES:
Photocopying, postage, phone, secretarial, e-mail/internet connection:                                 [*]
TRAVEL: For P.I. and co-investigators to travel to company headquarter, FDA, etc.:                     [*]
SUBTOTAL:  INITIAL DIRECT COST FOR PHASE III OF THE PROJECT:                                           [*]
TTUHSC OVERHEAD (Modified [*]% of [*] base-excluding equipment):                                       [*]
INITIAL TOTAL FOR PHASE III (FIRST DOWN PAYMENT):                                                      [*]
                                                                         MINUS $ APPROX. 41,500 FROM PHASE II
INITIAL TOTAL FOR PHASE III:                                                                          286,999
</TABLE>

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*  Blank  spaces  contained   confidential   information  that  has  been  filed
   separately with the Securities and Exchange Commission pursuant to Rule 24b-2
   under the Securities Exchange Act of 1934, as amended.

                                       3