SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
February 3, 2005, among Acies Corporation, a Nevada corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers"); and

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  and Rule
506  promulgated  thereunder,  the  Company  desires  to issue  and sell to each
Purchaser,  and each Purchaser,  severally and not jointly,  desires to purchase
from the Company in the  aggregate,  up to  $1,100,000 of shares of Common Stock
and Warrants on the Closing Date.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section 1.1:

            "Action"  shall have the  meaning  ascribed  to such term in Section
3.1(j).

            "Adjustment  Shares" shall have the meaning ascribed to such term in
Section 4.16(a) and (b) of this Agreement

            "Affiliate"  means any Person that,  directly or indirectly  through
one or more  intermediaries,  controls or is  controlled  by or is under  common
control  with a Person as such terms are used in and  construed  under Rule 144.
With  respect to a Purchaser,  any  investment  fund or managed  account that is
managed  on a  discretionary  basis  by the  same  investment  manager  as  such
Purchaser will be deemed to be an Affiliate of such Purchaser.

            "Closing"  means the closing of the  purchase and sale of the Common
Stock and the Warrants pursuant to Section 2.1.

            "Closing  Date" means the  Trading  Day when all of the  Transaction
Documents  have been executed and delivered by the applicable  parties  thereto,
and all  conditions  precedent  to (i) the  Purchasers'  obligations  to pay the
Subscription Amount and (ii) the Company's obligations to deliver the Securities
have been satisfied or waived.

            "Closing  Price" means on any particular  date (a) the last reported
closing bid price per share of Common  Stock on such date on the Trading  Market
(as reported by Bloomberg  L.P. at 4:15 PM (New York time) as the last  reported
closing bid price for regular  session  trading on such day), or (b) if there is
no such price on such date,  then the closing bid price on the Trading Market on
the date nearest  preceding  such date (as reported by Bloomberg L.P. at 4:15 PM
(New York time) as the  closing bid price for  regular  session  trading on such
day),  or (c) if the Common  Stock is not then  listed or quoted on the  Trading
Market and if prices for the Common Stock are then reported in the "pink sheets"
published  by  the  National   Quotation  Bureau   Incorporated  (or  a  similar
organization  or agency  succeeding to its functions of reporting  prices),  the
most recent bid price per share of the Common Stock so  reported,  or (d) if the
shares of Common Stock are not then  publicly  traded the fair market value of a
share of Common Stock as  determined  by an appraiser  selected in good faith by
the Purchasers of a majority in interest of the Shares then outstanding.

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            "Commission" means the Securities and Exchange Commission.

            "Common  Stock"  means the common  stock of the  Company,  par value
$0.0001 per share, and any securities into which such common stock may hereafter
be reclassified.

            "Common Stock  Equivalents"  means any  securities of the Company or
the  Subsidiaries  which would entitle the holder thereof to acquire at any time
Common Stock,  including without limitation,  any debt, preferred stock, rights,
options,  warrants or other  instrument that is at any time  convertible into or
exchangeable  for, or otherwise  entitles the holder thereof to receive,  Common
Stock.

            "Company Counsel" means Sichenzia Ross Friedman Ference LLP.

            "Disclosure Schedules" means the Disclosure Schedules of the Company
delivered concurrently herewith.

            "Effective Date" means the date that the  Registration  Statement is
first declared effective by the Commission.

            "Evaluation  Date" shall have the  meaning  ascribed to such term in
Section 3.1(r).

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
amended.

            "Exempt  Issuance"  means the issuance of (a) shares of Common Stock
or options to  employees,  officers or directors of the Company  pursuant to any
stock or option plan duly adopted by a majority of the  non-employee  members of
the  Board of  Directors  of the  Company  or a  majority  of the  members  of a
committee of non-employee directors established for such purpose, (b) securities
upon  the  exercise  of  or  conversion  of  any  securities  issued  hereunder,
convertible  securities,  options or warrants issued and outstanding on the date
of this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such  securities or to decrease
the exercise or  conversion  price of any such  securities,  and (c)  securities
issued  pursuant to acquisitions  or strategic  transactions,  provided any such
issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company in a business  synergistic with the business of the Company
and in which the Company  receives  benefits in  addition to the  investment  of
funds,  but shall not  include a  transaction  in which the  Company  is issuing
securities  primarily  for the purpose of raising  capital or to an entity whose
primary business is investing in securities.

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<PAGE>

            "GAAP"  shall  have the  meaning  ascribed  to such term in  Section
3.1(h).

            "Intellectual  Property  Rights" shall have the meaning  ascribed to
such term in Section 3.1(o).

            "Legend  Removal Date" shall have the meaning  ascribed to such term
in Section 4.1(c).

            "Liens" means a lien, charge, security interest,  encumbrance, right
of first refusal, preemptive right or other restriction.

            "Material  Adverse  Effect" shall have the meaning  ascribed to such
term in Section 3.1(b).

            "Material  Permits" shall have the meaning  ascribed to such term in
Section 3.1(m).

            "Participation Maximum" shall have the meaning ascribed to such term
in Section 4.13.

            "Penalty  Shares"  shall have the  meaning  ascribed to such term in
Section 2(b) of the Registration Rights Agreement, as defined below.

            "Per Share Purchase Price" equals $0.125,  subject to adjustment for
reverse and forward stock splits, stock dividends,  stock combinations and other
similar  transactions  of the Common  Stock  that  occur  after the date of this
Agreement.

            "Person"  means an individual or  corporation,  partnership,  trust,
incorporated or  unincorporated  association,  joint venture,  limited liability
company,  joint stock company,  government (or an agency or subdivision thereof)
or other entity of any kind.

            "Pre-Notice" shall have the meaning ascribed to such term in Section
4.13.

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

            "Purchaser  Party"  shall have the meaning  ascribed to such term in
Section 4.9.

            "Registration   Rights  Agreement"  means  the  Registration  Rights
Agreement,  dated as of the date of this  Agreement,  among the Company and each
Purchaser, in the form of Exhibit A hereto.

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<PAGE>

            "Registration  Statement" means a registration statement meeting the
requirements  set forth in the  Registration  Rights  Agreement and covering the
resale by the Purchasers of the Shares and the Warrant Shares.

            "Required Approvals" shall have the meaning ascribed to such term in
Section 3.1(e).

            "Rule 144" means Rule 144 promulgated by the Commission  pursuant to
the  Securities  Act,  as such Rule may be  amended  from  time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

            "SEC  Reports"  shall  have the  meaning  ascribed  to such  term in
Section 3.1(h).

            "Securities" means the Shares, the Warrants and the Warrant Shares.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Shares" means the shares of Common Stock issued or issuable to each
Purchaser  pursuant to this Agreement,  including the Adjustment Shares, if any,
as defined in Section 4.16(a) and (b) of this Agreement, and the Penalty Shares,
if any, as defined in Section 2(b) of the Registration Rights Agreement.

            "Subscription  Amount" means, as to each Purchaser,  the amounts set
forth below such  Purchaser's  signature block on the signature page hereto,  in
United States dollars and in immediately available funds.

            "Subsequent  Financing" shall have the meaning ascribed to such term
in Section 4.13.

            "Subsequent  Financing  Notice"  shall have the meaning  ascribed to
such term in Section 4.13.

            "Subsidiary" shall mean the subsidiaries of the Company, if any, set
forth on Schedule 3.1(a).

            "Trading  Day" means a day on which the Common  Stock is traded on a
Trading Market.

            "Trading  Market" means the following  markets or exchanges on which
the Common  Stock is listed or quoted for trading on the date in  question:  the
OTC Bulletin Board,  the American Stock  Exchange,  the New York Stock Exchange,
the Nasdaq National Market or the Nasdaq SmallCap Market.

            "Transaction  Documents" means this Agreement,  the Warrants and the
Registration  Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

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<PAGE>

            "Warrants" means the Common Stock Purchase Warrants,  in the form of
Exhibit B, delivered to the Purchasers at the Closing in accordance with Section
2.2(a)(iii)  hereof,  which  warrants  shall  be  exercisable  immediately  upon
issuance  for a term of five years and have an  exercise  price  equal to $0.25,
subject to adjustment as provided therein.

            "Warrant  Shares"  means the shares of Common  Stock  issuable  upon
exercise of the Warrants.

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing.  On the Closing Date,  each Purchaser shall purchase from the
Company,  severally and not jointly with the other  Purchasers,  and the Company
shall  issue and sell to each  Purchaser,  (a) a number of Shares  equal to such
Purchaser's  Subscription Amount divided by the Per Share Purchase Price and (b)
the  Warrants as  determined  pursuant  to Section  2.2(a)(iii).  The  aggregate
Subscription  Amounts for the Shares sold  hereunder  shall be up to $1,100,000.
Upon  satisfaction of the conditions set forth in Section 2.3, the Closing shall
occur at the offices of Sichenzia Ross Friedman  Ference LLP, 1065 Avenue of the
Americas,  New York, New York 10018, or such other location as the parties shall
mutually agree.

      2.2 Deliveries.

            (a) On the Closing  Date,  the Company  shall deliver or cause to be
delivered to each Purchaser the following:

            (i) this Agreement duly executed by the Company;

            (ii)  a copy  of  the  irrevocable  instructions  to  the  Company's
transfer agent instructing the transfer agent to deliver, on an expedited basis,
a  certificate   evidencing  a  number  of  Shares  equal  to  such  Purchaser's
Subscription  Amount divided by the Per Share Purchase Price,  registered in the
name of such Purchaser;

            (iii) a Warrant, registered in the name of such Purchaser,  pursuant
to which  such  Purchaser  shall  have the right to  acquire up to the number of
shares  of  Common  Stock  equal  to 100% of the  Shares  to be  issued  to such
Purchaser,

            (iv) the Registration Rights Agreement duly executed by the Company;
and

            (v) the Lock-Up Agreements duly executed by Oleg Firer, Yakov Shimon
and Miron Guilliadov, (collectively "the Principals") of the Company.

            (vi) a legal  opinion of Company  Counsel,  in the form of Exhibit C
attached hereto.

      (b) On the  Closing  Date,  each  Purchaser  shall  deliver or cause to be
delivered to the Company the following:

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<PAGE>

            (i) this Agreement duly executed by such Purchaser;

            (ii) such  Purchaser's  Subscription  Amount by wire transfer to the
account as specified in writing by the Company; and

            (iii)  the  Registration  Rights  Agreement  duly  executed  by such
Purchaser.

            2.3 Closing Conditions.

            (a) The obligations of the Company  hereunder in connection with the
Closing are subject to the following conditions being met:

            (i) the  accuracy  in all  material  respects  when  made and on the
Closing Date of the representations  and warranties of the Purchasers  contained
herein;

            (ii) all  obligations,  covenants and  agreements of the  Purchasers
required  to be  performed  at or prior to the  Closing  Date  shall  have  been
performed; and

            (iii)  the  delivery  by the  Purchasers  of the  items set forth in
Section 2.2(b) of this Agreement.

            (b)  The  respective  obligations  of the  Purchasers  hereunder  in
connection with the Closing are subject to the following conditions being met:

            (i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;

            (ii)  all  obligations,  covenants  and  agreements  of the  Company
required  to be  performed  at or prior to the  Closing  Date  shall  have  been
performed;

            (iii) the  delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;

            (iv) there shall have been no Material  Adverse  Effect with respect
to the Company since the date hereof; and

            (v) From the date hereof to the Closing Date,  trading in the Common
Stock shall not have been suspended by the Commission (except for any suspension
of trading of limited duration agreed to by the Company,  which suspension shall
be terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been  suspended  or  limited,  or  minimum  prices  shall not have been
established on securities  whose trades are reported by such service,  or on any
Trading Market,  nor shall a banking moratorium have been declared either by the
United  States or New York State  authorities  nor shall there have occurred any
material   outbreak  or  escalation  of   hostilities   or  other   national  or
international  calamity  of such  magnitude  in its effect  on, or any  material
adverse change in, any financial  market which,  in each case, in the reasonable
judgment of each Purchaser,  makes it  impracticable  or inadvisable to purchase
the Shares at the Closing.

                                       6
<PAGE>

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1  Representations  and  Warranties of the Company.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser:

      (a)  Subsidiaries.  All of the direct  and  indirect  subsidiaries  of the
Company  are set  forth on  Schedule  3.1(a).  The  Company  owns,  directly  or
indirectly,  all  of the  capital  stock  or  other  equity  interests  of  each
Subsidiary  free and clear of any  Liens,  and all the  issued  and  outstanding
shares of capital  stock of each  Subsidiary  are  validly  issued and are fully
paid,  non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.  If the Company has no subsidiaries,  then references in
the Transaction Documents to the Subsidiaries will be disregarded.

      (b)  Organization  and   Qualification.   Each  of  the  Company  and  the
Subsidiaries  is an entity duly  incorporated  or otherwise  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization  (as  applicable),  with the requisite power and
authority to own and use its  properties and assets and to carry on its business
as currently  conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation,  bylaws or other organizational or charter documents. Each of the
Company and the  Subsidiaries  is duly  qualified to conduct  business and is in
good standing as a foreign  corporation or other entity in each  jurisdiction in
which the nature of the business  conducted  or property  owned by it makes such
qualification necessary,  except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality,  validity or enforceability of
any  Transaction  Documents,  (ii) a material  adverse  effect on the results of
operations,  assets,  business,  prospects or financial condition of the Company
and the  Subsidiaries,  taken as a whole, or (iii) a material  adverse effect on
the Company's  ability to perform in any material  respect on a timely basis its
obligations  under any  Transaction  Documents  (any of (i),  (ii) or  (iii),  a
"Material  Adverse  Effect") and no Proceeding  has been  instituted in any such
jurisdiction  revoking,  limiting or curtailing  or seeking to revoke,  limit or
curtail such power and authority or qualification.

      (c) Authorization;  Enforcement.  The Company has the requisite  corporate
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations  thereunder.  The execution and delivery of each of the  Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby have been duly  authorized by all necessary  action on the
part of the  Company  and no  further  action  is  required  by the  Company  in
connection therewith other than in connection with the Required Approvals.  Each
Transaction  Documents  has been (or upon delivery will have been) duly executed
by the Company and, when delivered in

                                       7
<PAGE>

accordance  with the  terms  hereof,  will  constitute  the  valid  and  binding
obligation of the Company enforceable against the Company in accordance with its
terms   except   (i)  as   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium  and other  laws of  general  application  affecting
enforcement of creditors'  rights generally and (ii) as limited by laws relating
to  the  availability  of  specific  performance,  injunctive  relief  or  other
equitable remedies.

      (d)  No  Conflicts.  The  execution,   delivery  and  performance  of  the
Transaction  Documents by the  Company,  the issuance and sale of the Shares and
the consummation by the Company of the other transactions  contemplated  thereby
do not and will not (i) conflict  with or violate any provision of the Company's
or any Subsidiary's  certificate or articles of  incorporation,  bylaws or other
organizational  or charter  documents,  or (ii)  conflict  with, or constitute a
default  (or an event that with  notice or lapse of time or both would  become a
default) under, result in the creation of any Lien upon any of the properties or
assets  of the  Company  or any  Subsidiary,  or give to  others  any  rights of
termination,  amendment,  acceleration or cancellation  (with or without notice,
lapse  of time or  both)  of,  any  agreement,  credit  facility,  debt or other
instrument  (evidencing  a Company or  Subsidiary  debt or  otherwise)  or other
understanding  to which the Company or any Subsidiary is a party or by which any
property  or asset of the Company or any  Subsidiary  is bound or  affected,  or
(iii) subject to the Required Approvals,  conflict with or result in a violation
of any law,  rule,  regulation,  order,  judgment,  injunction,  decree or other
restriction  of any court or  governmental  authority  to which the Company or a
Subsidiary  is  subject   (including  federal  and  state  securities  laws  and
regulations),  or by which any  property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or  reasonably  be  expected  to result in a Material  Adverse
Effect.

      (e) Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver,  authorization or order of, give any notice to, or make any
filing or registration  with, any court or other federal,  state, local or other
governmental  authority  or other  Person  in  connection  with  the  execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.4 of this Agreement,  (ii) the filing
with the Commission of the Registration Statement,  (iii) application(s) to each
applicable  Trading  Market for the listing of the Shares and Warrant Shares for
trading thereon in the time and manner required thereby,  and (iv) the filing of
Form D with the  Commission  and such  filings as are  required to be made under
applicable state securities laws (collectively, the "Required Approvals").

      (f) Issuance of the Securities.  The Shares,  Adjustment  Shares,  Penalty
Shares and Warrants have been duly  authorized  and, when issued and paid for in
accordance  with the  Transaction  Documents,  will be duly and validly  issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer  provided for in the Transaction  Documents.
The  Warrant  Shares,  when  issued and the  Adjustment  Shares and the  Penalty
Shares,  if issued,  in accordance with the terms of the Transaction  Documents,
will be  validly  issued,  fully paid and  nonassessable,  free and clear of all
Liens  imposed by the Company.  Subject to  Stockholder  Approval (as defined in
Section 4.14),  the Company has reserved from its duly authorized  capital stock
the maximum number of shares of Common Stock issuable pursuant to this Agreement
and the Warrants.

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<PAGE>

      (g)  Capitalization.  The capitalization of the Company is as described in
the  Company's  most recent  periodic  report filed with the  Commission  and in
Schedule 3.1(g).  The Company has not issued any capital stock since such filing
other  than  pursuant  to the  exercise  of  employee  stock  options  under the
Company's  stock  option  plans,  the  issuance  of shares  of  Common  Stock to
employees pursuant to the Company's employee stock purchase plan and pursuant to
the conversion or exercise of outstanding  Common Stock  Equivalents.  No Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Securities,  there
are no outstanding  options,  warrants,  script rights to subscribe to, calls or
commitments of any character  whatsoever  relating to, or securities,  rights or
obligations convertible into or exchangeable for, or giving any Person any right
to  subscribe  for or  acquire,  any  shares  of  Common  Stock,  or  contracts,
commitments,  understandings  or  arrangements  by  which  the  Company  or  any
Subsidiary is or may become bound to issue additional  shares of Common Stock or
Common Stock Equivalents. The issue and sale of the Securities will not obligate
the Company to issue  shares of Common Stock or other  securities  to any Person
(other  than the  Purchasers)  and will not  result in a right of any  holder of
Company securities to adjust the exercise,  conversion,  exchange or reset price
under such  securities.  All of the  outstanding  shares of capital stock of the
Company are validly issued,  fully paid and  nonassessable,  have been issued in
compliance  with  all  federal  and  state  securities  laws,  and  none of such
outstanding  shares was issued in violation of any preemptive  rights or similar
rights  to  subscribe  for  or  purchase  securities.  No  further  approval  or
authorization  of any  stockholder,  the Board of  Directors  of the  Company or
others  is  required  for the  issuance  and sale of the  Shares.  There  are no
stockholders  agreements,  voting  agreements or other similar  agreements  with
respect to the  Company's  capital  stock to which the Company is a party or, to
the   knowledge  of  the  Company,   between  or  among  any  of  the  Company's
stockholders.

      (h) SEC Reports;  Financial Statements.  The Company has filed all reports
required  to be filed by it  under  the  Securities  Act and the  Exchange  Act,
including  pursuant  to  Section  13(a)  or  15(d)  thereof,  for the two  years
preceding the date hereof (or such shorter period as the Company was required by
law to file such  material)  (the  foregoing  materials,  including the exhibits
thereto, being collectively referred to herein as the "SEC Reports") on a timely
basis or has received a valid extension of such time of filing

                                       9
<PAGE>

and has  filed  any  such  SEC  Reports  prior  to the  expiration  of any  such
extension.  As of  their  respective  dates,  the SEC  Reports  complied  in all
material  respects with the  requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder,  and
none of the SEC  Reports,  when  filed,  contained  any  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances  under  which  they  were  made,  not  misleading.  The  financial
statements  of the Company  included in the SEC Reports  comply in all  material
respects with applicable  accounting  requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.  Such
financial  statements  have been  prepared  in  accordance  with  United  States
generally  accepted  accounting  principles applied on a consistent basis during
the periods  involved  ("GAAP"),  except as may be  otherwise  specified in such
financial  statements or the notes thereto and except that  unaudited  financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries  as of and for the dates thereof and the results of operations  and
cash  flows  for the  periods  then  ended,  subject,  in the case of  unaudited
statements, to normal, immaterial, year-end audit adjustments.

      (i)  Material  Changes.  Since the date of the  latest  audited  financial
statements included within the SEC Reports,  except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not  incurred any  liabilities  (contingent  or  otherwise)
other than (A) trade  payables  and accrued  expenses  incurred in the  ordinary
course  of  business  consistent  with past  practice  and (B)  liabilities  not
required to be reflected in the Company's financial  statements pursuant to GAAP
or required  to be  disclosed  in filings  made with the  Commission,  (iii) the
Company  has not  altered  its method of  accounting,  (iv) the  Company has not
declared or made any dividend or  distribution  of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its  capital  stock and (v) the  Company has not issued any equity
securities to any officer,  director or Affiliate,  except  pursuant to existing
Company  stock  option  plans.  The  Company  does not have  pending  before the
Commission any request for confidential treatment of information.

      (j) Litigation.  There is no action,  suit, inquiry,  notice of violation,
proceeding  or  investigation  pending  or,  to the  knowledge  of the  Company,
threatened  against or affecting  the Company,  any  Subsidiary  or any of their
respective  properties  before  or by any  court,  arbitrator,  governmental  or
administrative agency or regulatory authority (federal,  state, county, local or
foreign)  (collectively,  an "Action") which (i) adversely affects or challenges
the legality,  validity or enforceability of any of the Transaction Documents or
the  Securities or (ii) could,  if there were an unfavorable  decision,  have or
reasonably  be  expected  to result in a Material  Adverse  Effect.  Neither the
Company nor any Subsidiary,  nor any director or officer thereof, is or has been
the subject of any Action  involving a claim of violation of or liability  under
federal or state  securities laws or a claim of breach of fiduciary duty.  There
has not been,  and to the  knowledge  of the  Company,  there is not  pending or
contemplated,  any investigation by the Commission  involving the Company or any
current or former  director or officer of the Company.  The  Commission  has not
issued  any stop  order or  other  order  suspending  the  effectiveness  of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

      (k) Labor Relations. No material labor dispute exists or, to the knowledge
of the Company,  is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse Effect.

                                       10
<PAGE>

      (l)  Compliance.  Neither the Company nor any Subsidiary (i) is in default
under or in  violation  of (and no event has  occurred  that has not been waived
that,  with  notice or lapse of time or both,  would  result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture,  loan or credit  agreement or any other  agreement or  instrument  to
which it is a party or by which it or any of its properties is bound (whether or
not such  default or  violation  has been  waived),  (ii) is in violation of any
order of any court,  arbitrator or governmental body, or (iii) is or has been in
violation of any statute,  rule or  regulation  of any  governmental  authority,
including  without  limitation  all  foreign,  federal,  state  and  local  laws
applicable  to its  business  except in each  case as could not have a  Material
Adverse Effect.

      (m)  Regulatory  Permits.  The  Company and the  Subsidiaries  possess all
certificates,  authorizations  and permits  issued by the  appropriate  federal,
state,  local or foreign  regulatory  authorities  necessary  to  conduct  their
respective businesses as described in the SEC Reports,  except where the failure
to possess such permits  could not have or reasonably be expected to result in a
Material Adverse Effect  ("Material  Permits"),  and neither the Company nor any
Subsidiary has received any notice of proceedings  relating to the revocation or
modification of any Material Permit.

      (n)  Title to  Assets.  The  Company  and the  Subsidiaries  have good and
marketable  title in fee  simple  to all  real  property  owned by them  that is
material  to the  business  of the  Company  and the  Subsidiaries  and good and
marketable title in all personal  property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens,  except for Liens as do not materially  affect the value of such property
and do not  materially  interfere  with the use made and  proposed to be made of
such property by the Company and the  Subsidiaries  and Liens for the payment of
federal,  state or other taxes,  the payment of which is neither  delinquent nor
subject to penalties.  Any real property and facilities  held under lease by the
Company  and the  Subsidiaries  are held by them  under  valid,  subsisting  and
enforceable leases of which the Company and the Subsidiaries are in compliance.

      (o) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights  to  use,  all  patents,  patent  applications,   trademarks,   trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights  necessary  or  material  for use in  connection  with  their  respective
businesses  as  described  in the SEC  Reports  and which the failure to so have
could have a Material Adverse Effect (collectively,  the "Intellectual  Property
Rights").  Neither the Company nor any  Subsidiary has received a written notice
that the  Intellectual  Property  Rights used by the  Company or any  Subsidiary
violates or  infringes  upon the rights of any Person.  To the  knowledge of the
Company,  all such Intellectual  Property Rights are enforceable and there is no
existing  infringement  by another  Person of any of the  Intellectual  Property
Rights of others.

      (p) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized  financial  responsibility  against such losses and risks and in such
amounts as are prudent and customary in the  businesses in which the Company and
the  Subsidiaries  are engaged,  including,  but not limited to,  directors  and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Such  insurance  contracts and policies are accurate and  complete.  Neither the
Company nor any 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 without a significant increase in cost.

                                       11
<PAGE>

      (q) Transactions With Affiliates and Employees. Except as set forth in the
SEC  Reports,  none of the  officers or  directors  of the  Company  and, to the
knowledge  of the Company,  none of the  employees of the Company is presently a
party to any  transaction  with the  Company or any  Subsidiary  (other than for
services  as  employees,  officers  and  directors),   including  any  contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner,  in each case in excess of $60,000 other than (i) for payment of salary
or  consulting  fees for  services  rendered,  (ii)  reimbursement  for expenses
incurred  on behalf of the  Company  and  (iii)  for  other  employee  benefits,
including stock option agreements under any stock option plan of the Company.

      (r)  Sarbanes-Oxley;  Internal  Accounting  Controls.  The  Company  is in
material  compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are  applicable to it as of the Closing Date.  The Company and the  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
GAAP and to maintain asset  accountability,  (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded  accountability  for assets is compared with the existing assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.  The Company has established disclosure controls and procedures (as
defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the Company and
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information relating to the Company,  including its Subsidiaries,  is made known
to the certifying officers by others within those entities,  particularly during
the period in which the Company's most recently filed periodic  report under the
Exchange Act, as the case may be, is being  prepared.  The Company's  certifying
officers  have  evaluated  the  effectiveness  of  the  Company's  controls  and
procedures  as of the date prior to the filing date of the most  recently  filed
periodic report under the Exchange Act (such date, the "Evaluation  Date").  The
Company  presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying  officers about the  effectiveness  of the
disclosure  controls  and  procedures  based  on  their  evaluations  as of  the
Evaluation  Date.  Since the  Evaluation  Date,  there have been no  significant
changes  in the  Company's  internal  controls  (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge,
in  other  factors  that  could  significantly  affect  the  Company's  internal
controls.

                                       12
<PAGE>

      (s) Certain Fees. No brokerage or finder's fees or commissions are or will
be  payable by the  Company  to any  broker,  financial  advisor or  consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the  transactions  contemplated by this Agreement.  The Purchasers shall have no
obligation  with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.

      (t)  Private   Placement.   Assuming  the   accuracy  of  the   Purchasers
representations  and warranties set forth in Section 3.2, no registration  under
the  Securities  Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated  hereby.  The issuance and sale of the
Securities  hereunder  does not  contravene  the  rules and  regulations  of the
Trading Market.

      (u)  Investment  Company.  The Company is not, and is not an Affiliate of,
and  immediately  after receipt of payment for the Shares,  will not be or be an
Affiliate  of, an  "investment  company"  within the  meaning of the  Investment
Company Act of 1940,  as amended.  The Company  shall  conduct its business in a
manner so that it will not become subject to the Investment Company Act.

      (v) Registration  Rights.  No Person has any right to cause the Company to
effect  the  registration  under the  Securities  Act of any  securities  of the
Company.

      (w) Listing and Maintenance  Requirements.  The Company's  Common Stock is
registered  pursuant to Section  12(g) of the Exchange  Act, and the Company has
taken no action  designed  to, or which to its  knowledge  is likely to have the
effect of,  terminating the  registration of the Common Stock under the Exchange
Act nor has the  Company  received  any  notification  that  the  Commission  is
contemplating  terminating  such  registration.  The  Company has not, in the 12
months  preceding the date hereof,  received  notice from any Trading  Market on
which the Common  Stock is or has been  listed or quoted to the effect  that the
Company is not in compliance  with the listing or  maintenance  requirements  of
such Trading  Market.  The Company is, and has no reason to believe that it will
not in the  foreseeable  future  continue  to be,  in  compliance  with all such
listing and maintenance requirements.

      (x)  Application  of  Takeover  Protections.  The Company and its Board of
Directors  have  taken  all  necessary  action,  if  any,  in  order  to  render
inapplicable any control share acquisition,  business  combination,  poison pill
(including  any  distribution   under  a  rights  agreement)  or  other  similar
anti-takeover  provision under the Company's  Certificate of  Incorporation  (or
similar charter  documents) or the laws of its state of incorporation that is or
could become  applicable to the Purchasers as a result of the Purchasers and the
Company  fulfilling  their  obligations  or  exercising  their  rights under the
Transaction  Documents,  including without  limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.

      (y)  Disclosure.  The Company  confirms that,  neither the Company nor any
other Person  acting on its behalf has provided any of the  Purchasers  or their
agents or counsel with any  information  that  constitutes  or might  constitute
material,  non-public information. The Company understands and confirms that the

                                       13
<PAGE>

Purchasers will rely on the foregoing representations and covenants in effecting
transactions  in  securities  of the  Company.  All  disclosure  provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, furnished by or on
behalf of the Company with respect to the  representations  and warranties  made
herein are true and correct with respect to such  representations and warranties
and do not contain any untrue  statement of a material fact or omit to state any
material fact necessary in order to make the statements  made therein,  in light
of the  circumstances  under which they were made, not  misleading.  The Company
acknowledges and agrees that no Purchaser makes or has made any  representations
or warranties with respect to the  transactions  contemplated  hereby other than
those specifically set forth in Section 3.2 hereof.

      (z) No  Integrated  Offering.  Assuming  the  accuracy of the  Purchasers'
representations  and warranties  set forth in Section 3.2,  neither the Company,
nor any of its  affiliates,  nor any Person  acting on its or their  behalf has,
directly or  indirectly,  made any offers or sales of any  security or solicited
any  offers to buy any  security,  under  circumstances  that  would  cause this
offering of the Securities to be integrated  with prior offerings by the Company
for  purposes  of the  Securities  Act or any  applicable  shareholder  approval
provisions,  including,  without limitation,  under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated.

      (aa) Solvency.  Based on the financial  condition of the Company as of the
Closing Date after  giving  effect to the receipt by the Company of the proceeds
from the sale of the Securities hereunder, (i) the Company's fair saleable value
of its assets  exceeds  the  amount  that will be  required  to be paid on or in
respect of the Company's  existing debts and other liabilities  (including known
contingent  liabilities)  as they  mature;  (ii)  the  Company's  assets  do not
constitute  unreasonably  small capital to carry on its business for the current
fiscal  year as now  conducted  and as proposed to be  conducted  including  its
capital needs taking into account the  particular  capital  requirements  of the
business  conducted by the  Company,  and  projected  capital  requirements  and
capital  availability  thereof;  and (iii) the current cash flow of the Company,
together with the proceeds the Company would  receive,  were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be  sufficient to pay all amounts on or in respect of its debt when such amounts
are  required to be paid.  The Company does not intend to incur debts beyond its
ability to pay such debts as they  mature  (taking  into  account the timing and
amounts of cash to be payable on or in respect of its debt).  The Company has no
knowledge  of any facts or  circumstances  which lead it to believe that it will
file for  reorganization  or liquidation  under the bankruptcy or reorganization
laws of any jurisdiction  within one year from the Closing Date. The SEC Reports
set  forth  as of the  dates  thereof  all  outstanding  secured  and  unsecured
Indebtedness of the Company or any  Subsidiary,  or for which the Company or any
Subsidiary has commitments.  For the purposes of this Agreement,  "Indebtedness"
shall mean (a) any  liabilities  for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts  payable  incurred in the ordinary  course of
business), (b) all guaranties,  endorsements and other contingent obligations in
respect  of  Indebtedness  of  others,  whether or not the same are or should be
reflected  in the  Company's  balance  sheet  (or  the  notes  thereto),  except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar  transactions  in the ordinary  course of business;  and (c) the present
value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance  with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.

                                       14
<PAGE>

      (bb) Form SB-2 Eligibility. The Company is eligible to register the resale
of its Common  Stock by the  Purchasers  under Form SB-2  promulgated  under the
Securities  Act and the  Company  hereby  covenants  and  agrees to use its best
efforts to  maintain  its  eligibility  to use Form SB-2 until the  Registration
Statement  covering  the resale of the Shares  shall have been filed  with,  and
declared effective by, the Commission.

      (cc) Taxes.  Except for  matters  that would not,  individually  or in the
aggregate,  have or  reasonably  be  expected  to result in a  Material  Adverse
Effect, the Company and each Subsidiary has filed all necessary  federal,  state
and foreign  income and  franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

      (dd) General  Solicitation.  Neither the Company nor any person  acting on
behalf  of the  Company  has  offered  or sold any of the  Shares by any form of
general solicitation or general advertising.  The Company has offered the Shares
for sale only to the Purchasers and certain other "accredited  investors" within
the meaning of Rule 501 under the Securities Act.

      (ee) Foreign Corrupt Practices.  Neither the Company, nor to the knowledge
of the Company,  any agent or other person acting on behalf of the Company,  has
(i) directly or indirectly,  used any corrupt funds for unlawful  contributions,
gifts,  entertainment or other unlawful  expenses related to foreign or domestic
political  activity,  (ii) made any  unlawful  payment to  foreign  or  domestic
government  officials  or  employees  or to any  foreign or  domestic  political
parties or campaigns  from corporate  funds,  (iii) failed to disclose fully any
contribution  made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in  violation  of law, or (iv)  violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

      (ff)  Accountants.  The  Company's  accountants  are set forth on Schedule
3.1(ff)  of  the  Disclosure  Schedule.   To  the  Company's   knowledge,   such
accountants,  who the Company expects will express their opinion with respect to
the financial  statements to be included in the Company's  Annual Report on Form
10-KSB for the year ending December 31, 2004, are a registered public accounting
firm and are independent as required by the Securities Act.

      (gg) Acknowledgment  Regarding Purchasers' Purchase of Shares. The Company
acknowledges  and agrees  that each of the  Purchasers  is acting  solely in the
capacity of an arm's length purchaser with respect to the Transaction  Documents
and the transactions  contemplated hereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any  similar  capacity)  with  respect to this  Agreement  and the  transactions
contemplated  hereby  and any  advice  given  by any  Purchaser  or any of their
respective  representatives  or agents in connection with this Agreement and the
transactions  contemplated  hereby  is  merely  incidental  to  the  Purchasers'
purchase of the Shares.  The Company  further  represents to each Purchaser that
the Company's decision to enter into this Agreement has been based solely on the
independent  evaluation of the transactions  contemplated  hereby by the Company
and its representatives.

                                       15
<PAGE>

      (hh)  Lock-Up   Agreements.   The  Company  shall  have  obtained  Lock-Up
Agreements from Oleg Firer, Yakov Shimon and Miron Guilliadov (collectively, the
"Principals") pursuant to which the Principals agree that they will not sell any
of their shares of Common Stock that they currently  hold, may acquire or may be
entitled to acquire for a period of three (3) months after the effective date of
the Registration Statement. Thereafter, the principals of the Company shall sell
no more than ten percent (10%) of the weekly trading volume and no more than ten
percent (10%) of their holdings per month for the period subsequent to three (3)
months after the effective date of the Registration Statement.

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

      (a) Organization;  Authority.  Such Purchaser is an entity duly organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization  with full right,  corporate or partnership  power and authority to
enter into and to consummate the  transactions  contemplated  by the Transaction
Documents and otherwise to carry out its obligations thereunder.  The execution,
delivery and performance by such Purchaser of the  transactions  contemplated by
this Agreement have been duly  authorized by all necessary  corporate or similar
action on the part of such Purchaser.  Each Transaction Documents to which it is
a party has been duly  executed by such  Purchaser,  and when  delivered by such
Purchaser in accordance  with the terms hereof,  will  constitute  the valid and
legally  binding  obligation  of  such  Purchaser,  enforceable  against  it  in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general  application  affecting  enforcement of creditors'  rights generally,
(ii) as limited by laws relating to the  availability  of specific  performance,
injunctive   relief  or  other   equitable   remedies   and  (iii)   insofar  as
indemnification and contribution provisions may be limited by applicable law.

      (b) Own  Account.  Such  Purchaser  understands  that the  Securities  are
"restricted securities" and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof,  has no present intention of distributing any of
such Securities and has no arrangement or  understanding  with any other persons
regarding the distribution of such Securities (this  representation and warranty
not  limiting  such  Purchaser's  right to sell the  Securities  pursuant to the
Registration  Statement or otherwise in compliance with  applicable  federal and
state securities laws). Such Purchaser is acquiring the Securities  hereunder in
the ordinary course of its business.  Such Purchaser does not have any agreement
or understanding,  directly or indirectly,  with any Person to distribute any of
the Securities.

                                       16
<PAGE>

      (c)  Purchaser  Status.  At  the  time  such  Purchaser  was  offered  the
Securities,  it was,  and at the date hereof it is, and on each date on which it
exercises  any  Warrants,  it will be either:  (i) an  "accredited  investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a "qualified  institutional  buyer" as defined in Rule 144A(a) under
the  Securities  Act.  Such  Purchaser  is not  required to be  registered  as a
broker-dealer under Section 15 of the Exchange Act.

      (d) Experience of Such Purchaser. Such Purchaser, either alone or together
with its representatives,  has such knowledge,  sophistication and experience in
business and financial  matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities,  and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an  investment  in the  Securities  and, at the present time, is able to
afford a complete loss of such investment.

      (e) General Solicitation.  Such Purchaser is not purchasing the Securities
as a  result  of any  advertisement,  article,  notice  or  other  communication
regarding the Securities  published in any newspaper,  magazine or similar media
or broadcast  over  television or radio or presented at any seminar or any other
general solicitation or general advertisement.

      (f) Short Position and Short Sales. Each Purchaser  covenants that neither
it nor any of their affiliates has an open short position in the Common Stock of
the  Company,  and  each  Purchaser  agrees  that  neither  it nor any of  their
affiliates  will  engage  in any short  sales of or  hedging  transactions  with
respect  to  the  Common  Stock  during  the  period  from  the  time  that  the
transactions  contemplated by this Agreement were first discussed until prior to
Effective Date of the  registration  statement  required to be filed pursuant to
the Registration Rights Agreement.

      The Company  acknowledges  and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

      (a) The  Securities  may only be disposed of in compliance  with state and
federal  securities  laws. In connection  with any transfer of Securities  other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an affiliate of a Purchaser or in connection with a pledge as contemplated
in Section 4.1(b),  the Company may require the transferor thereof to provide to

                                       17
<PAGE>

the Company an opinion of counsel  selected  by the  transferor  and  reasonably
acceptable  to the Company,  the form and  substance of which  opinion  shall be
reasonably  satisfactory  to the Company,  to the effect that such transfer does
not require  registration of such  transferred  Securities  under the Securities
Act. As a condition of transfer,  any such transferee  shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.

      (b) The Purchasers agree to the imprinting, so long as is required by this
Section 4.1(b), of a legend on any of the Securities in the following form:

      THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
      COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE  "SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE  OFFERED OR SOLD
      EXCEPT  PURSUANT  TO  AN  EFFECTIVE   REGISTRATION   STATEMENT  UNDER  THE
      SECURITIES  ACT  OR  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
      TRANSACTION  NOT  SUBJECT  TO,  THE   REGISTRATION   REQUIREMENTS  OF  THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE  TRANSFEROR TO SUCH EFFECT,
      THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE COMPANY.
      THESE  SECURITIES  MAY BE PLEDGED IN  CONNECTION  WITH A BONA FIDE  MARGIN
      ACCOUNT  WITH A  REGISTERED  BROKER-DEALER  OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION  THAT IS AN  "ACCREDITED  INVESTOR"  AS DEFINED IN RULE 501(a)
      UNDER THE SECURITIES ACT.

      The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered  broker-dealer
or grant a security  interest  in some or all of the  Securities  to a financial
institution that is an "accredited investor" as defined in Rule 501(a) under the
Securities  Act and who agrees to be bound by the  provisions of this  Agreement
and the  Registration  Rights Agreement and, if required under the terms of such
arrangement,  such Purchaser may transfer  pledged or secured  Securities to the
pledgees or secured  parties.  Such a pledge or transfer would not be subject to
approval of the Company and no legal  opinion of legal  counsel of the  pledgee,
secured party or pledgor shall be required in connection therewith.  Further, no
notice shall be required of such pledge. At the appropriate Purchaser's expense,
the Company will execute and deliver such reasonable  documentation as a pledgee
or secured  party of Securities  may  reasonably  request in  connection  with a
pledge or transfer of the Securities,  including,  if the Securities are subject
to registration  pursuant to the Registration Rights Agreement,  the preparation
and filing of any required prospectus  supplement under Rule 424(b)(3) under the
Securities  Act  or  other  applicable   provision  of  the  Securities  Act  to
appropriately amend the list of Selling Stockholders thereunder.

                                       18
<PAGE>

      (c)  Certificates  evidencing  the Shares  and  Warrant  Shares  shall not
contain any legend (including the legend set forth in Section 4.1(b)), (i) while
a registration  statement  (including the Registration  Statement)  covering the
resale of such security is effective under the Securities Act, or (ii) following
any sale of such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such
Shares or Warrant  Shares are eligible  for sale under Rule  144(k),  or (iv) if
such legend is not required under applicable  requirements of the Securities Act
(including judicial  interpretations  and pronouncements  issued by the Staff of
the Commission). The Company shall cause its counsel to issue a legal opinion to
the Company's  transfer  agent  promptly after the Effective Date if required by
the Company's  transfer agent to effect the removal of the legend hereunder.  If
all or any  portion  of a  Warrant  is  exercised  at a time  when  there  is an
effective registration statement to cover the resale of the Warrant Shares, such
Warrant  Shares  shall be issued free of all  legends.  The Company  agrees that
following  the  Effective  Date or at such  time as  such  legend  is no  longer
required  under this Section  4.1(c),  it will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the  Company's  transfer
agent of a certificate  representing  Shares or Warrant Shares,  as the case may
be, issued with a restrictive  legend (such date,  the "Legend  Removal  Date"),
deliver or cause to be delivered to such  Purchaser a  certificate  representing
such Securities that is free from all restrictive and other legends. The Company
may not make any  notation on its records or give  instructions  to any transfer
agent of the Company that enlarge the restrictions on transfer set forth in this
Section.  Certificates for Securities  subject to legend removal hereunder shall
be  transmitted  by the  transfer  agent of the  Company  to the  Purchasers  by
crediting the account of the Purchaser's  prime broker with the Depository Trust
Company System.

      (d) In addition to such Purchaser's other available remedies,  the Company
shall pay to a Purchaser,  in cash, as partial  liquidated  damages and not as a
penalty, for each $1,000 of Shares or Warrant Shares (based on the Closing Price
of the Common Stock on the date such  Securities  are submitted to the Company's
transfer  agent) subject to Section  4.1(c),  $10 per Trading Day (increasing to
$20 per  Trading  Day five (5)  Trading  Days after such  damages  have begun to
accrue and  increasing  to $30 per Trading Day ten (10)  Trading Days after such
damages have begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered. Nothing herein shall limit such Purchaser's
right to pursue actual damages for the Company's failure to deliver certificates
representing any Securities as required by the Transaction  Documents,  and such
Purchaser shall have the right to pursue all remedies  available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.

      (e) Each Purchaser,  severally and not jointly with the other  Purchasers,
agrees that the removal of the restrictive legend from certificates representing
Securities  as set forth in this Section 4.1 is  predicated  upon the  Company's
reliance  that the  Purchaser  will sell any  Securities  pursuant to either the
registration  requirements  of the  Securities  Act,  including  any  applicable
prospectus delivery requirements, or an exemption therefrom.

      (f) Until the date that each  Purchaser  holds less than 20% of the Shares
initially purchased hereunder by such Purchaser, the Company shall not undertake
a reverse or forward stock split or reclassification of the Common Stock without
the prior written  consent of the  Purchasers  holding a majority in interest of
the Shares.

                                       19
<PAGE>

      4.2 Furnishing of Information.  As long as any Purchaser owns  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. As long as any
Purchaser  owns  Securities,  if the  Company is not  required  to file  reports
pursuant to the Exchange Act, it will prepare and furnish to the  Purchasers and
make publicly  available in accordance  with Rule 144(c) such  information as is
required for the Purchasers to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably request,  all to the extent required from time to time
to enable such Person to sell such  Securities  without  registration  under the
Securities Act within the limitation of the exemptions provided by Rule 144.

      4.3  Integration.  The Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

      4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern  time on the  Trading Day  following  the date  hereof,  issue a Current
Report on Form 8-K,  reasonably  acceptable  to each  Purchaser  disclosing  the
material terms of the  transactions  contemplated  hereby,  and shall attach the
Transaction Documents thereto. The Company and each Purchaser shall consult with
each other in issuing any other press releases with respect to the  transactions
contemplated  hereby,  and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company,  with respect to any press release of any Purchaser,  or
without the prior consent of each  Purchaser,  with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading  Market  regulations,  in which case the Company shall provide
the Purchasers  with prior notice of such  disclosure  permitted under subclause
(i) or (ii).

      4.5  Shareholder  Rights  Plan.  No claim will be made or  enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

                                       20
<PAGE>

      4.6 Non-Public Information.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.7 Use of Proceeds.  Except as set forth on Schedule 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital  purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade  payables in the ordinary  course of
the  Company's  business  and prior  practices),  to redeem any Common  Stock or
Common Stock Equivalents or to settle any outstanding litigation.

      4.8  Reimbursement.  If any Purchaser  becomes involved in any capacity in
any  Proceeding  by or against  any Person who is a  stockholder  of the Company
(except as a result of sales, pledges,  margin sales and similar transactions by
such Purchaser to or with any current  stockholder),  solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses  (including
the cost of any  investigation  preparation and travel in connection  therewith)
incurred  in  connection   therewith,   as  such  expenses  are  incurred.   The
reimbursement  obligations  of the  Company  under  this  paragraph  shall be in
addition to any  liability  which the Company may otherwise  have,  shall extend
upon the same terms and  conditions to any  Affiliates of the Purchasers who are
actually  named in such  action,  proceeding  or  investigation,  and  partners,
directors,  agents,  employees and controlling persons (if any), as the case may
be, of the  Purchasers  and any such  Affiliate,  and shall be binding  upon and
inure  to  the  benefit  of  any   successors,   assigns,   heirs  and  personal
representatives  of the Company,  the  Purchasers and any such Affiliate and any
such Person.  The Company also agrees that neither the  Purchasers  nor any such
Affiliates,  partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company  solely as a result of acquiring  the  Securities  under
this Agreement.

      4.9  Indemnification  of  Purchasers.  Subject to the  provisions  of this
Section  4.9,  the Company  will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the Company and the  position of such  Purchaser
Party.  The  Company  will not be  liable  to any  Purchaser  Party  under  this
Agreement  (i) for any  settlement  by a Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

                                       21
<PAGE>

      4.10  Reservation  of Common Stock.  Subject to  Stockholder  Approval (as
defined in Section  4.14),  as of the date hereof,  the Company has reserved and
the Company shall continue to reserve and keep  available at all times,  free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Shares  pursuant to this  Agreement and Warrant
Shares pursuant to any exercise of the Warrants.

      4.11 Listing of Underlying Shares and Related Matters.  For so long as the
Common  Stock or other  securities  of the Company are traded on the OTCBB,  the
Shares,  the Adjustment  Shares,  the Penalty Shares and the Warrant Shares will
also be tradeable on the OTCBB.  If the Company applies to have its Common Stock
or other securities  traded on any principal stock exchange or market,  it shall
include in such  application  the Shares,  the  Adjustment  Shares,  the Penalty
Shares and the Warrant Shares and will take such other  commercially  reasonable
action as is necessary to cause such Common Stock to be so listed.

      4.12 Equal Treatment of Purchasers.  No consideration  shall be offered or
paid to any  person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended to treat for the Company the  Purchasers as a class and shall not in
any way be  construed  as the  Purchasers  acting in  concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

      4.13  Participation  in Future  Financing.  From the date hereof  until 12
months after the Closing Date,  upon any financing by the Company (a "Subsequent
Financing"),  the  Purchasers  shall have the right to  participate  in up to an
aggregate of 35% of such Subsequent Financing (the "Participation  Maximum"). At
least 5 Trading  Days prior to the  closing  of the  Subsequent  Financing,  the
Company  shall  deliver to each  Purchaser a written  notice of its intention to
effect a Subsequent  Financing  ("Pre-Notice"),  which Pre-Notice shall ask such
Purchaser if it wants to review the details of such financing  (such  additional
notice, a "Subsequent Financing Notice").  Upon the request of a Purchaser,  and
only upon a request by such Purchaser,  for a Subsequent  Financing Notice,  the
Company  shall  promptly,  but no later than 1 Trading  Day after such  request,
deliver  a  Subsequent  Financing  Notice  to  such  Purchaser.  The  Subsequent
Financing Notice shall describe in reasonable  detail the proposed terms of such
Subsequent  Financing,  the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent  Financing is proposed to be effected,  and
attached to which shall be a term sheet or similar document relating thereto. If
by 6:30 p.m.  (New York City time) on the fifth day after all of the  Purchasers
have  received  the  Pre-Notice,   notifications  by  the  Purchasers  of  their
willingness  to  participate  in the  Subsequent  Financing  (or to cause  their
designees  to  participate)  is,  in the  aggregate,  less than 35% of the total
amount of the  Subsequent  Financing,  then the Company may effect the remaining
portion of such  Subsequent  Financing on the terms and to the Persons set forth
in the Subsequent  Financing  Notice.  If the Company  receives no notice from a
Purchaser as of such fifth day, such Purchaser  shall be deemed to have notified
the Company that it does not elect to participate.  The Company must provide the
Purchasers with a second Subsequent  Financing  Notice,  and the Purchasers will
again have the right of  participation  set forth above in this Section 4.13, if
the Subsequent  Financing subject to the initial Subsequent  Financing Notice is
not  consummated  for any  reason  on the  terms  set  forth in such  Subsequent
Financing Notice within 60 Trading Days after the date of the initial Subsequent
Financing  Notice.  In the event the Company  receives  responses to  Subsequent
Financing  Notices from  Purchasers  seeking to purchase more than the aggregate
amount of the Subsequent Financing,  each such Purchaser shall have the right to
purchase their Pro Rata Portion (as defined below) of the Participation Maximum.
"Pro Rata  Portion" is the ratio of (x) the  Subscription  Amount of  Securities
purchased  by a  participating  Purchaser  and  (y)  the  sum of  the  aggregate
Subscription  Amount  of  all  participating  Purchasers.   Notwithstanding  the
foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance.

                                       22
<PAGE>

      4.14 Stockholder Approval. The Company shall file an information statement
with the SEC no later  than the  Filing  Date (as  defined  in the  Registration
Rights   Agreement)  and  use  its  best  efforts  to  obtain,  as  promptly  as
practicable,  such approvals of the Company's stockholders as may be required to
issue all of the  Adjustment  Shares,  Penalty Shares and shares of Common Stock
issuable  upon  exercise of the Warrants in  accordance  with Nevada law and any
applicable rules or regulations of the OTCBB and Nasdaq,  through an increase in
authorized  capital (the "Stockholder  Approval").  The Company shall furnish to
each Purchaser and its legal counsel promptly (but in no event less than two (2)
business  days)  before  the  same  is  filed  with  the  SEC,  one  copy of the
information  statement  and any  amendment  thereto,  and shall  deliver to each
Purchaser promptly each letter written by or on behalf of the Company to the SEC
or the  staff of the SEC,  and each item of  correspondence  from the SEC or the
staff of the SEC, in each case  relating to such  information  statement  (other
than any portion  thereof which contains  information  for which the Company has
sought confidential treatment).  The Company will promptly (but in no event more
than ten (10) Trading  days)  respond to any and all comments  received from the
SEC (which comments shall promptly be made available to each Buyer). The Company
shall comply with the filing and disclosure requirements of Section 14 under the
1934 Act in connection with the Stockholder Approval. The Company represents and
warrants that its Board of Directors has approved the proposal  contemplated  by
this Section 4.14 and shall indicate such approval in the information  statement
used in connection with the Stockholder Approval.

      4.15 Registration  Statements.  From the date hereof until 60 Trading Days
after the Effective Date,  neither the Company nor any Subsidiary shall file any
registration  statements until the Registration  Statement  required pursuant to
the  Registration  Rights  Agreement is declared  effective  by the  Commission.
Further, the Company shall not file any registration statement on Form S-8 for a
period of twelve (12) months after the Closing Date.

                                       23
<PAGE>

      4.16 Adjustment Shares.

      (a) In the  event  that the  closing  bid  price of the  Company's  Common
Stock's is below $0.075 for five (5)  consecutive  Trading Days at any time from
the Closing Date until the Effective  Date,  then the Company shall issue to the
Purchasers  an  additional  amount of shares of Common Stock such that the total
amount of shares issued to the Purchasers at the Closing Date together with such
additional  shares shall result in an average  purchase price of $0.05 per share
after  giving  effect  to any  stock  split,  dividend  or  other  distribution,
recapitalization or similar event with respect to the Company's shares of Common
Stock.

      (b) Commencing  with the second fiscal quarter of 2005 and for a period of
one (1) year therafter,  in the event that the Company reports  revenues of less
than  $1,100,000  for any of the following  four (4) fiscal  quarters,  then the
Company shall issue to the  Purchasers an additional  amount of shares of Common
Stock such that the amount of shares  issued to the  Purchasers  at the  Closing
Date together with such  additional  shares shall result in an average  purchase
price of $0.05 per share after  giving  effect to any stock  split,  dividend or
other  distribution,  recapitalization  or  similar  event  with  respect to the
Company's  shares of Common Stock.  The additional  shares issuable  pursuant to
these  Sections  4.15(a)  and (b) are  collectively  referred  to  herein as the
"Adjustment Shares".

      (c) For purposes of Sections 4.15(a) and (b) of this Agreement, and by way
of example,  if one of the events  described in Sections  4.15(a) and (b) wee to
occur,  then and in such event a Purchaser  of 100,000  shares of the  Company's
Common Stock  (representing  a purchase  price of $12,500,  or $0.125 per share)
under this Agreement  would be entitled to receive an additional  150,000 shares
of the Company's Common Stock (resulting in an aggregate of 250,000 shares at an
average purchase price of $0.05 per share).

      (d) In the event that either of the foregoing events arise, the Purchasers
shall have the right to demand that the Company file a registration statement on
Form SB-2  registering  the  additional  shares of Common  Stock  issued to them
pursuant to this Section 4.15 within  thirty (30) days of such event,  provided,
however,  that such demand cannot be made any sooner than thirty (30) days after
the Registration Statement is declared effective.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1  Termination.  This Agreement may be terminated by any  Purchaser,  by
written notice to the other parties,  if the Closing has not been consummated on
or before February 4, 2005;  provided that no such  termination  will affect the
right of any party to sue for any breach by the other party (or parties).

                                       24
<PAGE>

      5.2 Fees and Expenses. The Company shall pay the fees and expenses related
to the preparation of this Agreement and related offering documents,  as well as
any escrow agent fees.  Such fees and expenses shall be paid on the Closing Date
out of funds held pursuant to a Funds Escrow Agreement to be entered into by the
Company,  Purchasers  and the  Escrow  Agent.  The  Company  shall  also pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the issuance of any Securities.

      5.3  Entire  Agreement.  The  Transaction  Documents,  together  with  the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.4 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 6:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second  Trading Day following the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

      5.5 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom  enforcement  of any such waiver is sought.  No waiver of any default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed to be a  continuing  waiver in the  future or a waiver of any  subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right.

      5.6  Headings.  The  headings  herein  are for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

      5.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".

                                       25
<PAGE>

      5.7 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

      5.8 Governing Law. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby irrevocably waives
personal  service of process and  consents to process  being  served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or  overnight  delivery  (with  evidence of  delivery) to such party at the
address in effect for  notices to it under this  Agreement  and agrees that such
service  shall  constitute  good and  sufficient  service of process  and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any manner  permitted by law. The parties  hereby waive all
rights  to a trial  by jury.  If  either  party  shall  commence  an  action  or
proceeding to enforce any  provisions  of the  Transaction  Documents,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its  attorneys'  fees and other costs and expenses  incurred  with the
investigation, preparation and prosecution of such action or proceeding.

      5.9 Survival.  The representations and warranties herein shall survive the
Closing and delivery of the Shares and Warrant Shares.

      5.10   Execution.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

      5.11  Severability.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

                                       26
<PAGE>

      5.12  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option under a  Transaction  Documents and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights.

      5.13   Replacement  of  Securities.   If  any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

      5.14  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      5.15 Payment Set Aside.  To the extent that the Company makes a payment or
payments to any Purchaser  pursuant to any Transaction  Documents or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

      5.16  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser  under any  Transaction  Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Documents.  Nothing  contained herein or in any
Transaction  Documents,  and no action taken by any Purchaser  pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Documents. Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,

                                       27
<PAGE>

including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the Transaction  Documents.  The Company has
elected to provide all Purchasers with the same terms and Transaction  Documents
for the  convenience of the Company and not because it was required or requested
to do so by the Purchasers.

      5.17  Liquidated  Damages.  The Company's  obligations  to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.

      5.18  Construction.  The  parties  agree  that each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Page Follows)


                                       28
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

ACIES CORPORATION                                    Address for Notice:
                                                     -------------------


By:/s/ Oleg Firer
   ------------------------------
   Name: Oleg Firer                                  14 Wall Street, Suite 1620
   Title:  President and CEO                         New York, New York 10005

With a copy to (which shall not constitute notice):

Richard A. Friedman, Esq.
Sichenzia Ross Friedman Ference
1065 Avenue of the Americas

New York, NY 10018

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]


                                       29
<PAGE>

        [PURCHASER SIGNATURE PAGES TO NSOL SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of Purchaser: ________________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Purchaser:________________________________________________
Facsimle of Purchaser:_____________________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount:
Shares:
Warrant Shares:

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]


                                       30
<PAGE>

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $1,100,000 of Common Stock and
Warrants from Acies Corporation (the "Company"). All funds will be wired into a
trust account maintained by Sichenzia Ross Friedman Ference LLP, counsel to the
Company. All funds will be disbursed in accordance with this Closing Statement.

DISBURSEMENT DATE:    February 3, 2005

--------------------------------------------------------------------------------

I. PURCHASE PRICE                                                  $1,100,000.00

                             NET PROCEEDS TO BE RECEIVED IN TRUST  $1,002,500.00

II.  DISBURSEMENTS

                             Investor's legal fees                    $15,000.00
                             Company's legal fees                     $50,000.00

TOTAL AMOUNT DISBURSED:                                               $65,000.00

WIRE INSTRUCTIONS:

To: Sichenza Ross Friedman Ference LLP

Wiring Instructions for Sichenzia Ross Friedman Ference LLP
IOLA Account

Wire to: [INTENTIONALLY OMITTED]


To: _____________________________________


                                       31
<PAGE>

                                  SCHEDULES TO

                          SECURITIES PURCHASE AGREEMENT

dated as of February 3, 2005 by and, among Acies Corporation, a Nevada
corporation (the "Company"), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a "Purchaser" and
collectively the "Purchasers")


                                       32
<PAGE>

                                 SCHEDULE 3.1(A)

                          SUBSIDIARIES OF THE COMPANY.

1. The following is the sole wholly-owned subsidiary of the Company:

         Acies, Inc.


                                       33
<PAGE>

                                 SCHEDULE 3.1(G)

                                 CAPITALIZATION

Authorized

50,000,000 shares of common stock

5,000,000 shares of preferred stock

Outstanding

38,265,207 shares of common stock outstanding as of December 31, 2004

0 shares of preferred stock

Warrant  to  purchase  an  aggregate  of  150,000  shares of common  stock at an
exercise price of $0.25 expiring on December 1, 2009

Warrant  to  purchase  an  aggregate  of  110,000  shares of common  stock at an
exercise price of $0.11 expiring on September 1, 2005

The following are the only outstanding options of the Company:

                                                     Issue  VESTED AS
                                        Price             OF 12/31/04

Oleg Firer              1,845,825       $1.00     7/1/2004    307,638
Yakov Shimon              461,456       $1.00     7/1/2004     76,909
Miron Guilliadov          461,456       $1.00     7/1/2004     76,909


                                       34
<PAGE>

                                SCHEDULE 3.1(FF)

            INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE COMPANY

Malone & Bailey, PLLC


                                       35
<PAGE>

                                  SCHEDULE 4.7

                                 USE OF PROCEEDS

None

                                       36