<PAGE>
EXHIBIT 10.8


                      STANDBY EQUITY DISTRIBUTION AGREEMENT
                      -------------------------------------

         THIS AGREEMENT dated as of the 31st day of January 2006 (the
"AGREEMENT") between CORNELL CAPITAL PARTNERS, LP, a Delaware limited
partnership (the "INVESTOR"), and ACUNETX, INC., a corporation organized and
existing under the laws of the State of Nevada (the "COMPANY").

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from the
Company up to Twelve Million Dollars ($12,000,000) of the Company's common
stock, par value $0.001 per share (the "COMMON STOCK");

         WHEREAS, such investments will be made in reliance upon the provisions
of Regulation D ("REGULATION D") of the Securities Act of 1933, as amended, and
the regulations promulgated thereunder (the "SECURITIES ACT"), and or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder;
and

         WHEREAS, the Company has engaged Monitor Capital, Inc. (the "PLACEMENT
AGENT"), to act as the Company's exclusive placement agent in connection with
the sale of the Company's Common Stock to the Investor hereunder pursuant to the
Placement Agent Agreement dated the date hereof by and among the Company, the
Placement Agent and the Investor (the "PLACEMENT AGENT AGREEMENT").


         NOW, THEREFORE, the parties hereto agree as follows:


                                   ARTICLE I.
                               CERTAIN DEFINITIONS

         Section 1.1. "ADVANCE" shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

         Section 1.2. "ADVANCE DATE" shall mean the first (1st) Trading Day
after expiration of the applicable Pricing Period for each Advance.

         Section 1.3. "ADVANCE NOTICE" shall mean a written notice in the form
of EXHIBIT A attached hereto to the Investor executed by an officer of the
Company and setting forth the Advance amount that the Company requests from the
Investor.

         Section 1.4. "ADVANCE NOTICE DATE" shall mean each date the Company
delivers (in accordance with Section 2.2(b) of this Agreement) to the Investor
an Advance Notice requiring the Investor to advance funds to the Company,
subject to the terms of this Agreement. No Advance Notice Date shall be less
than five (5) Trading Days after the prior Advance Notice Date.

<PAGE>

         Section 1.5. "BID PRICE" shall mean, on any date, the closing bid price
(as reported by Bloomberg L.P.) of the Common Stock on the Principal Market or
if the Common Stock is not traded on a Principal Market, the highest reported
bid price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc.

         Section 1.6. "CLOSING" shall mean one of the closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

         Section 1.7. "COMMITMENT AMOUNT" shall mean the aggregate amount of up
to Twelve Million Dollars ($12,000,000) which the Investor has agreed to provide
to the Company in order to purchase the Company's Common Stock pursuant to the
terms and conditions of this Agreement.

         Section 1.8. "COMMITMENT PERIOD" shall mean the period commencing on
the earlier to occur of (i) the Effective Date, or (ii) such earlier date as the
Company and the Investor may mutually agree in writing, and expiring on the
earliest to occur of (x) the date on which the Investor shall have made payment
of Advances pursuant to this Agreement in the aggregate amount of Twelve Million
Dollars ($12,000,000), (y) the date this Agreement is terminated pursuant to
Section 2.4, or (z) the date occurring twenty-four (24) months after the
Effective Date.

         Section 1.9. "COMMON STOCK" shall mean the Company's common stock, par
value $0.001 per share.

         Section 1.10. "CONDITION SATISFACTION DATE" shall have the meaning set
forth in Section 7.2.

         Section 1.11. "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

         Section 1.12. "EFFECTIVE DATE" shall mean the date on which the SEC
first declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

         Section 1.13. INTENTIONALLY OMITTED.

         Section 1.14. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

         Section 1.15. "MATERIAL ADVERSE EFFECT" shall mean any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this Agreement or the Registration Rights Agreement in any material
respect.

         Section 1.16. "MARKET PRICE" shall mean the lowest closing Bid Price of
the Common Stock during the Pricing Period.

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<PAGE>

         Section 1.17. "MAXIMUM ADVANCE AMOUNT" shall be Five Hundred Thousand
Dollars ($500,000) per Advance Notice.

         Section 1.18. "NASD" shall mean the National Association of Securities
Dealers, Inc.

         Section 1.19. "PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

         Section 1.19.1. "PLACEMENT AGENT" shall mean Monitor Capital, Inc., a
registered broker-dealer.

         Section 1.20. "PRICING PERIOD" shall mean the five (5) consecutive
Trading Days after the Advance Notice Date.

         Section 1.21. "PRINCIPAL MARKET" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange, the OTC Bulletin Board
or the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.

         Section 1.22. "PURCHASE PRICE" shall be set at ninety eight percent
(98%) of the Market Price during the Pricing Period.

         Section 1.23. "REGISTRABLE SECURITIES" shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which the Registration Statement
has not been declared effective by the SEC, (ii) which have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("RULE 144") or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

         Section 1.24. "REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration Statement for the resale of the Registrable Securities, entered
into between the Company and the Investor.

         Section 1.25. "REGISTRATION STATEMENT" shall mean a registration
statement on Form S-1 or SB-2 (if use of such form is then available to the
Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate, and which form shall be available for
the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

         Section 1.26. "REGULATION D" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.27. "SEC" shall mean the Securities and Exchange Commission.

                                       3
<PAGE>

         Section 1.28. "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.29. "SEC DOCUMENTS" shall mean Annual Reports on Form 10-KSB,
Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K, including the
Form 8-K filed in connection with the Company's merger transaction with
OrthoNetx, Inc and Proxy Statements of the Company as supplemented to the date
hereof, filed by the Company for a period of at least twelve (12) months
immediately preceding the date hereof or the Advance Date, as the case may be,
until such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.

         Section 1.30. "TRADING DAY" shall mean any day during which the New
York Stock Exchange shall be open for business.


                                   ARTICLE II.
                                    ADVANCES

         Section 2.1. ADVANCES.

                  Upon the terms and conditions set forth herein (including,
without limitation, the provisions of Article VII hereof), the Company may
request an Advance by the Investor by the delivery of an Advance Notice. The
number of shares of Common Stock that the Investor shall purchase pursuant to
each Advance shall be determined by dividing the amount of the Advance by the
Purchase Price. No fractional shares shall be issued. Fractional shares shall be
rounded to the next higher whole number of shares. The aggregate maximum amount
of all Advances that the Investor shall be obligated to make under this
Agreement shall not exceed the Commitment Amount.

         Section 2.2. MECHANICS.

                  (a) ADVANCE NOTICE. At any time during the Commitment
Period, the Company may deliver an Advance Notice to the Investor, subject to
the conditions set forth in Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable Advance Notice shall not
be more than the Maximum Advance Amount. The aggregate amount of the Advances
pursuant to this Agreement shall not exceed the Commitment Amount. The Company
acknowledges that the Investor may sell shares of the Company's Common Stock
corresponding with a particular Advance Notice after the Advance Notice is
received by the Investor. There shall be a minimum of five (5) Trading Days
between each Advance Notice Date.

                  (b) DATE OF DELIVERY OF ADVANCE NOTICE. An Advance
Notice shall be deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is received prior to 5:00
pm Eastern Time, or (ii) the immediately succeeding Trading Day if it is
received by facsimile or otherwise after 5:00 pm Eastern Time on a Trading Day
or at any time on a day which is not a Trading Day. No Advance Notice may be
deemed delivered on a day that is not a Trading Day.

                                       4
<PAGE>

         Section 2.3. CLOSINGS. On each Advance Date (i) the Company shall
deliver to the Investor shares of the Company's Common Stock, representing the
amount of the Advance specified in such Advance Notice pursuant to Section 2.1
herein, registered in the name of the Investor and (ii) upon receipt of such
shares, the Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately available funds.
In addition, on or prior to the Advance Date, each of the Company and the
Investor shall deliver to the other all documents, instruments and writings
required to be delivered by either of them pursuant to this Agreement in order
to implement and effect the transactions contemplated herein. The extent the
Company has not paid the fees, expenses, and disbursements of the Investor or
the Company's counsel in accordance with Section 12.4, the amount of such fees,
expenses, and disbursements may be deducted by the Investor (and shall be paid
to the relevant party) directly out of the proceeds of the Advance with no
reduction in the amount of shares of the Company's Common Stock to be delivered
on such Advance Date.

         Section 2.4. TERMINATION OF INVESTMENT. The obligation of the Investor
to make an Advance to the Company pursuant to this Agreement shall terminate
permanently (including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of fifty
(50) Trading Days, other than due to the acts of the Investor, during the
Commitment Period, or (ii) the Company shall at any time fail materially to
comply with the requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written notice from the Investor, PROVIDED,
HOWEVER, that this termination provision shall not apply to any period
commencing upon the filing of a post-effective amendment to such Registration
Statement and ending upon the date on which such post effective amendment is
declared effective by the SEC.

         Section 2.5. AGREEMENT TO ADVANCE FUNDS. The Investor agrees to advance
the amount specified in the Advance Notice to the Company after the completion
of each of the following conditions and the other conditions set forth in this
Agreement:

                  (a) the execution and delivery by the Company, and the
Investor, of this Agreement and the Exhibits hereto;

                  (b) The Investor shall have received the shares of Common
Stock applicable to the Advance in accordance with Section 2.3. Such shares
shall be free of restrictive legends.

                  (c) the Company's Registration Statement with respect to the
resale of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement shall have been declared effective by the SEC;

                  (d) the Company shall have obtained all material permits and
qualifications required by any applicable state for the offer and sale of the
Registrable Securities, or shall have the availability of exemptions therefrom.
The sale and issuance of the Registrable Securities shall be legally permitted
by all laws and regulations to which the Company is subject;

                  (e) the Company shall have filed with the Commission in a
timely manner all reports, notices and other documents required of a "reporting
company" under the Exchange Act and applicable Commission regulations;

                                       5
<PAGE>

                  (f) the fees as set forth in Section 12.4 below shall have
been paid or can be withheld as provided in Section 2.3; and

                  (g) the conditions set forth in Section 7.2 shall have been
satisfied.

                  (h) the Company shall have provided to the Investor an
acknowledgement, from the Company's independent certified public accountants as
to its ability to provide all consents required in order to file a registration
statement in connection with this transaction;

                  (i) The Company's transfer agent shall be DWAC eligible.

         Section 2.6. LOCK UP PERIOD. On the date hereof, the Company shall
obtain from each officer and director a lock-up agreement, as defined below, in
the form annexed hereto as Schedule 2.6 agreeing to only sell in compliance with
the volume limitation of Rule 144.

         Section 2.7. HARDSHIP. In the event the Investor sells shares of the
Company's Common Stock after receipt of an Advance Notice and the Company fails
to perform its obligations as mandated in Section 2.3, and specifically the
Company fails to deliver to the Investor on the Advance Date the shares of
Common Stock corresponding to the applicable Advance, the Company acknowledges
that the Investor shall suffer financial hardship and therefore shall be liable
for any and all losses, commissions, fees, or financial hardship caused to the
Investor.


                                  ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

         Investor hereby represents and warrants to, and agrees with, the
Company that the following are true and correct as of the date hereof and as of
each Advance Date:

         Section 3.1. ORGANIZATION AND AUTHORIZATION. The Investor is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the securities issuable hereunder. The decision to invest and
the execution and delivery of this Agreement by such Investor, the performance
by such Investor of its obligations hereunder and the consummation by such
Investor of the transactions contemplated hereby have been duly authorized and
requires no other proceedings on the part of the Investor. The undersigned has
the right, power and authority to execute and deliver this Agreement and all
other instruments (including, without limitations, the Registration Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

         Section 3.2. EVALUATION OF RISKS. The Investor has such knowledge and
experience in financial, tax and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this transaction. It recognizes that its investment in the Company involves a
high degree of risk.

                                       6
<PAGE>

         Section 3.3. NO LEGAL ADVICE FROM THE COMPANY. The Investor
acknowledges that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors. The Investor is relying solely on such counsel
and advisors and not on any statements or representations of the Company or any
of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.

         Section 3.4. INVESTMENT PURPOSE. The securities are being purchased by
the Investor for its own account, and for investment purposes. The Investor
agrees not to assign or in any way transfer the Investor's rights to the
securities or any interest therein and acknowledges that the Company will not
recognize any purported assignment or transfer except in accordance with
applicable Federal and state securities laws. No other person has or will have a
direct or indirect beneficial interest in the securities. The Investor agrees
not to sell, hypothecate or otherwise transfer the Investor's securities unless
the securities are registered under Federal and applicable state securities laws
or unless, in the opinion of counsel satisfactory to the Company, an exemption
from such laws is available.

         Section 3.5. ACCREDITED INVESTOR. The Investor is an "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a)(3) of Regulation D of the
Securities Act.

         Section 3.6. INFORMATION. The Investor and its advisors (and its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information it deemed
material to making an informed investment decision. The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management. Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor's right to rely on
the Company's representations and warranties contained in this Agreement. The
Investor understands that its investment involves a high degree of risk. The
Investor is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such
Investor to obtain information from the Company in order to evaluate the merits
and risks of this investment. The Investor has sought such accounting, legal and
tax advice, as it has considered necessary to make an informed investment
decision with respect to this transaction.

         Section 3.7. RECEIPT OF DOCUMENTS. The Investor and its counsel have
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto; (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the year ended December 31, 2004, Form
10-QSB for the periods ended March 31, 2005, June 30, 2005, September 30, 2005
and the Company's Form 8-K filed in connection with the Company's merger
transaction with OrthoNetx, Inc; (iv) answers to all questions the Investor
submitted to the Company regarding an investment in the Company; and the
Investor has relied on the information contained therein and has not been
furnished any other documents, literature, memorandum or prospectus.

         Section 3.8. REGISTRATION RIGHTS AGREEMENT. The parties have entered
into the Registration Rights Agreement dated the date hereof.

                                       7
<PAGE>

         Section 3.9. NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the shares of Common Stock offered hereby.

         Section 3.10. NOT AN AFFILIATE. The Investor is not an officer,
director or a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
the Company or any "AFFILIATE" of the Company (as that term is defined in Rule
405 of the Securities Act).

         Section 3.11. TRADING ACTIVITIES. The Investor's trading activities
with respect to the Company's Common Stock shall be in compliance with all
applicable federal and state securities laws, rules and regulations and the
rules and regulations of the Principal Market on which the Company's Common
Stock is listed or traded. Neither the Investor nor its affiliates has an open
short position in the Common Stock of the Company, the Investor agrees that it
shall not, and that it will cause its affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, PROVIDED that
the Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor has the right to sell the shares to be issued to the Investor pursuant
to the Advance Notice during the applicable Pricing Period.


                                   ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as stated below, on the disclosure schedules attached hereto or
in the SEC Documents (as defined herein), the Company hereby represents and
warrants to, and covenants with, the Investor that the following are true and
correct as of the date hereof:

         Section 4.1. ORGANIZATION AND QUALIFICATION. The Company is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite corporate power to own its
properties and to carry on its business as now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect on the Company and its subsidiaries taken as a whole.

         Section 4.2. AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement, the
Placement Agent Agreement and any related agreements, in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement, the Placement Agent Agreement and any related
agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders, (iii) this Agreement, the
Registration Rights Agreement, the Placement Agent Agreement and any related
agreements have been duly executed and delivered by the Company, (iv) this
Agreement, the Registration Rights Agreement, the Placement Agent Agreement and


                                       8
<PAGE>

assuming the execution and delivery thereof and acceptance by the Investor and
any related agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.

         Section 4.3. CAPITALIZATION. The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock and no shares of
Preferred Stock, $0.001 par value per share ("PREFERRED STOCK"), of which
48,217,576 shares of Common Stock and no shares of Preferred Stock are issued
and outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. Except as in the SEC Documents, no shares of
Common Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company. Except as disclosed
in the SEC Documents, as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there are no outstanding registration statements and (iv) there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except pursuant to the Registration Rights Agreement). There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by this Agreement or any related agreement or the
consummation of the transactions described herein or therein. The Company has
furnished to the Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as in effect on the
date hereof (the "BY-LAWS"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto.

         Section 4.4. NO CONFLICT. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations of any outstanding
series of preferred stock of the Company or By-laws or (ii) conflict with or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market on which the Common Stock is quoted)
applicable to the Company or any of its subsidiaries or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect. Except as disclosed in the SEC
Documents, neither the Company nor its subsidiaries is in violation of any term
of or in default under its Articles of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract,


                                       9
<PAGE>

agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not being
conducted in violation of any material law, ordinance, regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the Securities Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company and its subsidiaries are unaware of any fact or
circumstance which might give rise to any of the foregoing.

         Section 4.5. FINANCIAL STATEMENTS. Since August 14, 2001, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under the Exchange Act. The Company has delivered
to the Investor or its representatives, or made available through the SEC's
website at http://www.sec.gov, true and complete copies of the SEC Documents. As
of their respective dates, the financial statements of the Company disclosed in
the SEC Documents (the "FINANCIAL STATEMENTS") complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Investor contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

         Section 4.6. 10B-5. The SEC Documents to be filed will not include any
untrue statements of material fact, nor do they omit to state any material fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

         Section 4.7. NO DEFAULT. Except as may disclosed in the SEC Documents
to be filed, the Company is not in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it is or its property is bound and neither the
execution, nor the delivery by the Company, nor the performance by the Company
of its obligations under this Agreement or any of the exhibits or attachments
hereto will conflict with or result in the breach or violation of any of the


                                       10
<PAGE>

terms or provisions of, or constitute a default or result in the creation or
imposition of any lien or charge on any assets or properties of the Company
under its Certificate of Incorporation, By-Laws, any material indenture,
mortgage, deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound, or any
statute, or any decree, judgment, order, rules or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
properties, in each case which default, lien or charge is likely to cause a
Material Adverse Effect on the Company's business or financial condition.

         Section 4.8. ABSENCE OF EVENTS OF DEFAULT. Except for matters described
in the SEC Documents and/or this Agreement, no Event of Default, as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect on the Company's business, properties, prospects,
financial condition or results of operations.

         Section 4.9. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. The Company and its subsidiaries do not
have any knowledge of any infringement by the Company or its subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others, and, to the knowledge of the Company, there
is no claim, action or proceeding being made or brought against, or to the
Company's knowledge, being threatened against, the Company or its subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations, trade secret
or other infringement; and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

         Section 4.10. EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

         Section 4.11. ENVIRONMENTAL LAWS. The Company and its subsidiaries are
(i) in compliance with any and all applicable material foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

         Section 4.12. TITLE. Except as may be set forth in the SEC Documents to
be filed, the Company has good and marketable title to its properties and
material assets owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as


                                       11
<PAGE>

are not material to the business of the Company. Any real property and
facilities held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.

         Section 4.13. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.

         Section 4.14. REGULATORY PERMITS. The Company and its subsidiaries
possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.

         Section 4.15. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

         Section 4.16. NO MATERIAL ADVERSE BREACHES, ETC. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is subject to
any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's officers has or
is expected in the future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries. Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.

                                       12
<PAGE>

         Section 4.17. ABSENCE OF LITIGATION. Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect on the business, operations,
properties, financial condition or results of operation of the Company and its
subsidiaries taken as a whole.

         Section 4.18. SUBSIDIARIES. Except as disclosed in the SEC Documents
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.

         Section 4.19. TAX STATUS. Except as disclosed in the SEC Documents, the
Company and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

         Section 4.20. CERTAIN TRANSACTIONS. Except as set forth in the SEC
Documents none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

         Section 4.21. FEES AND RIGHTS OF FIRST REFUSAL. The Company is not
obligated to offer the securities offered hereunder on a right of first refusal
basis or otherwise to any third parties including, but not limited to, current
or former shareholders of the Company, underwriters, brokers, agents or other
third parties.

         Section 4.22. USE OF PROCEEDS. The Company shall use the net proceeds
from this offering for general corporate purposes, including, without
limitation, the payment of loans incurred by the Company. However, in no event
shall the Company use the net proceeds from this offering for the payment (or
loan to any such person for the payment) of any judgment, or other liability,
incurred by any executive officer, officer, director or employee of the Company,
except for any liability owed to such person for services rendered, or if any
judgment or other liability is incurred by such person originating from services
rendered to the Company, or the Company has indemnified such person from
liability.

                                       13
<PAGE>

         Section 4.23. FURTHER REPRESENTATION AND WARRANTIES OF THE COMPANY. For
so long as any securities issuable hereunder held by the Investor remain
outstanding, the Company acknowledges, represents, warrants and agrees that it
will maintain the listing of its Common Stock on the Principal Market.

         Section 4.24. OPINION OF COUNSEL. Investor shall receive an opinion
letter from counsel to the Company on the date hereof.

         Section 4.25. OPINION OF COUNSEL. The Company will obtain for the
Investor, at the Company's expense, any and all opinions of counsel which may be
reasonably required in order to sell the securities issuable hereunder without
restriction.

         Section 4.26. DILUTION. The Company is aware and acknowledges that
issuance of shares of the Company's Common Stock could cause dilution to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.


                                   ARTICLE V.
                                 INDEMNIFICATION

         The Investor and the Company represent to the other the following with
respect to itself:

         Section 5.1. INDEMNIFICATION.

                  (a) In consideration of the Investor's execution and
delivery of this Agreement, and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless the Investor, and all of its officers, directors, partners,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "INVESTOR INDEMNITEES") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement
or the Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Investor Indemnitee not arising out of any action
or inaction of an Investor Indemnitee, and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other


                                       14
<PAGE>

instrument, document or agreement executed pursuant hereto by any of the
Investor Indemnitees. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

                  (b) In consideration of the Company's execution and
delivery of this Agreement, and in addition to all of the Investor's other
obligations under this Agreement, the Investor shall defend, protect, indemnify
and hold harmless the Company and all of its officers, directors, shareholders,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "COMPANY INDEMNITEES") from and against any and all Indemnified Liabilities
incurred by the Company Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Investor in this Agreement, the Registration Rights
Agreement, or any instrument or document contemplated hereby or thereby executed
by the Investor, (b) any breach of any covenant, agreement or obligation of the
Investor(s) contained in this Agreement, the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby
executed by the Investor, or (c) any cause of action, suit or claim brought or
made against such Company Indemnitee based on misrepresentations or due to a
breach by the Investor and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason, the Investor shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                  (c) The obligations of the parties to indemnify or make
contribution under this Section 5.1 shall survive termination.


                                   ARTICLE VI.
                            COVENANTS OF THE COMPANY

         Section 6.1. REGISTRATION RIGHTS. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

         Section 6.2. LISTING OF COMMON STOCK. The Company shall maintain the
Common Stock's authorization for quotation on the National Association of
Securities Dealers Inc.'s Over the Counter Bulletin Board.

         Section 6.3. EXCHANGE ACT REGISTRATION. The Company will cause its
Common Stock to continue to be registered under Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as a reporting company under the Exchange Act and will not take any action or
file any document (whether or not permitted by Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Exchange Act.

         Section 6.4. TRANSFER AGENT INSTRUCTIONS. Upon effectiveness of the
Registration Statement the Company shall deliver instructions to its transfer
agent to issue shares of Common Stock to the Investor free of restrictive
legends on or before each Advance Date.

                                       15
<PAGE>

         Section 6.5. CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.

         Section 6.6. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
SUSPENSION OF RIGHT TO MAKE AN Advance. The Company will immediately notify the
Investor upon its becoming aware of the occurrence of any of the following
events in respect of a registration statement or related prospectus relating to
an offering of Registrable Securities: (i) receipt of any request for additional
information by the SEC or any other Federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to the registration statement or related prospectus; (ii) the
issuance by the SEC or any other Federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus of any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the Company
will promptly make available to the Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to the Investor any
Advance Notice during the continuation of any of the foregoing events.

         Section 6.7. RESTRICTION ON SALE OF CAPITAL STOCK. During the
Commitment Period, the Company shall not, without the prior written consent of
the Investor, which shall not be unreasonably withheld, (i) issue or sell any
Common Stock or Preferred Stock without consideration or for a consideration per
share less than the Bid Price of the Common Stock determined immediately prior
to its issuance, (ii) issue or sell any Preferred Stock warrant, option, right,
contract, call, or other security or instrument granting the holder thereof the
right to acquire Common Stock without consideration or for a consideration per
share less than such Common Stock's Bid Price determined immediately prior to
its issuance, or (iii) file any registration statement on Form S-8.

         Section 6.8. CONSOLIDATION; MERGER. Other than the Merger Transaction
the Company shall not, at any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all or substantially
all the assets of the Company to another entity (a "CONSOLIDATION EVENT") unless
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Investor such shares of
stock and/or securities as the Investor is entitled to receive pursuant to this
Agreement.

                                       16
<PAGE>

         Section 6.9. ISSUANCE OF THE COMPANY'S COMMON STOCK. The sale of the
shares of Common Stock shall be made in accordance with the provisions and
requirements of Regulation D and any applicable state securities law.

         Section 6.10. REVIEW OF PUBLIC DISCLOSURES. All SEC filings (including,
without limitation, all filings required under the Exchange Act, which include
Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, including the Form 8-K filed in
connection with the Company's merger transaction with OrthoNetx, Inc. etc., as
well as all documentation and filings in connection with the Exchange
Transaction and the Merger Transaction) and other public disclosures made by the
Company, including, without limitation, all press releases, investor relations
materials, and scripts of analysts meetings and calls, shall be reviewed and
approved for release by the Company's attorneys and, if containing financial
information, the Company's independent certified public accountants.

         Section 6.11. MARKET ACTIVITIES. The Company will not, directly or
indirectly, (i) take any action designed to cause or result in, or that
constitutes or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Stock or (ii) sell, bid for or purchase the Common
Stock, or pay anyone any compensation for soliciting purchases of the Common
Stock.


                                  ARTICLE VII.
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

         Section 7.1. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligation hereunder of the Company to issue and sell the shares of Common
Stock to the Investor incident to each Closing is subject to the satisfaction,
or waiver by the Company, at or before each such Closing, of each of the
conditions set forth below.

                  (a) ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investor shall be true and correct in
all material respects.

                  (b) PERFORMANCE BY THE INVESTOR. The Investor shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement
to be performed, satisfied or complied with by the Investor at or prior to such
Closing.

         Section 7.2. CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO
DELIVER AN ADVANCE NOTICE AND THE OBLIGATION OF THE INVESTOR TO PURCHASE SHARES
OF COMMON STOCK. The right of the Company to deliver an Advance Notice and the
obligation of the Investor hereunder to acquire and pay for shares of the
Company's Common Stock incident to a Closing is subject to the fulfillment by
the Company, on (i) the date of delivery of such Advance Notice and (ii) the
applicable Advance Date (each a "CONDITION SATISFACTION DATE"), of each of the
following conditions:

                  (a) MERGER TRANSACTION. The Company shall have made all
necessary filings in connection with the Company's merger transaction with
OrthoNetx, Inc.

                                       17
<PAGE>

                  (b) REGISTRATION OF THE COMMON STOCK WITH THE SEC. The
Company shall have filed with the SEC a Registration Statement with respect to
the resale of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement. As set forth in the Registration Rights
Agreement, the Registration Statement shall have previously become effective and
shall remain effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the SEC otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC's concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.

                  (c) AUTHORITY. The Company shall have obtained all permits and
qualifications required by any applicable state in accordance with the
Registration Rights Agreement for the offer and sale of the shares of Common
Stock, or shall have the availability of exemptions therefrom. The sale and
issuance of the shares of Common Stock shall be legally permitted by all laws
and regulations to which the Company is subject.

                  (d) FUNDAMENTAL CHANGES. There shall not exist any fundamental
changes to the information set forth in the Registration Statement which would
require the Company to file a post-effective amendment to the Registration
Statement.

                  (e) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement (including, without
limitation, the conditions specified in Section 2.5 hereof) and the Registration
Rights Agreement to be performed, satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.

                  (f) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits or directly and adversely affects any of the
transactions contemplated by this Agreement, and no proceeding shall have been
commenced that may have the effect of prohibiting or adversely affecting any of
the transactions contemplated by this Agreement.

                  (g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK.
The trading of the Common Stock is not suspended by the SEC or the Principal
Market (if the Common Stock is traded on a Principal Market). The issuance of
shares of Common Stock with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal Market (if the
Common Stock is traded on a Principal Market). The Company shall not have
received any notice threatening the continued listing of the Common Stock on the
Principal Market (if the Common Stock is traded on a Principal Market).

                                       18
<PAGE>

                  (h) MAXIMUM ADVANCE AMOUNT. The amount of an Advance requested
by the Company shall not exceed the Maximum Advance Amount. In addition, in no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause the aggregate number of shares of Common Stock beneficially owned by the
Investor and its affiliates to exceed nine and 9/10 percent (9.9%) of the then
outstanding Common Stock of the Company. For the purposes of this section
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act.

                  (i) NO KNOWLEDGE. The Company has no knowledge of any event
which would be more likely than not to have the effect of causing such
Registration Statement to be suspended or otherwise ineffective.

                  (j) EXECUTED ADVANCE NOTICE. The Investor shall have received
the Advance Notice executed by an officer of the Company and the representations
contained in such Advance Notice shall be true and correct as of each Condition
Satisfaction Date.


                                  ARTICLE VIII.
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

         Section 8.1. DUE DILIGENCE REVIEW. Prior to the filing of the
Registration Statement the Company shall make available for inspection and
review by the Investor, its advisors and representatives, and any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investor pursuant to the Registration Statement, any such registration statement
or amendment or supplement thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other filings with the SEC,
and all other corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review, and cause the Company's
officers, directors and employees to supply all such information reasonably
requested by the Investor or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made or submitted by
any of them), prior to and from time to time after the filing and effectiveness
of the Registration Statement for the sole purpose of enabling the Investor and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

         Section 8.2. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

                  (a) The Company shall not disclose non-public information to
the Investor, its advisors, or its representatives, unless prior to disclosure
of such information the Company identifies such information as being non-public
information and provides the Investor, such advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.

                  (b) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate non-public information to
any investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts, provided, however, that notwithstanding


                                       19
<PAGE>

anything herein to the contrary, the Company will, as hereinabove provided,
immediately notify the advisors and representatives of the Investor and, if any,
underwriters, of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting non-public information (whether or not requested of the
Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein, in light of the circumstances in which they
were made, not misleading. Nothing contained in this Section 8.2 shall be
construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain non-public information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent any
such persons or entities from notifying the Company of their opinion that based
on such due diligence by such persons or entities, that the Registration
Statement contains an untrue statement of material fact or omits a material fact
required to be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.


                                   ARTICLE IX.
                           CHOICE OF LAW/JURISDICTION

         Section 9.1. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New Jersey without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Hudson County, New Jersey, and expressly
consent to the jurisdiction and venue of the Superior Court of New Jersey,
sitting in Hudson County, New Jersey and the United States District Court of New
Jersey, sitting in Newark, New Jersey, for the adjudication of any civil action
asserted pursuant to this paragraph.


                                   ARTICLE X.
                             ASSIGNMENT; TERMINATION

         Section 10.1. ASSIGNMENT. Neither this Agreement nor any rights of the
Company hereunder may be assigned to any other Person.

         Section 10.2. TERMINATION. The obligations of the Investor to make
Advances under Article II hereof shall terminate twenty-four (24) months after
the Effective Date.


                                   ARTICLE XI.
                                     NOTICES

         Section 11.1. NOTICES. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;


                                       20
<PAGE>

(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

If to the Company, to:                    AcuNetx, Inc.
                                          1000 South McCaslin Blvd. - Suite 300
                                          Superior, CO 80027
                                          Attention:    Dr. Terry Knapp
                                          Telephone: (303) 494-1681
                                          Facsimile:  (303)  494-1714

With a copy to:                           Robert J. Zepfel
                                          Haddan & Zepfel LLP
                                          500 Newport Center Drive, Suite 580
                                          Newport Beach, CA 92660
                                          Telephone: (949) 706-6000
                                          Facsimile:  (949) 706-6060

If to the Investor(s):                    Cornell Capital Partners, LP
                                          101 Hudson Street -Suite 3700
                                          Jersey City, NJ 07302
                                          Attention:        Mark Angelo
                                                            Portfolio Manager
                                          Telephone:        (201) 985-8300
                                          Facsimile:        (201) 985-8266

With a Copy to:                           David Gonzalez, Esq.
                                          101 Hudson Street - Suite 3700
                                          Jersey City, NJ 07302
                                          Telephone:        (201) 985-8300
                                          Facsimile:        (201) 985-8266


Each party shall provide five (5) days' prior written notice to the other party
of any change in address or facsimile number.


                                  ARTICLE XII.
                                  MISCELLANEOUS

         Section 12.1. COUNTERPARTS. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof, though failure to deliver such copies shall not affect the
validity of this Agreement.

                                       21
<PAGE>

         Section 12.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes
all other prior oral or written agreements between the Investor, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

         Section 12.3. REPORTING ENTITY FOR THE COMMON STOCK. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of
the Investor and the Company shall be required to employ any other reporting
entity.

         Section 12.4. FEES AND EXPENSES. The Company hereby agrees to pay the
following fees:

                  (a) STRUCTURING FEES. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, except that upon the earlier to occur: (i) of
one hundred twenty (120) days from December 21, 2005 or (ii) upon the first
(1st) Advance hereunder the Company shall pay a structuring fee of Ten Thousand
Dollars ($10,000) to Yorkville Advisors, LLC. On each Advance Date, the Company
shall pay Yorkville Advisors, LLC a structuring fee of Five Hundred Dollars
($500) directly out the gross proceeds of each Advance.

                  (b) DUE DILIGENCE FEE. Company shall pay the Investor a
non-refundable due diligence fee of Five Thousand Dollars ($5,000) upon
submission of the due diligence documents to the Investor.

                  (c) COMMITMENT FEES.

                           (i) On each Advance Date the Company shall pay to
the Investor, directly out of the gross proceeds of each Advance, an amount
equal to five percent (5%) of the amount of each Advance. The Company hereby
agrees that if such payment, as is described above, is not made by the Company
on the Advance Date, such payment shall be made as outlined and mandated by
Section 2.3 of this Agreement.

                           (ii) On the date hereof the Company shall issue to
the Investor shares of Common Stock in an amount equal to Two Hundred Ninety
Thousand Dollars ($290,000) divided by the average closing bid price of the
Company's Common Stock, as quoted by Bloomberg, LP, for the thirty (30) Trading
Days preceding December 21, 2005 (the "INVESTOR'S SHARES").

                           (iii) Upon the execution of this Agreement the
Company shall issue to the Investor a warrant to purchase two hundred fifty
thousand (250,000) shares of Common Stock for a period of one (1) year at an
exercise price of Fifty Cents ($0.50) per share, a warrant to purchase two


                                       22
<PAGE>

hundred fifty thousand (250,00) shares of Common Stock for a period of two (2)
years at an exercise price of One Dollar ($1.00) per share, and a warrant to
purchase five hundred thousand (500,000) shares of Common Stock for a period of
three (3) years at an exercise price of Two Dollars ($2.00). (collectively
referred to as the "WARRANTS") The shares of Common Stock issuable under the
Warrants shall collectively be referred to as the Warrant Shares. The Warrant
Shares shall have "piggy-back" and demand registration rights.

The Warrants shall contained a forced redemption provided that there is an
effective registration statement registering the Warrant Shares and the Closing
Bid Price of the Company's Common Stock, as quoted by Bloomberg, LP, is greater
than one hundred thirty percent (130%) of the Exercise Price for twenty (20)
consecutive Trading Days and the Company has not effectuated any forced
redemptions of any Warrants, held by the Investor, the Company shall have the
right, at its sole discretion, upon sixty (60) calendar days prior written
notice (the "NOTICE PERIOD"), to redeem the Warrants for an amount in cash equal
to the value of the shares underlying the Warrants multiplied by the difference
of the Exercise Price defined therein and one hundred thirty percent (130%) of
the Exercise Price defined therein provided that the Closing Bid Price of the
Company's Common Stock, as quoted by Bloomberg, LP, is at or greater than one
hundred thirty percent (130%) of the Exercise Price defined therein.

                           (iv) FULLY EARNED. The Investor's Shares and the
Warrants shall be deemed fully earned as of the date hereof.

                           (v) REGISTRATION RIGHTS. The Investor's Shares and
the Warrant Shares will have "piggy-back" registration rights.

         Section 12.5. BROKERAGE. Other than the to Company's dealings with
Galen Capital Group, and the fees that the Company will pay to Galen Capital
Group, each of the parties hereto represents that it has had no dealings in
connection with this transaction with any finder or broker who will demand
payment of any fee or commission from the other party, the Company on the one
hand, and the Investor, on the other hand, agree to indemnify the other against
and hold the other harmless from any and all liabilities to any person claiming
brokerage commissions or finder's fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.

         Section 12.6. CONFIDENTIALITY. If for any reason the transactions
contemplated by this Agreement are not consummated, each of the parties hereto
shall keep confidential any information obtained from any other party (except
information publicly available or in such party's domain prior to the date
hereof, and except as required by court order) and shall promptly return to the
other parties all schedules, documents, instruments, work papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       23
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity
Distribution Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.

                                              COMPANY:
                                              ACUNETX, INC.

                                              By: /s/ TERRY KNAPP
                                                  ---------------
                                              Name:      Dr. Terry Knapp
                                              Title:    President


                                              INVESTOR:
                                              CORNELL CAPITAL PARTNERS, LP

                                              BY:      YORKVILLE ADVISORS, LLC
                                              ITS:     GENERAL PARTNER

                                              By: /s/ MARK ANGELO
                                                  ---------------
                                              Name:    Mark Angelo
                                              Title:   Portfolio Manager


                                       24


<PAGE>

                                    EXHIBIT A

                                 ADVANCE NOTICE

                                  ACUNETX, INC.


         The undersigned, _______________________ hereby certifies, with respect
to the sale of shares of Common Stock of ACUNETX, INC. (the "COMPANY") issuable
in connection with this Advance Notice, delivered pursuant to the Standby Equity
Distribution Agreement (the "AGREEMENT"), as follows:

         1. The undersigned is the duly elected ______________ of the Company.

         2. There are no fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post effective
amendment to the Registration Statement.

         3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company and has complied in all material
respects with all obligations and conditions contained in the Agreement on or
prior to the Advance Notice Date, and shall continue to perform in all material
respects all covenants and agreements to be performed by the Company through the
applicable Advance Date.

         4. The undersigned hereby represents, warrants and covenants that it
has made all filings ("SEC FILINGS") required to be made by it pursuant to
applicable securities laws (including, without limitation, all filings required
under the Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB,
10-K or 10-KSB, 8-K, etc.). All SEC Filings and other public disclosures made by
the Company, including, without limitation, all press releases, analysts
meetings and calls, etc. (collectively, the "PUBLIC DISCLOSURES"), have been
reviewed and approved for release by the Company's attorneys and, if containing
financial information, the Company's independent certified public accountants.
None of the Company's Public Disclosures contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

         5. The Advance requested is _____________________.

         The undersigned has executed this Certificate this ___ day of ________.

                                       ACUNETX, INC.


                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


If Returning This Advance Notice via Facsimile Please Send To:  (201) 946-0851

If by Mail, via Federal Express To:       Cornell Capital Partners, LP
                                          101 Hudson Street, Suite 3700,
                                          Jersey City, NJ 07302

<PAGE>

                                  SCHEDULE 2.6
                                  ------------

                                  ACUNETX, INC.
                                  -------------

         The undersigned hereby agrees that for a period commencing on February
___, 2006 and expiring on the termination of the Standby Equity Distribution
Agreement dated February ___, 2006 between the Company and the Investor (the
"LOCK-UP PERIOD"), he, she or it will not, directly or indirectly, without the
prior written consent of the Investor, issue, offer, agree or offer to sell,
sell, grant an option for the purchase or sale of, transfer, pledge, assign,
hypothecate, distribute or otherwise encumber or dispose of any securities of
the Company, including common stock or options, rights, warrants or other
securities underlying, convertible into, exchangeable or exercisable for or
evidencing any right to purchase or subscribe for any common stock (whether or
not beneficially owned by the undersigned), or any beneficial interest therein
(collectively, the "SECURITIES") except in accordance with the volume
limitations set forth in Rule 144(e) of the General Rules and Regulations under
the Securities Act of 1933, as amended.

         In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop-transfer
orders with the transfer agent of the Company's securities with respect to any
of the Securities registered in the name of the undersigned or beneficially
owned by the undersigned, and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated: _______________, 2006

                                 Signature


                                 _______________________________________________
                                 Name: _________________________________________
                                 Address: ______________________________________
                                 City, State, Zip Code: ________________________


                                 _______________________________________________
                                 Print Social Security Number
                                 or Taxpayer I.D. Number