Exhibit 10.50

                           GENERAL SECURITY AGREEMENT


            General  Security  Agreement  dated  ____________,   2004,  made  by
Molecular  Diagnostics,  Inc. a Delaware corporation ("Debtor") having an office
at  __________________________,  in favor of the  parties  listed on  Schedule B
attached hereto (the "Secured Parties").

            Debtor hereby agrees in favor of Secured Parties as follows:

            1.  In  consideration  for  loans  made  or to  be  made  to  Debtor
substantially  for the benefit of Debtor by Secured  Parties,  evidenced  by the
Promissory  Notes of Debtor in the  principal  amounts  set forth on  Schedule B
hereto,  payable  to the order of  Secured  Parties  (such  notes,  as  amended,
modified, supplemented,  replaced or substituted from time to time, being herein
referred  to as  the  "Notes"),  Debtor  hereby  grants  to  Secured  Parties  a
continuing  security  interest in, lien upon and a right of setoff against,  and
Debtor  hereby  assigns to Secured  Parties,  all of Debtor's  right,  title and
interest in and to the Collateral described in Section 2, to secure the full and
prompt   payment,   performance   and  observance  of  all  present  and  future
indebtedness,  obligations,  liabilities and agreements of any kind of Debtor to
Secured Parties arising under or in connection with the Notes, which is existing
now  or  hereafter  (all  of  the  foregoing  being  herein  referred  to as the
"Obligations").

            2. The  Collateral is described on Schedule A annexed hereto as part
hereof and on any separate  schedule(s)  identified as Collateral at any time or
from  time to time  furnished  by Debtor to  Secured  Parties  (all of which are
hereby deemed part of this  Security  Agreement)  and includes  claims of Debtor
against third parties for loss or damage to or destruction of any Collateral.

            3. Debtor hereby warrants,  represents,  covenants and agrees (as of
the date hereof and so long as any Obligation remains outstanding) that: (a) the
chief  executive  office and other  places of business of Debtor,  the books and
records  relating  to the  Collateral  (except  for such  records  as are in the
possession or control of Secured  Parties) and the Collateral are located at the
address set forth below and Debtor will not change any of the same,  or merge or
consolidate with any person or change its name or conduct its business under any
trade,  assumed or fictitious name,  without prior written notice to and consent
of Secured  Parties;  (b) the  Collateral is and will be used in the business of
Debtor  and  not  for  personal,  family,  household  or  farming  use;  (c) the
Collateral  is now,  and at all times will be, owned by Debtor free and clear of
all liens, security interests, claims and encumbrances, except as are created by
this Security

<PAGE>



Agreement  and  those  that are set forth on  Schedule  C; (d)  Debtor  will not
abandon or assign, sell, lease,  transfer or otherwise dispose of, other than in
the ordinary course of Debtor's  business,  nor will Debtor suffer or permit any
of the same to occur with  respect to, any  Collateral,  without  prior  written
notice to and consent of a designated representative of the Secured Parties; (e)
Debtor  will make  payment or will  provide  for the  payment,  when due, of all
taxes,  assessments or  contributions  or other public or private  charges which
have been or may be levied or assessed  against Debtor,  whether with respect to
the  Collateral,  to any wages or salaries paid by Debtor,  or  otherwise,  will
deliver  to  Secured  Parties,   on  demand,   certificates  or  other  evidence
satisfactory  to Secured  Parties  attesting  thereto and shall  cause  Debtor's
subsidiaries  to take any such action as described  under this section 3(e); (f)
Debtor will use the  Collateral for lawful  purposes  only,  with all reasonable
care and caution and in conformity in all material  respects with all applicable
laws,  ordinances  and  regulations;  (g) Debtor will, at Debtor's sole cost and
expense,  keep the Collateral in good order,  repair,  running  condition and in
substantially the same condition as on the date hereof, reasonable wear and tear
excepted,  and Debtor  will not,  without the prior  written  consent of Secured
Parties,  alter or remove  any  identifying  symbol  or  number  upon any of the
Collateral; (h) Secured Parties shall at all times have free access to and right
of  inspection  of any  Collateral  and  any  papers,  instruments  and  records
pertaining  thereto  (and the right to make  extracts  from and to receive  from
Debtor  originals or true copies of such records,  papers and  instruments  upon
request  therefor)  and  Debtor  hereby  grants to  Secured  Parties a  security
interest in all such  records,  papers and  instruments  to secure the  payment,
performance  and  observance of the  Obligations;  (i) the Collateral is now and
shall remain  personal or  intangible  property,  and Debtor will not permit any
Collateral to become a fixture  without  prior written  notice to and consent of
Secured Parties and without first making all  arrangements,  and delivering,  or
causing to be  delivered,  to Secured  Parties all  instruments  and  documents,
including,  without  limitation,  waivers and  subordination  agreements  by any
landlords or mortgagees,  requested by and  satisfactory  to Secured  Parties to
preserve and protect the primary  security  interest  granted herein against all
persons;  (j) Debtor will,  at its sole cost and  expense,  perform all acts and


                                      -2-
<PAGE>

execute  all  documents  requested  by  Secured  Parties  from  time  to time to
evidence,  perfect, maintain or enforce Secured Parties' first priority security
interest  granted  herein or otherwise in  furtherance of the provisions of this
Security Agreement;  (k) at any time and from time to time, Debtor shall, at its
sole cost and expense,  execute and deliver to Secured  Parties  such  financing
statements  pursuant to the Uniform  Commercial Code ("UCC"),  applications  for
certificate  of title and  other  papers,  documents  or  instruments  as may be
requested by Secured Parties in connection with this Security Agreement,  and to
the extent permitted by applicable law, Debtor hereby authorizes Secured Parties
to  execute  and file at any time  and from  time to time one or more  financing
statements or copies  thereof or of this Security  Agreement with respect to the
Collateral  signed  only  by  Secured  Parties,  and  Debtor  agrees  to pay any
recording tax or similar tax arising in  connection  with the filing of any such
financing  statement  and  further  agrees to pay any  additional  recording  or
similar tax which is incurred in connection  therewith;  (l) Debtor  assumes all
responsibility  and  liability  arising  from  the  Collateral;   (m)  in  their
discretion,  Secured  Parties  may, at any time and from time to time,  upon the
occurrence  and during the  continuance of a Default (as  hereinafter  defined),
demand, sue for, collect or receive any money or property at any time payable or
receivable  on  account  of or in  exchange  for,  or  make  any  compromise  or
settlement  deemed desirable by Secured Parties with respect to, any Collateral,
and/or  extend the time of  payment,  arrange for  payment in  installments,  or
otherwise  modify the terms of, or release,  any of the  Obligations  and/or the
Collateral,  or any obligor, maker, endorser,  acceptor, surety or guarantor of,
or any Parties to, any of the Obligations or the Collateral,  all without notice
to or consent by Debtor and  without  otherwise  discharging  or  affecting  the
Obligations,  the Collateral or the first  priority  security  interest  granted
herein; (n) in their discretion,  Secured Parties may, at any time and from time
to time,  for the  account of Debtor,  pay any amount or do any act  required of
Debtor hereunder and which Debtor fails to do or pay, and any such payment shall
be deemed an  advance by Secured  Parties to Debtor  payable on demand  together
with  interest at the highest rate then payable on any of the  Obligations;  (o)
Debtor will  promptly  pay  Secured  Parties  for any and all sums,  costs,  and
expenses  which Secured  Parties may pay or incur  pursuant to the provisions of
this Security  Agreement or in  perfecting,  defending,  protecting or enforcing
this Security  Agreement or the first priority  security interest granted herein
or in enforcing  payment of the  Obligations or otherwise in connection with the
provisions hereof, including but not limited to all search, filing and recording
fees, taxes, fees and expenses for the service and filing of papers,  premium on
bonds and undertakings,  fees of marshals,  sheriffs,  custodians,  auctioneers,
court costs,  collection  charges,  travel expenses,  and reasonable  attorneys'
fees,  all of which  together  with interest at the highest rate then payable on
any of the  Obligations,  shall be part of the  Obligations  and be  payable  on
demand;  (p) upon the  occurrence and during the  continuance of a Default,  any
proceeds of the Collateral received by Debtor shall not be commingled with other
property of Debtor, but shall be segregated, held by Debtor in trust for Secured
Parties, and immediately delivered to Secured Parties in the form received, duly
endorsed in blank where  appropriate to effectuate the  provisions  hereof,  the
same to be held by Secured  Parties as  additional  Collateral  hereunder or, at
Secured Parties' option, to be applied to payment of the Obligations, whether or
not due and in any order; (q) in their sole discretion,  Secured Parties may, at
any time and from time to time, assign, transfer or deliver to any transferee of
any  Obligations,  any  Collateral,  whereupon  Secured  Parties  shall be fully
discharged from all  responsibility  and the transferee shall be vested with all
powers and rights of Secured Parties hereunder with respect thereto, but Secured
Parties  shall retain all rights and powers with respect to any  Collateral  not
assigned,  transferred or delivered; and (r) upon request of Secured Parties, at
any time and from time to time,  Debtor shall, at its cost and expense,  execute
and deliver to Secured  Parties  reports as to the Collateral  listing all items
thereof,  describing  the  condition of same and setting forth the value thereof
(lower of cost or market) all in form and substance  reasonably  satisfactory to
Secured Parties.

            4. The term Default as used in this  Security  Agreement  shall mean
any event of default, as such term is defined in the Notes.

            5. Upon the  occurrence  and during the  continuance of any Default,
Secured  Parties may,  without  notice to (except as herein set forth) or demand
upon Debtor,  declare any  Obligations  immediately  due and payable and Secured
Parties shall have the following rights and remedies (to the extent permitted by
applicable  law) in  addition to all rights and  remedies  of a Secured  Parties
under the UCC or of Secured Parties under the  Obligations,  all such rights and
remedies  being  cumulative,   not  exclusive  and  enforceable   alternatively,
successively or concurrently:



                                      -3-
<PAGE>

            (a) Secured  Parties may, at any time and from time to time, with or
without judicial process or the aid and assistance of others, (i) enter upon any
premises in which any  Collateral  may be located  and,  without  resistance  or
interference by Debtor,  take possession of the Collateral,  (ii) dispose of any
part or all of the  Collateral on any such  premises,  (iii)  require  Debtor to
assemble and make available to Secured Parties at the expense of Debtor any part
or all of the  Collateral at any place and time  designated  by Secured  Parties
which is reasonably  convenient to both parties,  (iv) remove any part or all of
the Collateral from any such premises for the purpose of effecting sale or other
disposition  thereof (and if any of the Collateral  consists of motor  vehicles,
Secured Parties may use Debtor's license plates),  and (v) sell, resell,  lease,
assign and deliver, grant options for or otherwise dispose of any part or all of
the  Collateral in its then condition or following any  commercially  reasonable
preparation  or  processing,  at  public  or  private  sale  or  proceedings  or
otherwise,  by one or more  contracts,  in one or more  parcels,  at the same or
different  times,  with or without having the Collateral at the place of sale or
other disposition,  for cash and/or credit, and upon any terms, at such place(s)
and time(s) and to such  person(s) as Secured  Parties  deems best,  all without
demand,  notice or  advertisement  whatsoever  except  that where an  applicable
statute requires  reasonable notice of sale or other  disposition  Debtor hereby
agrees that the sending of ten days' notice by overnight mail,  postage prepaid,
to any address of Debtor set forth in this  Security  Agreement  shall be deemed
reasonable  notice  thereof.  If any Collateral is sold by Secured  Parties upon
credit or for  future  delivery,  Secured  Parties  shall not be liable  for the
failure of the purchaser to pay for same and in such event  Secured  Parties may
resell or otherwise dispose of such Collateral. Secured Parties may buy any part
or all of the  Collateral  at any  public  sale  and,  if any part or all of the
Collateral  is of a type  customarily  sold in a recognized  market or is of the
type  which is the  subject of widely  distributed  standard  price  quotations,
Secured  Parties may buy such  Collateral  at private  sale and in each case may
make payment therefor by any means, whether by credit against the Obligations or
otherwise.  Secured Parties may apply the cash proceeds  actually  received from
any sale or other disposition to the reasonable  expenses of retaking,  holding,
preparing for sale, selling, leasing and the like, to reasonable attorneys' fees
and all  legal,  travel  and other  expenses  which may be  incurred  by Secured
Parties in attempting to collect the Obligations, proceed against the Collateral
or enforce  this  Security  Agreement  or in the  prosecution  or defense of any
action or proceeding related to the Obligations, the Collateral or this Security
Agreement;  and then to the  Obligations  in such order and as to  principal  or
interest as Secured Parties may desire;  and Debtor shall remain liable and will
pay Secured Parties on demand any deficiency  remaining,  together with interest
thereon at the highest rate then payable on the  Obligations  and the balance of
any expenses unpaid, with any surplus to be paid to Debtor,  subject to any duty
of Secured  Parties  imposed by law to the  holder of any  subordinate  security
interest in the Collateral known to Secured Parties.

            (b)  Secured  Parties  may,  at any time and from  time to time,  as
appropriate, set off and apply to the payment of the Obligations, any Collateral
in or coming into the  possession of Secured  Parties or their  agents,  without


                                      -4-
<PAGE>

notice to Debtor and in such manner as Secured  Parties may in their  discretion
determine.

            6. To the extent  necessary to enforce their rights  hereunder,  and
after the occurrence and during the continuance of a Default, Debtor and Secured
Parties  hereby  designate  and appoint [ ]  ("Agent")  as  attorney-in-fact  of
Debtor,  irrevocably and with power of substitution,  with authority to: endorse
the name of Debtor on any notes,  acceptances,  checks,  drafts,  money  orders,
instruments or other evidences of Collateral that may come into Secured Parties'
possession;  sign the name of Debtor on any  invoices,  documents,  assignments;
execute  proofs of claim and loss;  execute  endorsements,  assignments or other
instruments  of conveyance or transfer;  adjust and  compromise any claims under
insurance  policies or otherwise;  execute  releases;  and do all other acts and
things necessary or advisable in the sole discretion of Secured Parties to carry
out and enforce this  Security  Agreement or the  Obligations.  Neither  Secured
Parties  nor any  designee  or agent  thereof  shall be  liable  for any acts of
commission or omission done in good faith,  for any error of judgment or for any
mistake of fact or law. This power of attorney being coupled with an interest is
irrevocable while any Obligations shall remain unpaid. A majority in interest of
the Secured Parties may replace the Agent.

            7. With respect to the enforcement of Secured  Parties' rights under
this Security  Agreement,  Debtor hereby releases Secured Parties and Agent from
any  claims,  causes of action and  demands at any time  arising  out of or with
respect to this Security Agreement, the Obligations,  the Collateral and its use
and/or any actions  taken or omitted to be taken by Secured  Parties or Agent in
good faith  with  respect  thereto,  and Debtor  hereby  agrees to hold  Secured
Parties and Agent  harmless  from and with  respect to any and all such  claims,
causes of action and demands.

            8.  Secured  Parties'  prior  recourse to any  Collateral  shall not
constitute  a  condition  of any  demand,  suit or  proceeding  for  payment  or
collection  of the  Obligations  nor shall any demand,  suit or  proceeding  for
payment or collection of the Obligations  constitute a condition of any recourse
by Secured Parties to the Collateral.  Any suit or proceeding by Secured Parties
to  recover  any of the  Obligations  shall  not be  deemed a waiver  of, or bar
against,  subsequent  proceedings  by Secured  Parties with respect to any other
Obligations and/or with respect to the Collateral.  No act, omission or delay by
Secured Parties shall constitute a waiver of their rights and remedies hereunder
or otherwise.  No single or partial  waiver by Secured  Parties of any covenant,
warranty,  representation,  Default or right or remedy which they may have shall
operate as a waiver of any other covenant,  warranty,  representation,  Default,
right or  remedy or of the same  covenant,  warranty,  representation,  Default,
right or remedy on a future occasion.  Debtor hereby waives presentment,  notice
of  dishonor  and  protest of all  instruments  included  in or  evidencing  any
Obligations or Collateral,  and all other notices and demands whatsoever (except
as expressly provided herein).

            9.  Debtor  hereby  agrees  to pay,  on  demand,  all  out-of-pocket
expenses  incurred by Secured  Parties in connection with the enforcement of the
Notes, this Security  Agreement,  and the Obligations and in connection with any


                                      -5-
<PAGE>

amendment,  including, without limitation, the fees and disbursements of counsel
to Secured Parties.

            10.  In the  event of any  litigation  with  respect  to any  matter
connected with this Security Agreement,  the Obligations,  the Collateral or the
Notes,  Debtor  hereby  waives  the  right to a trial by jury and all  rights of
setoff.  Debtor hereby waives personal service of any process in connection with
any such action or proceeding and agrees that the service thereof may be made by
certified  or  registered  mail  directed to Debtor at any address of Debtor set
forth in this  Security  Agreement.  Debtor so served  shall appear or answer to
such process  within  thirty days after the mailing  thereof.  Should  Debtor so
served fail to appear or answer within said thirty-day  period,  Debtor shall be
deemed in default and judgment may be entered by Secured  Parties against Debtor
for the amount or such other relief as may be demanded in any process so served.
In the alternative,  Secured Parties may in their discretion effect service upon
Debtor in any other form or manner permitted by law.

            11. Debtor shall deliver to Secured Parties on the date of execution
of this Security Agreement duly executed UCC-1 financing statements with respect
to the  Collateral.  Upon the  payment  in full or  conversion  of the Notes and
satisfaction  of all  Obligations  in  accordance  with the Notes,  the security
interest  granted hereby in the Collateral shall terminate and all rights to the
Collateral  under  this  Agreement  shall  revert  to  Debtor.   Upon  any  such
termination,  the Secured  Parties  shall  execute and deliver UCC -3  financing
statement releases or other documents of release reasonably requested by Debtor.

            12. Secured Parties may assign their rights and obligation hereunder
to any Affiliate of Secured Parties provided that such Affiliate  assumes all of
the  liabilities or obligations of Secured  Parties  hereunder.  For purposes of
this section,  "Affiliate" of any person means any other person or entity which,
directly or  indirectly,  controls or is controlled by that person,  or is under
common  control  with  that  person  or  entity.   "Control"  (including,   with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any person or entity, means the possession,  directly or
indirectly,  of the power to direct or cause the direction of the management and
policies  of such person or entity,  whether  through  the  ownership  of voting
securities, by contract or otherwise.

            13. All terms  herein shall have the meanings as defined in the UCC,
unless the context  otherwise  requires.  No provision hereof shall be modified,
altered, waived, released,  terminated or limited except by a written instrument
expressly  referring  to this  Security  Agreement  and to such  provision,  and
executed  by the  Parties to be  charged.  The  execution  and  delivery of this
Security  Agreement has been  authorized by the Board of Directors of Debtor and
by any  necessary  vote or consent of  stockholders  of  Debtor.  This  Security
Agreement and all  Obligations  shall be binding upon the successors and assigns
of Debtor and shall,  together  with the rights and remedies of Secured  Parties
hereunder,   inure  to  the  benefit  of  Secured   Parties,   their  executors,
administrators,  successors,  endorsees and assigns. This Security Agreement and


                                      -6-
<PAGE>

the  Obligations  shall be governed in all  respects by the laws of the State of
Illinois  applicable to contracts executed and to be performed in such state. If
any term of this  Security  Agreement  shall be held to be  invalid,  illegal or
unenforceable,  the  validity  of all  other  terms  hereof  shall  in no way be
affected  thereby.  Secured  Parties is authorized to annex hereto any schedules
referred  to herein.  Debtor  acknowledges  receipt  of a copy of this  Security
Agreement.

            14. All notices and other  communications under this Agreement shall
be in writing and shall be deemed given when delivered personally,  by overnight
mail or mailed by certified mail, return receipt requested,  to the parties (and
shall also be transmitted by facsimile to the persons  receiving copies thereof)
at the  following  addresses  (or to such  other  address  as a party  may  have
specified by notice given to the other party pursuant to this provision):

If to Debtor:                            Molecular Diagnostics, Inc.
                                         414 North Orleans Street, Suite 510
                                         Chicago, IL 60610
                                         Attn: Mr. Peter Gombrich

                  With a copy to:        Sichenzia Ross Friedman Ference LLP
                                         1065 Avenue of the Americas
                                         New York, New York 10018
                                         Attn: Gregory Sichenzia, Esq.

                  If to Secured Parties:
                                         ---------------------
                                         ---------------------
                                         ---------------------

                  With a copy to:
                                         ---------------------
                                         ---------------------
                                         ---------------------

            IN WITNESS  WHEREOF,  the  undersigned  has  executed or caused this
security  agreement  to be  executed  in the State of New York on the date first
above set forth.

                                   MOLECULAR DIAGNOSTICS, INC.


                                   By___________________________
                                       Peter Gombrich, Chief Executive Officer



                                      -7-
<PAGE>

                                   SCHEDULE A



The  property  covered  by this  Security  Agreement  consists  of covers all of
Debtor's  right,  title and interest in, to and under the following  properties,
assets and rights of the Debtor, in each case whether now or hereafter  existing
or arising or in which Debtor now has or hereafter owns, acquires or develops an
interest and wherever located (collectively, the "Collateral"):

            (i) all patents and patent  applications,  domestic or foreign,  all
licenses  relating to any of the  foregoing  and all income and  royalties  with
respect  to any  licenses,  all  rights  to sue  for  past,  present  or  future
infringement  thereof,  all rights arising therefrom and pertaining  thereto and
all reissues, divisions,  continuations,  renewals, extensions and continuations
in-part thereof;

            (ii) all general  intangibles  and all  intangible  intellectual  or
other  similar  property  of Debtor of any kind or  nature,  associated  with or
arising out of any of the aforementioned properties and assets and not otherwise
described above;

            (iii) all  personal  and  fixture  property of every kind and nature
including without limitation all goods (including  inventory,  equipment and any
accessions  thereto),   instruments  (including  promissory  notes),  documents,
accounts,  chattel paper (whether  tangible or  electronic),  deposit  accounts,
letter-of-credit  rights  (whether or not the letter of credit is evidenced by a
writing),  securities and all other investment property, supporting obligations,
any other contract  rights or rights to the payment of money,  insurance  claims
and proceeds,  and all general intangibles  (including all payment intangibles);
and

            (iv)  all  proceeds  of any  and  all of  the  foregoing  Collateral
(including  license  royalties,  rights to  payment,  accounts  and  proceeds of
infringement  suits) and, to the extent not  otherwise  included,  all  payments
under insurance  (whether or not Secured Party is the loss payee thereof) or any
indemnity,  warranty  or  guaranty  payable  by  reason  of loss or damage to or
otherwise with respect to the foregoing Collateral).



                                      -8-
<PAGE>

                                   Schedule B


Name of Investor           Address of Investor       Amount of Promissory Notes











                                      -9-
<PAGE>

                                   Schedule C
                                      Liens

o     Debtor is  delinquent  in filing  certain  Federal  and State  Income  Tax
      returns for 2002 and 2001.  Debtor is also  delinquent in paying a portion
      of Federal and State  employee and employer  payroll taxes for 2003,  2002
      and 2001.  Debtor owed  $736,000 and $678,000 as of September 30, 2003 and
      December 31, 2002,  respectively,  in past-due  payroll  taxes,  including
      $241,000 and $250,000  respectively  in assessed and  estimated  statutory
      penalties  and  interest.  The Internal  Revenue  Service has filed a lien
      against  Debtor's  assets to secure the unpaid  payroll  taxes.  Debtor is
      currently  in the  process  of  communicating  through  counsel  with  the
      Internal Revenue Service to resolve this matter. The amount is included in
      accrued payroll costs in the  accompanying  balance sheet.  Debtor is also
      delinquent in paying various state franchise taxes.

o     On April 2, 2003, Debtor issued a $1,000,000  Convertible  Promissory Note
      to an affiliate, Suzanne M. Gombrich, the wife of Peter Gombrich, Debtor's
      Chairman  and CEO, in exchange  for cash.  The note bears  interest at the
      rate of 12% per annum and is convertible into the common stock of MDI at a
      conversion  price of $0.10 per share.  Debtor  also  granted  the holder a
      first priority security interest in all of Debtor's assets.

o     Beginning in October  2002,  Debtor began an issue of up to  $4,000,000 in
      series Bridge II Convertible Promissory Notes to accredited investors. The
      notes bear  interest at 12 % per annum payable at maturity date in kind in
      the form of shares of common stock and were due July 31,  2003.  The notes
      are  convertible  at any time  into the  common  stock of  Debtor.  Debtor
      granted a junior  security  position in all of the Debtor's  assets to the
      holders of the Bridge II convertible promissory notes. The Bridge II notes
      automatically  convert into shares of Common Stock (subject to adjustments
      for stock splits,  etc.) upon a "Qualified  Financing  Transaction," which
      means a  transaction  in which  the  Company  closes a new debt or  equity
      financing  prior to the maturity  date that results in net proceeds to the
      Company of at least four million dollars  ($4,000,000).  Through September
      30,  2003,  Debtor  issued  $1,858,200  in  principal  amount of Bridge II
      convertible promissory notes in exchange for cash. Between October 1, 2003
      and  November  10, 2003,  MDI issued an  additional  $122,000 in principal
      amount of Bridge II convertible  promissory notes in exchange for cash. In
      September 2003 an amendment to the Bridge II Convertible  Promissory Notes
      was sent to holders requesting an extension of the notes to July 31, 2004.
      As additional  consideration  for the  extension,  holders were offered an
      increase in the interest  rate from 12% to 15%. In addition,  an amendment
      to the indenture  offered an increase in the warrant  coverage  ratio from
      25% to 33%.




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