UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K


(Mark
One)





[X]
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
fiscal year ended December 31, 2008





[  ]
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from_________ to __________





Commission
file number: 001-16381








ARRAYIT
CORPORATION


(Exact
name of small business issuer as specified in its charter)











NEVADA
            76-0600966(State
      or other jurisdiction of
            (IRS
      Employerincorporation
      or organization)
            Identification
      No.)





524
East Weddell Drive, Sunnyvale, CA 94089


(Address
of principal executive offices)





408-744-1331


(Registrant's
telephone number)





Securities
registered under Section 12(b) of the Exchange Act:





NONE





Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $0.001 par value per share


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes [  ]  No
[X]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes [  ] No
[X]





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes [X]  No  [ 
]





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [   ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
accelerated
filer                                           [
]                                           Accelerated
filer                                                      [
]
















1










Non-accelerated
filer                                           [
]                                           Smaller
reporting
company                                                      [X]


(Do not
check if a smaller  reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [   ] No [X].





The
issuer's revenues for the most recent fiscal year ended December 31, 2008 were
$4,063,149.





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the closing value of the Registrant's
common stock on June 3, 2009, was approximately $13,946,000





As of
June 3, 2009, the issuer had 20,211,762 shares of common stock, $0.001 par value
per share outstanding.




Documents
Incorporated by Reference: NONE





Transitional
Small Business Disclosure Format: Yes [   ] No [X]








EXPLANATORY
NOTE





Arrayit
Corporation. has restated its Annual Report on Form 10-K. This Annual Report is
for the year ended December 31, 2008, and was originally filed with the
Commission on Form 10-K on April 15, 2009. The purpose of this amended Annual
Report is to make corrections to the Annual Report based on comments received by
the Commission. In addition, as required by Rule 12b-15 promulgated under the
Securities Exchange Act of 1934, as amended, new certifications by our principal
executive officer and principal financial officer are filed as exhibits to this
Amendment.





There are
changes made throughout this document, but primarily to the Items
entitled





-
            Management
      Discussion and Analysis – Debt
Obligations


-
            Disposal
      of Discontinued Operations


-
            Note
      10 to the financial statements concerning
Debt


-
            Management
      Discussion and Analysis – Liquidity





This
First Amended Annual Report on Form 10-K/A for the fiscal year ended December
31, 2008 amends and restates only those items of the previously filed Annual
Report on Form 10-K, which have been affected by the restatement.  In
order to preserve the nature and character of the disclosures set forth in such
items as originally filed, no attempt has been made in this
amendment





(i)
            to
      modify or update such disclosures except as required to reflect the
      effects of the revisions and restatements, other than to make reference to
      changes in note conversion terms in Note 10 to the financial statements
      and in the Management Discussion and
    Analysis,  or





(ii)
            to
      make revisions to the Notes to the Consolidated Financial Statements
      except for those which are required by or result from the effects of the
      revisions and restatements. No other information contained in our
      previously filed Form 10-K for the fiscal year ended December 31, 2008 has
      been updated or amended.





















2










ARRAYIT
CORPORATION


FORM
10-K


YEAR
ENDED DECEMBER 31, 2008


INDEX





Part
I





Item
      1. BusinessItem
      1A. Risk FactorsItem
      2. PropertiesItem
      3. Legal ProceedingsItem
      4. Submission of Matters to a Vote of Security Holders





Part II





Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity SecuritiesItem
      6. Selected Financial DataItem
      7. Management's Discussion and Analysis or Plan of
    OperationItem
      8. Financial Statements and Supplementary Data
              F-1Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial DisclosureItem
      9A. Controls and ProceduresItem
      9B. Other Information





Part III





Item
      10. Directors, Executive Officers and Corporate GovernanceItem
      11. Executive CompensationItem
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder MattersItem
      13. Certain Relationships and Related TransactionsItem
      14. Principal Accountant Fees and Services




Part
IV





Item
      15. Exhibits, Financial Statement Schedules


















3















PART
I





ITEM
1. BUSINESS





SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS





CERTAIN
STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K (THIS "FORM 10-K"), INCLUDING
STATEMENTS UNDER "ITEM 1. BUSINESS," AND "ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS", CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT
NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE
OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD",
OR "ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF ARRAYIT CORPORATION (THE "COMPANY", “TeleChem”, “Arrayit”,
"WE", "US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. REFERENCES IN THIS FORM 10-K, UNLESS ANOTHER DATE IS STATED, ARE TO
DECEMBER 31, 2008.





Corporate
History:





Integrated
Media Holdings, Inc.(IMHI) is a Delaware corporation, on February 5, 2008,
entered into a Plan and Agreement of Merger (the “Merger”) by and among ,
TeleChem International, Inc. (“TeleChem”), the majority shareholders of TeleChem
(“Shareholders”), Endavo Media and Communications, Inc., a Delaware corporation
(“Endavo”) and TCI Acquisition Corp., a Nevada corporation, and wholly owned
subsidiary of IMHI (“Merger Sub”).  IMHI, TeleChem, Endavo, Merger Sub
and Shareholders are referred to collectively herein as the
“Parties”.




Effective
February 21, 2008, IMHI completed the Plan and Agreement of Merger by and among
us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly owned subsidiary of
IMHI.  Consummation of the merger did not require a vote of our
shareholders.  IMHI issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary.  The former shareholders of TeleChem now own approximately
73.5% of the outstanding interest and voting rights of IMHI.  The
Preferred Stock is convertible into 36,100,000 shares of common stock after, but
not before, the effective date of the reverse split of the outstanding
Integrated Media common stock.  Finally, in connection with the
merger, we changed the address of our principal executive offices to 524 East
Weddell Drive, Sunnyvale, CA 94089.  Simultaneously with the merger we
transferred our wholly-owned subsidiary, Endavo to an individual.  As
a result, the transaction will be accounted for as a reverse merger, where
Telechem is the accounting acquirer resulting in a recapitalization of our
equity.





Effective
Thursday, March 19, 2009, the final steps of the business combination with
Integrated Media Holdings, Inc. were completed and the Company’s common stock
began trading on the OTC Bulletin Boards as “ARYC”. In addition, the Company
changed its name to “Arrayit Corporation”, was reincorporated to Nevada from
Delaware, and reverse-split its common stock and Series A Convertible Preferred
stock in the ratio of one for thirty shares.





The
reincorporation will be effected by the merger of IMHI, with and into
its wholly owned subsidiary, Arrayit.  Arrayit will be the
surviving entity.




On the
Effective Time, each of IMHI’s common stockholders will be entitled to receive
one fully paid and non-assessable share of common stock or preferred stock of
Arrayit for each share of our common stock or preferred stock, respectively,
outstanding as of the Effective Time and (ii) IMHI will cease its corporate
existence in the State of Delaware.  We anticipate that the shares of
the Company will cease trading on the first trading date following the Effective
Time and shares of Arrayit will begin trading in their place but under a new
CUSIP number and trading symbol.
























4









General
Business Description, Operating History and Change in Control





THE
COMPANY





Arrayit
began as a division of TeleChem International in 1996 with the advent of Dr.
Mark Schena’s use of microarrays as genetic research tools. Arrayit was able to
generate a large customer base in a relatively short time frame by capitalizing
on increased Internet access and Arrayit’s online business
model.  Genetic research was advancing at a dramatic pace in the 1990s
as more advanced tools became commercially
available.   Microarray technology, including printing, detection
and scanning instrumentation, was a timely addition to the geneticist’s
repertoire of advanced tools, including automated sequencing, PCR, and expanded
computing capability.   The sequencing of the genomes of various
simple organisms and later, sequencing of the more complex genomes of humans,
have led to yet another revolution in genetic discovery: gene function and
variations with regard to disease states and
diagnostics.   Microarray tools, having undergone FDA-validation
in the 2000s, remain an important component of the new genomic industry upon
which Arrayit will capitalize.





Arrayit
Products and Services





In the
late 1990’s, Arrayit focused on developing microarray slides, kits and reagents
using an open platform strategy in order to establish a market
niche.  In other words, Arrayit decided to make products that
integrate with components from other vendors, enabling research laboratories to
utilize microarray products from multiple vendors, in contrast to the closed
platform format of the earliest competitors.  Research customers
especially enjoy the flexibility and continue to buy Arrayit’s
products.  Arrayit’s patented printing technology has become an
industry standard for microarray manufacturing.   Arrayit’s
revenues from the printing patent and its own family of printing instrumentation
illustrate the Company’s success at meeting the unmet needs of the microarray
industry.   Arrayit now sells both small-scale microarray robots
(SpotBot®) and high throughput versions (NanoPrint). The SpotBot® and NanoPrint
product lines have been further advanced to accommodate more stringent
requirements in manufacturing protein microarrays.   As the
industry grows, Arrayit is expanding its product line to include integrated
platforms and pre-printed microarray slides with specific content.





Arrayit
is now expanding its Microarray Services capabilities as well, in connection
with increased demand for microarrays of all kinds, and a trend toward
outsourcing high end technical manufacturing. With the investment proposed in
this plan, Arrayit will create a variety of microarray based diagnostic tests
using Arrayit’s patented Healthcare technology, the Variation Identification
Platform (VIP), technology.  As microarrays move into clinical
diagnostics and genetic screening applications, the Company also expects to earn
license and royalty fees in these areas.





Arrayit
has been a microarray technology market driver for more than a decade. A full
microarray product list with descriptions, scientific publications ,
protocols and pricing is available at  http://Arrayit.com
..





THE
MICROARRAY INDUSTRY





The
microarray industry is comprised of four areas:  basic research into
the function of genes in plants and animals, research on the human genome,
development of diagnostics for personalized medicine, and diagnostic screening
tools for drug development programs that identify toxicity patterns in patient
populations.





The basic
research segment constitutes a significant portion of the industry that has
grown dramatically since first introduced in the mid-nineties by Arrayit’s Dr.
Mark Schena.  Arrayit currently sells the majority of its products to
this segment of the industry.   The human genetic research
segment constitutes the fastest growing segment, making up the current balance
of Arrayit’s sales. However, the impact of diagnostics in personalized medicine
is expected to be far greater than the above, because of its impact on the very
costly healthcare industry.   Better patient outcome and lower
healthcare cost to medical providers will provide opportunities in a vast number
of disease states as the industry grows.   Diagnostic tests will
become a part of every individual patient’s care plan across the costly spectrum
of disease states, including cardiovascular, oncology, neurology, and other
genetic diseases that affect large numbers of the population.





Competition
within the Microarray Research and Development Industry





Arrayit
competes with large and small, public and private companies. The industry has
been historically dominated by Affymetrix which achieved strong market
penetration by being the first public company to commercialize and promote
microarray applications.  A more recent entry to the market, Illumina, has
taken significant market share from Affymetrix.  However, both competitors
face mid to long term scientific and technological challenges because they are
limited by what they can deposit onto a microarray--DNA.  Arrayit’s
patented printing technology can deposit any kind of molecule into a microarray,
including DNA, proteins, antibodies,


















5










diagnostic
elements and other compounds.  These next generation microarrays
represent the largest growth opportunity in the industry.  Arrayit has
a long-term advantage in its unique line of personal and high throughput
microarray printers, highest sensitivity microarray scanners, top quality
consumables, patented diagnostic methods, collaborative corporate culture, and
competitive pricing.





The
following companies compete with Arrayit in the research and development portion
of the microarray market:





All price
per share and market cap values calculated as of March 5, 2009.





Agilent
Technologies, Inc., Santa Clara, California (A)


Price per
share                                $12.54                      Market
Cap                      $4.33B


Agilent
provides bio-analytical and electronic solutions to the communications,
electronics, life sciences and chemical analysis industries.  The
microarray division is a small portion of their total
business.  Agilent’s process places spots in a microarray by means of
an ink jet technology and is limited to DNA microarrays.





Affymetrix,
Inc., Santa Clara, California (AFFX)


Price per
share                                $1.93                      Market
Cap                      $135.49M


Affymetrix
provides consumables and systems for genetic analysis in life
sciences.  Their process creates a microarray by means of photo
lithography and is limited to DNA microarrays.





Illumina,
Inc., San Diego, California (ILMN)


Price per
share                                $32.00                      Market
Cap                      $3.87B


Illumina
provides a line of products and services to serve the sequencing, genotyping and
gene expression markets.  Their process places chemically reacted
beads into a microarray format, and is limited to DNA microarrays.




Health
Care Industry Segment




A 13 year
combined effort of scientists around the world and the expenditure of over $2.7
billion led to the completion of the mapping of the entire human genome in
2003.  This project identified all 25,000 genes that are common to all
humans.  This was the beginning of the study of these genes and the
variations in the genes that produce unique human characteristics and how some
of these variations lead to or identify disease.


Because
each gene has the potential for numerous variations, the possible combinations
number in the billions.  As daunting as the task was to map the human
genome, the identification of all the variations of these genes and the
implications to human health was even more overwhelming.  Dr. Mark
Schena, the company president, has worked to develop the tools and methods to
take on this task using microarray technology.  Now laboratories and
research facilities around the globe use microarrays daily to isolate genetic
variations that identify specific characteristics.  With the isolation
of these variations, a whole new world of opportunities has been
opened.





With the
tools and reagents that were developed to create microarrays and analyze the
results as a foundation, very specific diagnostic opportunities are
emerging.  The pioneering diagnostic slides are processed for one
patient at a time, and it is becoming obvious that it will be universally
beneficial to test millions of people for a specific disease and determine if
they have the disease undetected, or will develop that disease, or in order to
identify what disease is associated with symptoms.  However, testing
millions of patient samples, one at a time, would overwhelm the testing
facilities and be cost prohibitive.





To solve
this problem, Dr. Schena developed and patented a method to place up to 100,000
individual patient samples on a single microscope slide and have that slide
immersed in a solution that contains the known markers for a specific disease,
such as childhood hearing loss, Parkinson’s Disease, Alzheimer’s Disease,
etc.  Should any one of those 100,000 patient samples contain the
marker for the disease being tested it would produce a red spot, if no disease,
a green spot.  This procedure also identifies carriers as yellow
spots. Because of the sophistication of this patent, one lab could test hundreds
of thousands of patient samples a day after receiving a sample of DNA from each
patient.  It is the only method available to the industry that can
accomplish this.  Dr. Schena’s procedure is protected by the following
patents:





USPatent
6,913,879


Australia
2002218740


Europe
1343911


Korea
10-0756015


New
Zealand 523560


Singapore
94899


Taiwan
I280282


Other
worldwide patents pending.





THE
ARRAYIT OPPORTUNITY FOR DIAGNOSTICS





With the
completion of the human genome sequencing project, genetic research is
increasing its focus on identifying the variations of the specific genes in the
genome.  These variations are what define individual characteristics,
including disease states or a statistical propensity for disease.  The
implications are far-reaching and impact not only the research community, but
also the individual patients and the medical
providers.   Diagnostic tests that detect diseases very early in
their progression will provide options for earlier treatments that may improve
the patient’s quality of life and prognosis by delaying or preventing disease
progression or even death.  Medical providers will incur major cost
savings by avoiding costly late stage disease treatments.





















6









Product
and Services Categories





The
Foundational Tools





While the
upcoming diagnostic opportunities will be the pay back for years of research and
development, they are only possible because of the development of the microarray
equipment and consumables by Arrayit.





Patented
      Printing TechnologyArrayit
      manufactures the world’s most widely used microarray printing technology
      consisting of Professional, 946, Stealth and ChipMaker® pins and
      printheads. Arrayit’s patented printing technology allows the high-speed
      manufacture of DNA, protein, antibody, lipid, carbohydrate and many other
      types of microarrays for research and diagnostic applications including
      gene expression, genotyping, protein profiling and many
    more.InstrumentationInstrumentation
      including NanoPrintTM and SpotBot® provide for automated microarray
      printing.  NanoPrintTM allows high-end manufacturing, whereas
      SpotBot systems are the only personal microarrayers in the industry that
      enable affordable desktop use.
              
              Other
      instruments include TrayMix Hybridization Stations, InnoScan laser
      scanners, SpotLightTM CCD fluorescence scanners, and SpotWare colorimetric
      scanners.  High speed centrifuges, air jets, vacuum products,
      laboratory tools and bioinformatics computers complete the instrumentation
      line which are all designed to facilitate the quality and speed of
      microarray research.ConsumablesArrayit
      provides the microarray industry with variety of consumables, including
      substrates, reagents, solutions, kits and clean room
supplies.
              
              Arrayit
      Super Microarray Substrates have been adopted by major Life Science
      companies and are used industry wide.  They are polished
      atomically flat glass printing surfaces with proprietary coupling
      chemistry.
              
              Arrayit
      buffers and solutions are optimized to increase the quality of microarray
      manufacturing, processing, and use.
              Purification
      kitsprovide
      both a high yield and superior purity. Applications include: DNA
      microarrays, fluorescent probe purification, sequencing and others.
      Arrayit kits utilize proprietary binding membranes and purification
      chemistries for optimal
performance.








Healthcare
      PlatformsArrayit’s
      patented Healthcare technology, the Variation Identification Platform
      (VIP), allows diagnostic tests to be performed by depositing as many as
      100,000 biological samples into a single microarray. VIP manufacturing and
      clean room technology platforms are also sold to customers who license the
      technology from Arrayit.  VIP platforms enable the manufacture
      of extremely high-quality microarrays with superior precision and
      accuracy. These microarrays containing 100,000 individual features allow
      the simultaneous genotyping of 100,000 different patients in a single
      test.






















7








Advertising,
Marketing and Sales





Paul K.
Haje has led a successful advertising, sales and marketing program for Arrayit
since 1999.  Arrayit is the most highly recognized independent brand
name in the microarray industry. This was accomplished through visibility in
major broadcast television news media, full page advertisements in top
scientific journals, trade shows and workshops, vendor fairs, direct mail
campaigns, feature articles in major trade publications and e-mail
newsletters.  All advertising and marketing efforts drive traffic to
the Arrayit.com website and web based store resulting in sales.





The
Arrayit.com web site, which regularly receives more than 1,500 unique visitors
per day and 40,000 visitors per month and over 1 million hits per month, is
considered by many to be the portal of the microarray industry.  As an
additional enticement for researchers, Arrayit hosts an E-library providing a
searchable reference database for all microarray publications.





The
Company’s sales strategy has been successful by providing personalized sales and
support.  The sales force is currently comprised of three
persons.  The Company plans to hire additional experienced sales
professionals with microarray, diagnostics and pharmaceutical contacts who will
capitalize on the company’s powerful microarray technologies. The company
anticipates a sales force of approximately ten within three years.





Strategic
Distributorships





The
Company utilizes 38 international distributors in South America, Europe, Japan,
the Middle East, South Africa, China, Singapore, Korea, India, Taiwan, Israel
and other locations world-wide. The Company has generally chosen one
representative in each geographical area, and has worked closely with that
organization to promote the Company’s product line.  These global
distributors purchase directly from Arrayit for resale on net 30 day terms, and
represent approximately 45% of the Company’s 2008 revenues.  These
foreign receivables are insured through Euler Hermes ACI.





Facilities





Arrayit’s
corporate offices and research facilities are located at 524 East Weddell Drive,
Sunnyvale, California 94089. The corporate headquarters covers 8,000 square feet
which in addition to the executive offices, shipping and receiving, include a
microarray manufacturing cleanroom demonstration facility, two (2) microarray
manufacturing clean-rooms, a substrate manufacturing cleanroom, preparation and
packing facilities, and quality control and quality assurance work
stations.









Regulatory
Matters








We are
not subject to direct governmental regulation other than the laws and
regulations generally applicable to businesses in the jurisdictions in which we
operate. In addition, we believe we are in compliance with all relevant
environmental laws.




















8









Employees





We
presently have ten employees.





Comment
Letters Issued by the SEC





During
2008 and 2009, the SEC has issued comment letters relating to its previously
filed form 14C.  We are in the process of responding to these comment
letters





ITEM
1A. RISK FACTORS





Our
securities are highly speculative and should only be purchased by persons who
can afford to lose their entire investment in our Company. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent. The Company's business is subject
to many risk factors, including the following:





We
Will Need Additional Financing To Continue Our Business Plan





Current
collaboration agreements present Arrayit with near term opportunities for
substantial growth.  Capital is required to take advantage of these
opportunities.





An
immediate opportunity exists with OZ Systems of Arlington, Texas.  The
government mandates hearing loss tests for all infants born in the
USA.   OZ Systems has relationships and long-term contracts with
hospitals worldwide to test for hearing loss.  They currently test
over four million (4,000,000) infants per year for hearing loss.





Arrayit
has fully developed, tested and validated a hearing loss screen using our
patented VIP technology that can replace the existing OZ test, creating
immediate revenue for Arrayit. The test is highly accurate and can be performed
at a fraction of current cost, yet billable at current market prices, making
this an equally attractive opportunity for OZ to transition its existing
contracts to the new test.





An
audiologist uses an auditory signal and behavioral monitoring of the child’s
response to the sound for the current OZ hearing loss test.  The test
is analyzed and results reported back to the attending physician, who informs
the parents.  This test has fair accuracy and requires $1,500 of
confirmatory testing if a determination of hearing loss is
indicated.  The Arrayit hearing loss test is based on Arrayit’s
patented VIP technology.  It can screen 100,000 children in a single
test for fourteen (14) different forms of hearing loss, including a form of
hearing loss that does not occur until the child reaches six years of age. The
Arrayit test will require FDA approval prior to release.





Arrayit’s
diagnostic test can be accomplished in a CLIA approved
laboratory.  The DNA samples will be collected from the patients by
the hospital, and forwarded to Arrayit’s CLIA approved laboratory. The tests
will be conducted in volume on a single microarray using Arrayit’s patented VIP
method.





The
information derived from the test is not urgent; nor is the hearing loss
condition life threatening.  This allows Arrayit time to conduct the
tests in volume as the requirement to report to the attending physician is
within three months of the sample collection. The test results will be reported
electronically to OZ Systems which in-turn will advise the attending physician
and counsel the parents as necessary.





The
agreement proposes a 50/50 split of proceeds with Oz Systems.  All
patient identity would be protected in the patient tracking technology software
provided by Oz Systems.  Oz Systems would conduct all patient follow
through and interface with the physicians.  The test would retail for
around $80 and Arrayit’s out of pocket costs would be in the range of $2-3 per
test.





Other mid
to long term opportunities for Arrayit Diagnostic tests arise from
collaborations with Stage One Diagnostics of Little Rock, Arkansas and
BioSystems International of Paris, France.





Stage One
is currently isolating antibodies related to ovarian cancer at their laboratory
in Arkansas.  When that phase of the research is completed, Arrayit
will print microarrays with these known antibodies.  That slide, when
immersed in a solution of patient’s blood, would conclusively indicate whether
that patient has ovarian cancer, even before any symptoms occur.  As
the market moves toward preventative medicine, Arrayit believes a simple test
conducted at the site of care would be a valuable and widely utilized screen for
ovarian cancer.  This project is in the late stages of
development.  Arrayit will have the marketing rights for the product
and produce the kit for the healthcare providers.  How the proceeds
will be shared is yet to be determined.





BioSystems
International (BSI) is producing antibodies of blood plasma, taken from human
sources, for which Arrayit is developing a microarray that potentially has the
capability to identify predictors and biomarkers for such difficult to diagnose
diseases as Parkinson’s disease and Alzheimer’s disease, among
others.  Once these biomarkers are identified, a diagnostic slide
could then be developed for broad use across the healthcare
industry.  Arrayit will also benefit from licensing of these
antibodies for such downstream applications.





Arrayit
has begun collaboration with the Parkinson’s Institute to test known Parkinson’s
Disease patients’ blood to identify biomarkers for Parkinson’s Disease from the
human plasma proteome microarray marketed as PlasmaScan.  Arrayit is
also working with Stanford University to test known Alzheimer’s patients’ blood
to identify biomarkers for Alzheimer’s Disease using PlasmaScan.





The chart
below outlines the cash required to expand the laboratory facilities at Arrayit
and capitalize on these opportunities.





Manufacturing
Set-up Expense for Diagnostic Tests





Diagnostic
      Test Opportunities Expense for Setup (thousands$)Hearing loss Ovarian Cancer Parkinson’s
      DiseaseLaunch
      date
                
                March
      1, 2009
                
                
                Jun
      1, 2009
                
                Sept
      1, 2009$
                ’000
                
                
                $
                ’000
                
                $
                ’000Clean
      Room
                
                
                200New
      lab Equip
                
                
                1,000CLIA
      Certification
                
                
                150FDA
      Approval
                
                
                50
                
                
                
                50
                
                
                50Approval
      Time
                
                6
      months
                
                
                6
      months
                
                6
      monthsSales
      Team Dev
                
                
                50
                
                
                
                150
                
                
                150Kit
      Development
                
                
                50
                
                
                
                150
                
                
                50Totals
                
                
                1,500
                
                
                
                350
                
                
                250





Because
the equipment sales require up front monies to build the systems, additional
cash will be required for this growth and for building the inventory of supplies
in the range of $700,000.





















9













We
Have A Limited Operating History As A Public Company Upon Which You Can Assess
Our Prospects And We Are Subject To The Risks Associated With Any New Public
Company.





As a
result of our short history of operations as a public company, there is little
historical information regarding our operations upon which you can base your
investment decision. In addition, we are subject to all of the business risks
and uncertainties associated with any newly public business
enterprise.   Additionally, our management has limited experience
operating a public company.   As such, our Company may not be
able to continue to meet its continued filing requirements and may be late in
its periodic filings, which late filings may cause the Company to be delisted
from the Over-The-Counter Bulletin Board.  If this were to happen, any
investment in the Company could become devalued or worthless.





Our
Growth Will Place Significant Strains On Our Resources.





The
Company's growth, if any, is expected to place a significant strain on the
Company's managerial, operational and financial
resources.  Furthermore, assuming the Company receives additional
contracts, and obtains additional partners, it will be required to manage
multiple relationships with other third parties. These requirements will be
exacerbated in the event of further growth of the Company or in the number of
its contracts, partnerships and employees. There can be no assurance that the
Company's systems, procedures or controls will be adequate to support the
Company's operations or that the Company will be able to achieve the rapid
execution necessary to successfully offer its services and continue its business
plan. The Company's future operating results, if any, will also depend on its
ability to add additional personnel commensurate with the growth of its
business, if any. If the Company is unable to manage growth effectively, the
Company's business, results of operations and financial condition will be
adversely affected.





An
Interruption In or Breach of Our Information Systems May Result In Lost Business
and Increased Expenses.




We rely
heavily upon communications and information systems to conduct our business. Any
failure, interruption or breach in security of or damage to our information
systems or the third-party information systems on which we rely could prevent us
from conducting our business operations and/or if such failure resulted in the
release of non-public and confidential information, could make us subject to
litigation or actions for damages.







The
Inability To Attract And Retain Qualified Employees Could Significantly Harm Our
Business.




We
continually need to attract, hire and successfully integrate additional
qualified personnel in an intensely competitive hiring environment in order to
manage and operate our business. The market for skilled management, professional
and loan servicing personnel is highly competitive. Competition for qualified
personnel may lead to increased hiring and retention costs. If we are unable to
attract, successfully integrate and retain a sufficient number of skilled
personnel at manageable costs, it will harm our business, results of operations
and financial condition.




There
Are Risks That We Will Not Be Able To Implement Our Business
Strategy.




Our
financial position, liquidity, and results of operations depend on our
management’s ability to execute our business strategy. Key factors such as
technology advancement, government regulations, outcome of researches and access
to capital market all play an important role in our execution of business
strategy.





We
Incur Significant Costs As A Result Of Operating As A Fully Reporting Company In
Connection With Section 404 Of The Sarbanes Oxley Act, And Our Management Is
Required To Devote Substantial Time To Compliance Initiatives.





We
anticipate incurring significant legal, accounting and other expenses in
connection with our status as a fully reporting public company. The
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently
implemented by the SEC have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. As
such, our management and other personnel will need to devote a substantial
amount of time to these new compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make
some activities more time-consuming and costly. In addition, the Sarbanes-Oxley
Act requires, among other things, that we maintain effective internal controls
for financial reporting and disclosure of controls and procedures. In
particular, for fiscal year 2009, Section 404 will require us to obtain a report
from our independent registered public accounting firm attesting to the
assessment made by management.  Our testing, or the subsequent testing
by our independent registered public accounting firm, may reveal deficiencies in
our internal controls over financial reporting that are deemed to be material
weaknesses. Our compliance with Section 404 will require that we incur
substantial accounting expense and expend significant management efforts. We
currently do not have an internal audit group, and we may need to hire
additional accounting and financial staff with appropriate public company
experience and technical accounting knowledge. Moreover, if we are not able to
comply with the requirements of Section 404 in a timely manner, or if we or our
independent registered public accounting firm identifies deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline, and we could be subject
to sanctions or investigations by the SEC or other regulatory authorities, which
would require additional financial and management resources.


















10









There
Is Currently Only A Limited Market For Our Common Stock, And The Market For Our
Common Stock May Continue To Be Illiquid, Sporadic And Volatile.





There is
currently only a limited market for our common stock, and as such, we anticipate
that such market will be illiquid, sporadic and subject to wide fluctuations in
response to several factors moving forward, including, but not limited
to:





(1)
            actual
      or anticipated variations in our results of operations;(2)
            our
      ability or inability to generate new revenues;(3)
            the
      number of shares in our public
float;








(4)
            increased
      competition;(6)
            conditions
      and trends in the market for automobiles and vehicle
    leasing.





Furthermore,
because our common stock is traded on the Over-The-Counter Bulletin Board, our
stock price may be impacted by factors that are unrelated or disproportionate to
our operating performance. These market fluctuations, as well as general
economic, political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. Additionally, at present, we have a limited number of shares in
our public float, and as a result, there could be extreme fluctuations in the
price of our common stock. Further, due to the limited volume of our shares
which trade and our limited public float, we believe that our stock prices (bid,
ask and closing prices) are entirely arbitrary, are not related to the actual
value of the Company, and do not reflect the actual value of our common stock
(and in fact reflect a value that is much higher than the actual value of our
common stock). Shareholders and potential investors in our common stock should
exercise caution before making an investment in the Company, and should not rely
on the publicly quoted or traded stock prices in determining our common stock
value, but should instead determine the value of our common stock based on the
information contained in the Company's public reports, industry information, and
those business valuation methods commonly used to value private
companies.




Investors
May Face Significant Restrictions On The Resale Of Our Common Stock Due To
Federal Regulations Of Penny Stocks.





Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock.





Generally,
the Commission defines a penny stock as any equity security not traded on an
exchange or quoted on NASDAQ that has a market price of less than $5.00 per
share. The required penny stock disclosures include the delivery, prior to any
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated with it. Such requirements could severely limit the market
liquidity of the securities and the ability of purchasers to sell their
securities in the secondary market.





In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.





ITEM
2. PROPERTIES





The
Company has corporate headquarters and operates out of leased premises in
Sunnyvale, California.





ITEM
3. LEGAL PROCEEDINGS





Civil
Action number 01-2226 between TeleChem International, Inc., Pediatrix Screening,
Inc. and Pediatrix Screening LP went to jury trial in the United States District
Court in the Western District of Pennsylvania in the summer of
2007.  The jury awarded TeleChem $5 million in damages for Pediatrix's
breach of contract, fraudulent misrepresentation, and punitive
damages.  The jury awarded Pediatrix $1,085,001 for TeleChem's breach
of contract.  Pediatrix appealed the jury's decision, and requested
that the damages award


















11










to
TeleChem be reduced.  This appeal was denied.  Pediatrix put
$5 million in bond, and submitted an appeal to the Third Circuit Court of
Appeals to request that the damages award to TeleChem be reduced.  The
parties await the Third Circuit Court's response.





There are
no other legal proceedings, although we may, from time to time, be party to
certain legal proceedings and other various claims and lawsuits in the normal
course of our business, which, in the opinion of management, are not material to
our business or financial condition.








ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





The
Company had no matters submitted to a vote of security holders during the fiscal
quarter ended December 31, 2008.





PART
II





ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES





Market
Information and Holders





Our
common stock now trades publicly on the OTC Bulletin Board under the symbol
"ARYC". Previous to March 19, 2009, our common stock traded under the symbol
"IMHI". The OTCBB is a regulated quotation service that displays real-time
quotes, last-sale prices and volume information in over-the-counter equity
securities. The OTCBB securities are traded by a community of market makers that
enter quotes and trade reports. This market is extremely limited and any prices
quoted are not a reliable indication of the value of our common
stock.




The
following table sets forth the quarterly high and low bid prices per share of
our common stock by the OTCBB during the last two fiscal years. The quotes
represent inter-dealer quotations, without adjustment for retail mark-up,
markdown or commission and may not represent actual transactions. The trading
volume of our securities fluctuates and may be limited during certain periods.
As a result of these volume fluctuations, the liquidity of an investment in our
securities may be adversely affected.





QUARTER
      ENDED
                
                HIGH
                
                
                LOWDecember
      31, 2008
                
                $
                1.50
                
                
                $
                0.54September
      30, 2008
                
                $
                4.47
                
                
                $
                0.90June
      30, 2008
                
                $
                3.00
                
                
                $
                1.20March
      31, 2008
                
                $
                4.50
                
                
                $
                0.21December
      31, 2007
                
                $
                0.60
                
                
                $
                0.21September
      30, 2007
                
                $
                3.30
                
                
                $
                0.42June
      30, 2007
                
                $
                4.50
                
                
                $
                1.05March
      31, 2007
                
                $
                11.70
                
                
                $
                3.00





As of
March 9, 2009, we had 17,499,262 shares of common stock issued and outstanding
held by approximately xx  shareholders of record; 3,697,611shares of
Series A Convertible Preferred Stock issued and outstanding and 103,143 shares
of Series B Convertible Preferred Stock issued and outstanding.





Dividends





We have
never declared or paid any cash dividends on our common stock, and we do not
anticipate paying any dividends in the foreseeable future.  We intend
to devote any earnings to fund the operations and the development of our
business.





Common
Stock





Holders
of shares of common stock are entitled to one vote per share on each matter
submitted to a vote of shareholders. In the event of liquidation, holders of
common stock are entitled to share pro rata in the distribution of assets
remaining after payment of liabilities, if any. Holders of common stock have no
cumulative voting rights, and, accordingly, the holders of a majority of the
outstanding shares have the ability to elect all of the directors. Holders of
common stock have no preemptive or other rights to subscribe for shares. Holders
of common stock are entitled to such dividends as may be declared by the Board
out of funds legally available therefore. The outstanding shares of common stock
are validly issued, fully paid and non-assessable.




RECENT
SALES OF UNREGISTERED SECURITIES





All sales
of unregistered common stock that occurred in 2008 has been previously reported
in our public filings with the Securities and Exchange Commission and is
described in detail in Management' Discussion and Analysis below.





ITEM
6. SELECTED FINANCIAL DATA





Not
required.


















12













ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





THIS
REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934. THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT. THE FOLLOWING DISCUSSION
AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA" AND
THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS
REPORT.





Restatement
of Financial Statements





This
Amendment No. 1 on Form 10-K/A reflects a restatement of our consolidated
financial statements for the year ended December 31, 2008, as discussed in Note
17 to the consolidated financial statements included in Item 8 of this Form
10-K/A. The financial statements have been restated as a result of a comment
letter received from the SEC and from management’s determination along with
outside legal counsel that the Company had inadvertently not recorded the
disposal of discontinued operations as part of the reverse merger., as well as
the subsequent fiscal quarter ended June 30, 2008, primarily in connection with
the calculation and recognition of revenue, including reimbursable and outside
production costs and expenses, and properly recording general and administrative
expenses in the periods in which they were incurred.





The
restatement for these errors had no effect upon the Company’s net income, as
originally reported for the fiscal year ended December 31, 2008. The restatement
had no effect on our cash or net cash used in operations for the fiscal year
ended December 31, 2008. After reviewing the circumstances leading up to the
restatement, management believes that the errors were inadvertent and
unintentional. In addition, following the discovery of these errors, we have
begun implementing procedures intended to strengthen our internal control
processes and prevent a recurrence of future errors.








Critical
Accounting Policies




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Company to make
estimates and assumptions that affect amounts reported in the accompanying
consolidated financial statements and related footnotes.  These estimates
and assumptions are evaluated on an on-going basis based on historical
developments, market conditions, industry trends and other information the
Company believes to be reasonable under the circumstances.  There can be no
assurance that actual results will conform to the Company’s estimates and
assumptions, and that reported results of operations will not be materially
adversely affected by the need to make accounting adjustments to reflect changes
in these estimates and assumptions from time to time.  The following
policies are those the Company believes to be the most sensitive to estimates
and judgments.  The Company’s significant accounting policies are more
fully described in Note 2 to our consolidated financial
statements.





PLAN
OF OPERATIONS FOR THE NEXT TWELVE MONTHS





Throughout
the remainder of fiscal 2009, we plan to continue investing to support our
long-term growth initiatives. We plan to partner with other alliances, enter new
markets and further expand our presence in existing markets.





DEBT
OBLIGATIONS





The
Company has $3,368,830 (2007 - $3,549,558) of debt.  Amounts incurred
directly by Arraying amount to $1,320,856; of which $323,283 is being liquidated
by monthly installments of $8,572 over a 60 month term; and $845,396 is due from
the former TeleChem shareholders and their families, who have deferred repayment
of their loans until the $323,283 has been paid in full.  To date the
Company has been able to meet the servicing of the TeleChem debt from cash flow
generated by operations.





As part
of the ‘reverse merger” with Integrated Media Holdings, Inc., the ongoing
Company took on the financial obligation for debt outstanding at the merger
date.  The predecessor debt amounts to $2,047,974 at December 31,
2008, of which $1,830,300 is convertible into common shares.  The
entire $2,047,974 is in default and is currently due.  The debt
conversion terms are such that decrease in the market value of our shares will
materially increase the number of shares issuable pursuant to the terms of the
debt notes.  As the debt notes terms do not contain a floor on the
conversion price, it is not possible to determine how many shares may ultimately
be issuable under the terms of the notes payable. It is possible that the note
holders, upon conversion could own a majority of the shares of the Company and
it is further possible that the issuance of this unquantifiable number of our
Company’s shares will have a negative impact on the market price of our
shares.  While the terms of the Notes Payable limit the holdings of
any one shareholder to 9.99%, there is no prohibition on that note holder from
converting part of the debt, selling the resulting shares and then converting
additional amounts of debt held.  This could place additional downward
pressure on the market price of our shares.





On June
2, 2009 the market price of our shares was $0.69, resulting in a potential
issuance of 37,873,458 post split, common shares had all the eligible debt been
converted on that date.





However
as more fully described in the section below, the Company has entered into Oral
Agreements to mitigate the effects of the default, and to fix the number of
shares to be issued, notwithstanding the terms of the notes
payable.





The
conversion of the debt, even after the limitation on the number of shares under
the Oral Agreement,  will result in the issuance of an additional
12,478,357 shares, which will have a material, dilutive effect upon existing
shareholders.  Such a large issuance of additional shares may also
have a negative effect upon the price of our shares traded on the OTC bulletin
board.  In addition the effect of the Oral Agreement described below,
will result in a derivative, the recognition of which will materially impact the
financial statements of the Company.








Oral
Agreements





The
predecessor debt is held by third parties who have lodged their holdings with
Cloud Capital.   In 2008, Cloud Capital entered into a formal
custodial arrangement with 16 participants.  Cloud has no
discretionary power and acts solely as custodian taking direction from each
participant.  Each participant lodged a basket of securities with the
custodian made up of common, convertible preferred and convertible debt at the
time of the IMHI acquisition of TeleChem on February 21, 2008.





In
January 2008, the Company entered into an oral agreement with each of the
participants whereby the participant agreed to a fixed number of shares for
their "basket" of securities. However, On February 20, 2009 the participants
became discouraged with the efforts of the company to complete the regulatory
filings and requested that the original oral agreement be
abrogated.  The Company then came to a new oral agreement with each of
the participants that included the following:





(a)  All
prior agreements are now null and void.





(b) The
quantum of shares being made available to the 16 participants will be fixed at
12,478,357.





(c) The
18,695 common shares, held by the participants, are issued and outstanding and
will be not be affected by the new oral agreement.





(d)  The
2,926,787 pre-split, (936,572 post-split) series A preferred shares will be
surrendered for cancellation without compensation by each of the
participants.





(e)  The
debt of $1,993,450 and estimated penalty and interest of $1,555,750 for a total
approximation of $3,549,200 will be converted into 12,478,357 common shares
being a fixed number of common shares regardless of the interest and penalties
that continue to accrue.








COMPARISON
OF OPERATING RESULTS




RESULTS
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008, COMPARED TO THE YEAR ENDED
DECEMBER 31, 2007





For the
year ended December 31, 2008, revenues were $4,063,149, compared to $3,821,490
for the year ended December 31, 2007, an increase of $241,659 or approximately
6% from the prior period.


The
increase in revenues was principally due to the Company’s expansion into new
markets during fiscal 2008, versus 2007.





Cost of
sales decreased $19,795 or 1% to $2,643,974 for the year ended December 31,
2008, compared to $2,663,769 for the year ended December 31, 2007.





Gross
profit increased $261,454 or 23% to $1,419,175 for the year ended December 31,
2008 compared to $1,157,721 for the year ended December 31,
2007.  Gross profit increased largely due to the increase in
total revenue which was offset by the decrease in total cost of
revenues.





General
and administrative expenses were $1,346,046 and $1,240,709, for the years ended
December 31, 2008 and December 31, 2007, respectively, constituting an increase
of $105,337 or approximately 9% from the prior period.  The increase
in general and administrative expenses was due to mainly to expenses associated
with the Company being a public company and the Company’s public company
reporting obligations, including consulting and accounting fees.





Other
income and expense was a net other expense of $2,020,548 and net other income of
$202,818 for the years ended December 31, 2008 and December 31, 2007,
respectively.  Other expense for 2008 included interest expense of
$721,408 and loss on derivatives $1,299,139   Other income and
expense for the year ended December 31, 2007, included interest expense of
$521,502 and gain on derivatives of $724,320.  The main reason for the
$199,906 or 38% increase in interest expense for the year ended December 31,
2008, compared to the year ended December 31, 2007, was due to debts assumed
with the merger during 2008.





The
Company had net loss of $2,029,693 for the year ended December 31, 2008,
compared to net loss of $1,775,438 for the year ended December 31, 2007, a
increase in net loss of $254,255 or 14% from the prior period.  The
main reason for the increase in net loss was the loss on derivative liability
during the year ended December 31, 2008.




LIQUIDITY
AND CAPITAL RESOURCES





We had
total assets of $907,133 and total liabilities of $11,755,125 as of December 31,
2008. We had total negative working capital of $10,760,689 as of December 31,
2008.





We had
net cash provided by operating activities of $75,979 that is mainly due to loss
on derivatives and increase in account payable and accrued
liabilities.





We had
$75,979 of net cash used by financing activities for the year ended December 31,
2008, which included $ 185,329 of proceeds from note payable, offset by $109,350
of payments on notes payables.





We relied
on our officers and directors or any of our shareholders to supplement our
operations or provide us with financing.  If we are unable to increase
revenues from operations, to raise additional capital from conventional sources
and/or additional sales of stock in the future, we may be forced to curtail or
cease our operations. In the future, we may be required to seek additional
capital by selling debt or equity securities. The sale of additional equity or
debt securities, if accomplished, may result in dilution to our then
shareholders. We provide no assurance that financing will be available in
amounts or on terms acceptable


to us, or
at all.





During
the next twelve months the Company’s cash needs should in the opinion of
Management not exceed $200,000.  It is the intention of management to
raise funds from a private placement to meet the need for $200,000 of negative
cash flow from operations and mandatory debt
repayment.    Should the Company not be able to raise such
funds, it will need to reduce expenses by laying off staff and curtailing
development.





In the
long term, the Company will need significant amounts of net cash to fund its
research and development, to provide working capital and to repay its
debt.   Failure to raise new capital will severely impact the
Company’s ability to complete its business plan as more fully described
above.


















13










ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA




















ARRAYIT
CORPORATION








CONSOLIDATED
FINANCIAL STATEMENTS








For the
Years Ended December 31, 2008 and 2007
























14










ARRAYIT
CORPORATION








INDEX TO
FINANCIAL STATEMENTS











PAGEIndependent
      auditors’ report
              
              
              16Consolidated
      balance sheets
              
              
              17Consolidated
      statement of operations
              
              
              18Consolidated
      statement of  changes in stockholders’ equity
      (deficit)
              
              
              19Consolidated
      statement of cash flows
              
              
              20Notes
      to financial statements





















15










REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Arrayit
Corporation.


Sunnyvale,
California





We have
audited the accompanying consolidated balance sheets of Arrayit Corporation as
of December 31, 2008 and 2007, and the related consolidated statements of
operations, changes in stockholders’ equity (deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Arrayit
Corporation as of December 31, 2008 and 2007, and the consolidated results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America.




The
accompanying financial statements have been prepared assuming that the company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the company has suffered recurring losses and has working capital
and stockholder deficits. Those conditions raise substantial doubt about its
ability to continue as a going concern. Management’s plans regarding those
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





As
disclosed in Note 17 to the financial statements, the Company restated its 2008
and 2007 financial statements to correcting accounting for debt obligations and
discontinued operations.








/s/
Berman Hopkins Wright & LaHam, CPAs and Associates, LLP





Winter
Park, Florida


June 3,
2009
























16










ARRAYIT
CORPORATION


CONSOLIDATED
BALANCE SHEETS


As at
December 31, 2008 and 2007


2008
            
            
            2007Current
      assets:
            
            (as
      restated)
            
            
            (as
      restated)Cash
            
            $
            0
            
            
            $
            0Accounts
      receivable, net
            
            
            261,656
            
            
            
            294,186Inventory
            
            
            484,368
            
            
            
            309,246Prepaid
      expenses
            
            
            0
            
            
            
            120,000Total
      current assets
            
            
            746,024
            
            
            
            723,432Property
      and equipment, net
            
            
            41,451
            
            
            
            55,395Assets
      of discontinued operations
            
            
            0
            
            
            
            247,945Restricted
      cash
            
            
            100,734
            
            
            
            103,836Deposits
            
            
            18,924
            
            
            
            18,924Total
      assets
            
            $
            907,133
            
            
            $
            1,149,532Liabilities
      and Stockholders' DeficitCurrent
      liabilities:Accounts
      payable and accrued liabilities
            
            $
            5,143,622
            
            
            $
            4,801,956Bank
      overdraft
            
            
            9,110
            
            
            
            29,495Due
      to related parties
            
            
            349,950
            
            
            
            337,616Accrued
      expenses
            
            
            1,295,131
            
            
            
            850,462Customer
      deposits
            
            
            62,798
            
            
            
            29,580Derivative
      liability
            
            
            1,525,684
            
            
            
            326,544Notes
      payable, current portion including related parties
            
            
            3,120,418
            
            
            
            3,222,218Total
      current liabilities
            
            
            11,506,713
            
            
            
            9,597,871Notes
      payable, long term
            
            
            248,412
            
            
            327,340Liabilities
      of discontinued operations
            
            
            0
            
            
            1,463,966Total
      liabilities
            
            
            11,755,125
            
            
            11,389,177Stockholders'
      deficitPreferred
      "A"
            
            
            3,697
            
            
            
            3,810Preferred
      "C"
            
            
            103
            
            
            
            103Common
      stock
            
            
            17,499
            
            
            
            16,419APIC
            
            
            1,320,380Accumulated
      deficit
            
            
            (12,189,671
            )
            
            
            (10,259,977
            )Total
      stockholders' deficit
            
            
            (10,847,992
            )
            
            
            (10,239,645
            )Total
      liabilities and stockholders' deficit
            
            $
            907,133
            
            
            $
            1,149,532











See
accompanying notes to financial statements.
















17












ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
years ended December 31, 2008 and 2007





2008(as restated)
                
                
                2007Total
      revenues
                $
                4,063,149
                
                
                $
                3,821,490Cost
      of sales
                
                2,643,974
                
                
                
                2,663,769Gross
      margin
                
                1,419,175
                
                
                
                1,157,721Selling,
      general, and administrative expense
                
                1,346,046
                
                
                
                1,240,709Legal
      expense
                
                82,274
                
                
                
                1,895,268Interest
      expense
                
                721,408
                
                
                
                521,502Loss
      (gain) on derivative liability
                
                1,199,140
                
                
                
                (724,320
                )Net
      loss for the year
                $
                (1,929,693
                )
                
                $
                (1,775,438
                )Net
      loss per common share -basic
      and diluted
                $
                (0.11
                )
                
                $
                (0.11
                )Weighted
      average shares - basic and diluted
                
                17,499,262
                
                
                
                16,419,252








See
accompanying notes to the financial statements.
























18










ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)


For the
years ended December 31, 2008 and 2007





Additional
              
              TotalPreferred
      Series A
              
              Preferred
      Series C
              
              Common
      Stock
              Paid
      In
              Retained
              Stockholders'Description
              Number
              Dollar
              
              Number
              Dollar
              
              Number
              Dollar
              Capital
              Earnings
              Equity(as
      restated)
              (as
      restated)
              (as
      restated)Balance,
      December 31, 2006
              2,884,117
              $2,884
              
              -
              -
              
              16,368,710
              $16,369
              $   31,832,986
              $  (37,820,426)
              $    (5,968,187)Issuance
      of common stock for services
              
              
              
              
              
              
              360,994
              $      361
              $        52,139
              
              $           52,500Issuance
      for compensation
              
              
              
              
              
              
              
              
              $        784,615
              
              $         784,615Issuance
      of common stock for unpaid rent
              
              
              
              
              
              
              30,345
              $        30
              $            4,370
              
              $             4,400Settlement
      of unpaid note interest
              -
              -
              
              -
              -
              
              951,283
              $      951
              $         51,750
              -
              $           52,701Conversion
      of notes to common stock
              
              
              
              
              
              
              1,439,438
              $   1,439
              $         48,560
              
              $           49,999Surrender
      for cancellation of common stock on disposal of WV Fiber
              
              
              
              
              
              
              (3,246,000)
              $(3,246)
              $    (486,900)
              
              $        (490,146)Common
      stock issued for cash
              
              
              
              
              
              
              514,482
              $      515
              $        106,893
              
              $          107,408Preferred
      shares issued for services
              112,651
              $   113
              
              
              
              
              
              
              $        208,687
              
              $           208,800Re-acquisition
      of Series A Preferred on disposal of WV Fiber
              (646,774)
              $(647)
              
              
              
              
              
              
              $       (930,708)
              
              $       (931,355)Re-issuance
      of Series A Preferred for acquisitions in 2006
              1,460,268
              $1,460
              
              
              
              
              
              
              $       1,106,912
              
              $      1,108,372Issuance
      of Series C Preferred
              
              
              
              103,143
              $   103
              
              
              
              $         98,897
              
              $           99,000Eliminate
      IMHI equity under reverse merger accounting
              
              
              
              
              
              
              
              
              $ (32,878,201)
              $  29,335,887
              $    (3,542,314)Net
      loss for the year endedDecember
      31, 2007
              -
              -
              
              -
              -
              
              -
              -
              -
              $    (1,775,438)
              $
      (1,775,438)Balance,
      December 31, 2007
              3,810,262
              $ 3,810
              
              103,143
              $  103
              
              16,419,252
              $ 16,419
              -
              $ (10,259,977)
              $  (10,239,645)Restate
      share capital
              (112,651)
              $          (113)
              
              
              
              
              1,080,010
              $ 1,080
              $  (232,310)
              
              $  (231,343)Spin
      off of certain assets and liabilities assumed with earlier
      mergers
              
              
              
              
              
              
              
              
              $  1,552,690
              
              $  1, 552,690Net
      Income for the year endedDecember
      31, 2008
              
              
              
              
              
              
              
              
              
              $   (1,929,694)
              $   (1,929,694)Balance,
      December 31, 2008
              3,697,611
              $3,697
              
              103,143
              $  103
              
              17,499,262
              $17,499
              $  1,320,380
              $   (12,189,671)
              $  (10,847,992)





See
accompanying notes to the financial statements























19













ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


For the
years ended December 31, 2008 and 2008





2008(as
      restated)
                
                
                2007Cash
      flows from operating activities:Net
      loss
                
                
                
                (1,929,693
                )
                
                
                (1,775,438
                )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activities:Depreciation
                
                
                13,943
                
                
                
                20,090Gain
      (loss) on derivatives
                
                
                1,199,140
                
                
                
                (724,320
                )Changes
      in operating assets and liabilities(Increase)
      decrease in assetsAccounts
      receivable
                
                
                32,529
                
                
                
                13,850Inventories
                
                
                (175,122
                )
                
                
                339,008Prepaids
                
                
                120,000
                
                
                
                (117,920
                )Restricted
      cash
                
                
                3,101
                
                
                
                (2,133
                )AdvancesIncrease
      (decrease) in liabilitiesAccounts
      payable & accrued liabilities
                
                
                786,914
                
                
                
                1,776,640Due
      to related parties
                
                
                12,333
                
                
                
                206,709Bank
      overdraft
                
                
                (20,384
                )
                
                
                29,495Customer
      deposits
                
                
                33,218Net
      cash provided by (used in) for operating activities
                
                
                75,979
                
                
                
                (234,019
                )Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                -
                
                
                
                (3,833
                )Net
      cash provided by (used in) for investing activities:
                
                
                
                
                
                
                (3,833
                )Cash
      flows from financing activities:Proceeds
      from notes payable
                
                
                109,350
                
                
                
                201,444Payments
      from notes payable
                
                
                (185,329
                )
                
                
                (20,519
                )Net
      cash provided by (used in) financing activities
                
                
                (75,979
                )
                
                
                180,925Net
      increase (decrease)  in cash
                
                
                0
                
                
                
                (56,927
                )Cash,
                Beginning
      of year
                
                
                -
                
                
                
                56,927Cash,
                End
      of year
                
                $ nil
                
                
                $ nilSupplemental
      cash flow informationCash
      Paid for interest
                
                
                $
                159,892
                
                
                $
                453,738








See
accompanying notes to the financial statements.
















20









ARRAYIT
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


As at
December 31, 2008 and 2007











NOTE
1 – ORGANIZATION





Effective
Thursday, March 19, 2009, the final steps of the business combination with
Integrated Media Holdings, Inc. were completed and the Company’s common stock
began trading on the OTC Bulletin Boards as “ARYC”. In addition, the Company
changed its name to “Arrayit Corporation”, was reincorporated to Nevada from
Delaware, and reverse-split its common stock and Series A Convertible Preferred
stock in the ratio of one for thirty shares.  Arrayit has a December
31 year end.





Effective
February 21, 2008, TeleChem International, Inc. (“TeleChem”) completed the Plan
and Agreement of Merger between Integrated Media Holdings Inc. (“IMHI”),
TeleChem, the majority shareholders of TeleChem, Endavo Media and
Communications, Inc., a Delaware corporation and TCI Acquisition Corp., a Nevada
corporation, and wholly-owned subsidiary of IMHI.  Consummation of the
merger did not require a vote of the IMHI shareholders.  IMHI issued
103,143 shares of Series C Convertible Preferred Stock to the shareholders of
TeleChem in exchange for 100% of the equity interests of TeleChem resulting in
TeleChem being a wholly owned subsidiary of the Company.  The former
shareholders of TeleChem then owned approximately 99.51% of the outstanding
interest and voting rights of the parent company.  The Preferred Stock
is convertible into 36,100,000 shares of common stock after, but not before, the
effective date of the reverse split of the outstanding IMHI common
stock.








NOTE
2- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES




Description
of Business





Arrayit
Corporation is a Nevada Corporation, formerly known as TeleChem International,
Inc., that entered into the life sciences in 1996.  Arrayit is a
leading edge developer, manufacturer and marketer of next-generation life
science tools and integrated systems for the large scale analysis of genetic
variation, biological function and diagnostics. Using Arrayit’s proprietary
technologies, the Company provides a comprehensive line of products and services
that currently serve the sequencing, genotyping, gene expression and protein
analysis markets, and the Company expects to enter the market for molecular
diagnostics.





Arrayit
has earned respect as a leader in the health care and life sciences industries
with its proven expertise in three key areas:  the development and
support of microarray tools and components, custom printing and analysis of
microarrays for research, and the identification and development of diagnostic
microarrays and tools for early detection of treatable disease
states.





As a
result, Arrayit has provided tools and services to thousands of the leading
genomic research centers, pharmaceutical companies, academic institutions,
clinical research organizations, government agencies and biotechnology companies
worldwide.





The
Company’s patented tools and trade secrets provide researchers around the world
with the performance, throughput, cost effectiveness and flexibility necessary
to perform the billions of genetic tests needed to extract valuable medical
information. The Company believes this information will enable researchers to
correlate genetic variation and biological function, which will enhance drug
discovery, drug


















21










development
and clinical research, allowing diseases to be detected earlier and permitting
better choices of drugs for individual patients.




Arrayit’s
principal office is in Sunnyvale, California. Arrayit presently has ten
employees.


Summary
of Significant Accounting Policies






Use of
Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.




Cash and
Cash Equivalents




Cash
includes all cash and highly liquid investments with original maturities of
three months or less. The Company maintains cash in bank deposit accounts which,
at times, exceed federally insured limits. The Company has not experienced any
losses on these accounts.





Investments
in certificates of deposit with our bankers that contain prohibition on their
redemption are treated as non-current assets and included in restricted
cash.





Property
and Equipment





Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
and amortization on property and equipment are determined using the
straight-line method over the three to five year estimated useful lives of the
assets.





Impairment
of Long-Lived Assets




Arrayit
reviews its long-lived assets for impairment when events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
Arrayit evaluates, at each balance sheet date, whether events and circumstances
have occurred which indicate possible impairment. The Company uses an estimate
of future undiscounted net cash flows of the related asset or group of assets
over the estimated remaining life in measuring whether the assets are
recoverable. If it is determined that an impairment loss has occurred based on
expected cash flows, such loss is recognized in the statement of
operations.





Inventory





Inventories
are stated at the lower of cost or market, cost determined on the basis of
FIFO.























22










Revenue
Recognition





Revenue
is recognized when title and risk of loss are transferred to customers upon
delivery based on terms of sale and collectability is reasonably
assured.




Shipping
and Handling Costs





Shipping
and handling costs billed to customers are recorded as revenue. Shipping and
handling costs paid to vendors are recorded as cost of sales.





Fair
Value of Financial Instruments





The
carrying amounts reported in the accompanying balance sheets of all financial
instruments approximates their fair values because of the immediate or
short-term maturity of these financial instruments or comparable interest rates
of similar instruments.





Allowance
for Doubtful Accounts





The
Company records an allowance for estimated losses on customer accounts. The
allowance is increased by a provision for bad debts, which is charged to
expense, and reduced by charge-offs, net of recoveries.





Patent
Costs





Costs
incurred with registering and defending patent technology are charged to expense
as incurred.





Derivative
Instruments





Statement
of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” as amended, requires all derivatives to be
recorded on the balance sheet at fair value. These derivatives, including
embedded derivatives, are separately valued and accounted for on our balance
sheet.





Emerging
Issues Task Force Issue No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in, a Company's Own Stock" ("EITF
00-19"), requires freestanding contracts that are settled in a company's own
stock, including warrants to purchase common stock, to be designated as an
equity instrument, asset or a liability. Under the provisions of EITF 00-19, a
contract designated as an asset or a liability must be carried at fair value on
a company’s balance sheet, with any changes in fair value recorded in the
company’s results of operations. A contract designated as an equity instrument
must be included within equity, and no fair value adjustments are
required.





Following
guidance by SFAS No. 133 and EITF 00-19, we determined the conversion feature of
our “SOV Cap” notes , Senior Secured Convertible Notes (“SSCN”) and the warrants
associated with the SSCN notes should be treated as separate derivative
liabilities on our balance sheet under current liabilities. Unrealized changes
in the value of these derivatives are recorded in the consolidated statement of
operations as a gain or loss on derivative liabilities. Fair values of the
derivative liability associated with the conversion features  and
warrants are determined using a Black-Scholes Model.





Income
Taxes




Prior to
February 21, 2008, the financial statements of TeleChem did not include a
provision for Income Taxes because the taxable income of Telechem was included
in the Income Tax Returns of the Stockholders under the Internal Revenue Service
"S" Corporation elections.





Upon
completion of the February 21, 2008 transaction with IMHI as more fully
described  in  Note  1, TeleChem ceased to be
treated as an
"S"  Corporation  for  Income  Tax  purposes.  Effective
March 19, 2009, Arrayit Corporation became a Nevada C Corporation.





Deferred
taxes are computed using the asset and liability method. Under the asset and
liability method, deferred tax assets and liabilities are recognized for future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Deferred tax assets are not recognized
unless it is more likely than not that the asset will be realized in future
years.




The
Company applies the provisions of FASB, Interpretation No. 48, or FIN 48,
“Accounting for Uncertainty in Income Taxes – an Interpretation of FASB
Statement 109.” FIN 48 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to
be recognized, a tax position must be more likely than not to be sustained upon
examination by taxing authorities. The amount recognized is measured as the
largest amount of benefit that has a greater than 50% likelihood of being
realized upon ultimate settlement.




When
applicable, the Company will include interest and penalties related to uncertain
tax positions in income tax expense.






















23









Loss
per Common and Common Equivalent Share







The
computation of basic loss per common share is computed using the weighted
average number of common shares outstanding during the year. The computation of
diluted earnings per common share is based on the weighted average number of
shares outstanding during the year plus common stock equivalents which would
arise from their exercise using the treasury stock method and the average market
price per share during the year.  No common stock equivalents were
outstanding during 2007.





Recent
Accounting Prononcements





In
December, 2007, the FASB issued FAS No. 141(R), Business Combinations, and SFAS
No. 160, Accounting and Reporting of Noncontrolling Interests
in  Consolidated Financial Statements, an amendment of ARB No. 51. FAS
No. 141(R)  is required to be adopted concurrently with SFAS No.
160.These standards are  effective for fiscal years beginning after
December 15, 2008 and will apply  prospectively to business
combinations completed on or after that date.  Early adoption is
prohibited. FAS 141(R) requires changes in accounting
for  acquisitions and FAS 160 will change the accounting for minority
interests.  The adoption of this statement is not expected to have a
material effect on the Company's financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS No. 161”).  SFAS No. 161 amends and
expands the disclosure requirements of FASB Statement 133, “Accounting for
Derivative Instruments and Hedging Activities” (“SFAS No. 133”) to require
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of and gains and losses on
derivative instruments, and disclosures about credit risk-related contingent
features in derivative agreements.  The Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008.  Early application is encouraged.  The
Company is currently assessing the financial impact of SFAS 161 on its financial
statements.





In May
2008, the FASB issued FASB FSP APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)”. FSP APB 14-1 requires the issuer of certain convertible debt
instruments that may be settled in cash (or other assets) on conversion to
separately account for the liability (debt) and equity (conversion option)
components of the instrument in a manner that reflects the issuer’s
non-convertible debt borrowing rate.  Such separate accounting also
requires accretion of the resulting discount on the liability component of the
debt to result in interest expense equal to an issuer’s nonconvertible debt
borrowing rate. In addition, the FSP provides for certain changes related to the
measurement and accounting related to derecognition, modification or exchange.
FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on
a retroactive basis.  The impact of this standard cannot be determined
until the transactions occur.





In May
2008, the FASB issued FAS No. 162, "The Hierarchy of Generally
Accepted  Accounting Principles". FAS No. 162 identifies the sources
of accounting  principles and the framework for selecting the
principles to be used in the  preparation of financial statements of
nongovernmental entities that are  presented in conformity with
generally accepted accounting principles in the  United States. It is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted  Accounting  Principles".
The adoption of this statement is not expected effect on the Company's financial
statements.




NOTE
3- GOING CONCERN





At
December 31, 2008 Arrayit has a working capital deficit of $10,700,689, a
stockholders' deficit of $10,847,992, and recurring net losses. These factors
create substantial doubt about Arrayit’s ability to continue as a going concern.
The financial statements do not include any adjustment that might be necessary
if Arrayit is unable to continue as a going concern.


















24










The
ability of Arrayit to continue as a going concern is dependent on Arrayit
generating cash from the sale of its common stock or obtaining debt financing
and attaining future profitable operations. Management's plans include selling
its equity securities and obtaining debt financing to fund its capital
requirement and ongoing operations; however, there can be no assurance Arrayit
will be successful in these efforts.








NOTE
4 – CASH AND RESTRICTED CASH





Cash on
hand and bank overdrafts represent cash that may freely be used in the conduct
of our business.





At
December 31, 2008 and 2007, restricted cash was composed of a $100,000
Certificate of Deposit and accrued interest of $735 and $3,836, respectively,
lodged with our bankers as security for a $100,000 letter of deposit we were
mandated to lodge with the Pennsylvania court, as part of the Pediatrix legal
action more fully described in Note 10.  Upon finalization of the
legal action, the letter of credit will be returned and the bankers will release
the restrictions on the Certificate of Deposit.








NOTE
5 – ACCOUNTS RECEIVABLE





Accounts
receivable are shown net of an Allowance for Doubtful
Accounts.   As more fully explained in Note 6 below, receivable
has been reduced by Accounts Receivable loans sold with recourse.





2008
                
                
                2007Gross
      Accounts Receivable
                
                $
                772,295
                
                
                $
                581,449Less:Allowance
      for doubtful
                
                
                (125,000
                )
                
                
                (65,714
                )Loan
      value of receivables sold with recourse (see note 6)
                
                
                (385,639
                )
                
                
                (221,549
                )Total
                
                $
                261,656
                
                
                $
                294,186











NOTE
6 – ACCOUNTS RECEIVABLE SOLD WITH RECOURSE





Pursuant
to an agreement dated July 5, 2007, the Company has sold some of its Accounts
Receivable to a financial institution with full recourse.  The
financial institution retains a 15% portion of the proceeds from the receivable
sales as reserves, which are released to the Company as the Receivables are
collected.  The maximum commitment under this facility is $500,000,
and is limited to receivables that are less than 31 days outstanding. The
facility bears interest at prime plus 7% currently 11.50% at December 31, 2008,
and is secured by an unconditional guarantee of the Company and a first charge
against the Accounts Receivable.  At December 31, 2008, the balance
outstanding under the recourse contracts was $385,639 net of a hold back reserve
of $79,742 (2007 net - $ 230,498).   Because of the Company’s
credit policies, repossession losses and refunds in the event of default have
not been significant and losses under the present recourse obligations are not
expected to be significant, it is at least reasonably possible that the
Company’s estimate will change within the near term.

















25













NOTE
7 – FIXED ASSETS





Property
and equipment consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Fixed
      Assets – Cost
                
                $
                303,870
                
                
                $
                303,870Less:Accumulated
      Depreciation
                
                
                (262,419
                )
                
                
                (248,475
                )Total
                
                $
                41,451
                
                
                $
                55,395





Depreciation
expense totalled $13,944 and $20,090 respectively in fiscal 2008 and
2007.








NOTE
8 – ACCOUNTS PAYABLE AND ACCRUED LIABILILITES





Accounts
payable and accrued liabilities, consisted of the following at December 31, 2008
and 2007:





2008
                
                
                2007Accounts
      payable
                
                $
                4,252,197
                
                
                $
                4,242,153Accrued
      liabilities
                
                
                1,741,887
                
                
                
                554,682Total
                
                $
                5,994,084
                
                
                $
                4,796,835








NOTE
9 – DUE TO RELATED PARTIES





Pursuant
to a consulting agreement with Dr. Mark Schena, the Company is obligated to pay
a royalty of 5% of gross sales to him as a royalty for unfettered use of his
patents and knowledge.   Amounts outstanding at December 31, 2008
and 2007 of $349,950 and $337,616 respectively are unsecured, non-interest
bearing and due on demand.




















26













NOTE
10 - DEBT





2008
                
                
                2007Discounted
      convertible notes payable due to SovCap. SovCap is affiliated with a
      former officer and director of the Company and is a significant
      stockholder of the Company. These notes have a face interest rate of 18%.
      The notes are unsecured and are due on demand. The notes are convertible
      at rates between 85% and 75% of the average closing bid price of the
      Company's common stock for the five trading days ending on the trading day
      immediately preceding the conversion date. The notes were issued in six
      tranches between November 25, 2003 and August 24, 2004.  During
      2008 none of the principal was converted into common
stock.
                
                
                405,300
                
                
                
                405,300Notes
      payable due to SovCap, for proceeds received during the third quarter of
      2006, payable on demand after 45 days from the issue date,unsecured
      bearing interest at 6% -8%
                
                
                118,500
                
                
                
                118,500Notes
      payable due to SovCap,  unsecured bearing interest at 8% and due
      on February 22, 2007, issued on February 22, 2005.  . The notes
      are convertible at rate of 75% of the average closing bid price of the
      Company's common stock for the five trading days ending on the trading day
      immediately preceding the conversion date.The Company is presently in
      default of the payments on these notes, and as a result, the notes are
      accruing interest at the default rate of 26%.
                
                
                1,425,000
                
                
                
                1,425,000Note
      payable to Dorn & Associates, in conjunction with a 2005 funding.
      Payable in 36 monthly instalments of $890 at an interest rate of 5%. The
      Company is presently in default of the payment terms on this note, and has
      classified the entire note balance as current.  These notes are
      unsecured
                
                
                25,177
                
                
                
                25,177Convertible
      notes due to a former officer and shareholder of the Company, arising from
      a series pf advances during fiscal; 2003. These notes bear interest at
      12%, are unsecured, and due on demand. The Company is presently in default
      of the payment terms on these notes. The notes are convertible into
      approximately 10,251 shares at approximately $8.00 per
    share.
                
                
                74,174
                
                
                
                74,174Notes
      payable to an individual with interest at 10% collateralized by
      receivables and due on demand.
                
                
                0
                
                
                
                17,826Promissory
      note payable to AlphaWest Capital Partners, LLC, a party related to a
      former President and Director, in exchange for the March 24, 2006 proceeds
      in the same amount, unsecured with interest rate at 12% and due on
      demand.
                
                
                25,000
                
                
                
                25,000Notes
      payable to certain individual accredited investors with interest of 15% or
      18% per annum and are payable on demand after 180 days from the issue
      date. Notes are convertible into units of common stock and warrants at a
      rate of one unit for every $5.00 converted.  Notes in the
      principal amount of $1,183,500 were sold as a part of the sale of WV
      Fiber, Inc.
                
                
                0
                
                
                
                44,500Notes
      payable to former officer and other individual accredited investors,
      unsecured without specific terms of repayment
                
                
                0
                
                
                
                60,250Notes
      payable due to SovCap, unsecured
                
                
                0
                
                
                
                161,250Notes
      payable, interest free, unsecured due on demand from a
      shareholder
                
                
                0
                
                
                
                0Notes
      payable to Wells Fargo, payable in 60 monthly instalments of $8,572
      including interest at 10.25%, through November 2012
                
                
                323,283
                
                
                
                392,952Notes
      payable, interest at 8%, unsecured due on demand from Arrayit
      creditors
                
                
                42,827
                
                
                
                44,545Notes
      payable, interest at 5%, unsecured, due on demand from minority
      shareholders
                
                
                109,350
                
                
                
                0Notes
      payable, interest at 8%, unsecured due on demand from the former TeleChem
      shareholders and their families
                
                
                845,396
                
                
                
                959,3383,368,830
                
                
                
                3,753,812Notes
      payables included in liabilities of discontinued
operations
                
                
                0
                
                
                
                (204,254
                
                )Notes
      payable including related parties
                
                
                3,368,830
                
                
                
                3,549,558





















27









Scheduled
maturities of notes payable for years succeeding December 31, 2008 are as
follows:





Year
                
                Amount2009
                
                $
                74,8712010
                
                $
                80,0842011
                
                $
                85,6602012
                
                $
                82,699





Derivative
Liabilities





Convertible
Notes





From
November 2003 to August 2004, the Company issued promissory notes in the
aggregate principal amount of $405,300. These Promissory Notes carry an interest
rate of 18% and was payable within ten (10) days from the demand by the holder,
which demand may be made at any time after 120 days from the issuance of the
Promissory Notes. Interest is payable in cash or shares of common
stock.  The notes are convertible into our common shares at 75% of
volume weighted average price for five (5) trading days prior to conversion
date. As of December 31, 2008, the Company is in default of these Promissory
Notes.





The
Company evaluated the convertible debentures under SFAS No. 133 "Accounting for
Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments
Indexed to and Potentially Settled in a Company's Own Stock". The Company
determined that the convertible debentures contained an embedded derivative for
the conversion option. The conversion option allows for an indeterminate number
of shares to potentially be issued upon conversion.





This
results in the Company being unable to determine with certainty they will have
enough shares available to settle any and all outstanding common stock
equivalent instruments.  The Company would be required to obtain
shareholder approval to increase the number of authorized shares needed to share
settle those contracts. Because increasing the number of shares authorized is
outside of the Company’s control, this results in these instruments being
classified as liabilities under EITF 00-19 and derivatives under SFAS No. 133.
As a result, the Company has determined that all existing outstanding
convertible notes are also subject to EITF 00-19 and SFAS No. 133. The
terms of those Notes and Promissory Notes were disclosed under Note
9.




The fair
value of the derivative instruments – convertible debentures is estimated using
the intrinsic values of the conversion feature of the debentures. The Promissory
Notes are carried at full face value as they are in default.  In
addition, the fair market value of the related derivative liabilities is
recorded as of December 31, 2008 and 2007 to be $1,525,684 and $326,524,
respectively. During the years ended December 31, 2008 and 2007, a $38,424 and
$724,320 decrease in the fair value of the derivative instruments-convertible
notes was recorded as unrealized loss on fair value of derivative instruments in
the accompanying consolidated statement of operations.





Warrants





In
January 2008, the Company issued warrants to purchase 1,250,000 shares of common
stock.  The Company evaluated the convertible debentures and the
warrants under SFAS No. 133 "Accounting for Derivatives" and EITF 00-19
"Accounting for Derivative Financial Instruments Indexed to and Potentially
Settled in a Company's Own Stock". The Company determined that the warrants
qualified as free standing derivatives as the Company is unable to determine
with certainty they will have enough shares available to settle any and all
outstanding common stock equivalent instruments.  The Company would be
required to obtain shareholder approval to increase the number of authorized
shares needed to share settle those contracts. Because increasing the number of
shares authorized is outside of the Company’s control, this results in these
instruments being classified as liabilities under EITF 00-19 and derivatives
under SFAS No. 133.





During
the year ended December 31, 2008, a $1,337,564 increase in the fair value of the
derivative instruments-warrants was recorded as unrealized loss on fair value of
derivative instruments in the accompanying consolidated statement of
operations.





The fair
value of the derivative instruments – warrants is estimated using the
Black-Scholes option pricing model with the following assumptions as of December
31, 2008:





Common
      stock issuable upon exercise of warrants
              
              
              
              
              
              
              1,250,000Estimated
      market value of common stock on measurement date(1)
              
              
              
              
              
              
              $.01Exercise
      price
              
              
              
              
              
              
              $2.25Risk
      free interest rate (2)
              
              
              
              
              
              
              3.34
              %Warrant
      lives in years
              
              
              
              
              
              
              4.05Expected
      volatility (3)
              
              
              
              
              
              
              83.63
              %Expected
      dividend yields (4)
              
              
              
              
              
              None




(1)
            The
      estimated market value of the stock is measured each period end and is
      based reported public market prices.(2)
            The
      risk-free interest rate was estimated by management using the U.S.
      Treasury zero-coupon yield over the contractual term of the warrant on
      date of grant.(3)
            The
      volatility factor was estimated by management using the Company’s
      historical volatilities of its stock price.(4)
            Management
      estimated the dividend yield at 0% based upon its expectation that there
      will not be earnings available to pay dividends in the near
      term.








NOTE
11 – SEGMENT REPORTING





Arrayit
has two reportable segments:





Biotech -
life sciences and disease diagnostics





Chemical
- chemical trading















28










Inventory
at December 31, 2008 and 2007, which consisted primarily of finished goods or
finished parts requiring assembly, was comprised of:





2008
                  
                  
                  2007Biotech
                  
                  $
                  445,534
                  
                  
                  $
                  256,237Chemical
                  
                  
                  38,834
                  
                  
                  
                  53,009Total
                  
                  $
                  484,368
                  
                  
                  $
                  309,246








Gross
Profit for the years ended December 31, 2008 and 2007, was comprised
of:





Sales
                
                
                2008
                
                
                2007Biotech
                
                $
                3,721,751
                
                
                $
                3,310,412Chemical
                
                
                341,399
                
                
                
                511,078Total
      Sales
                
                
                4,063,149
                
                
                
                3,821,490Cost
      of SalesBiotech
                
                
                2,079,375
                
                
                
                2,185,948Chemical
                
                
                564,599
                
                
                
                477,821Total
      Cost of Sales
                
                
                2,643,974
                
                
                
                2,663,769Gross
      ProfitBiotech
                
                
                1,642,375
                
                
                
                1,124,464Chemical
                
                
                (223,200
                )
                
                
                33,257Total
      Gross Profit
                
                $
                1,419,175
                
                
                $
                1,157,721









NOTE
12 - COMMITMENTS AND CONTINGENCIES




Pediatrix
Screening, Inc., et al. V. TeleChem International, Inc.





The
controversy at issue arose from a failed grant collaboration between Pediatrix
and TeleChem, involving TeleChem’s proprietary microarray technology and
subsequent agreement by the parties to commercialize this microarray technology
through the formation of a joint corporation.  Pediatrix brought a
lawsuit in the United States District Court for the Western District of
Pennsylvania alleging multiple claims for breach of contract in connection with
both the grant collaboration and Pre-Incorporation
Agreement.  TeleChem counterclaimed alleging breach of the
Pre-Incorporation Agreement, as well as fraudulent misrepresentation and trade
secret misappropriation,inter alia ,
stemming from the failed grant collaboration and subsequent Pre-Incorporation
Agreement.





On August
11, 2007, the jury returned a verdict finding that, while both parties were in
breach of contract, Pediatrix also engaged in fraudulent misrepresentation and
awarded TeleChem $500,000 in damages and $3,500,000 in punitive damages for the
fraudulent misrepresentation claim and $1,000,000 in damages on the breach of
contract claim.   The jury also awarded Pediatrix $1,085,000 in
damages for Pediatrix’s breach of contract claim against TeleChem.





Pediatrix’s
Rule 59 motion to amend the judgement was denied by the District
Court.  Pediatrix appealed the jury verdict on fraudulent
misrepresentation and the $4,000,000 in damages awarded thereunder to the U.S.
Court of Appeals for the Third Circuit.  Pediatrix has indicated that
it will not pursue on appeal the breach of contract verdict and damage award
against it.   TeleChem did not appeal any portion of the jury
verdict.


















29










The
appeal is currently pending before the U.S. Court of Appeals for the Third
Circuit.








Long Term
Lease Commitments





The
Company leases its office facility in Sunnyvale, California under operating
leases that expire November 30, 2012.





Future  minimum  lease  payments  as  of  December  31,  2008  are  as  follows:





YEAR  ENDING





2009                  150,024





2010                  150,024





2011                  150,024





2012                 137,522








$  587,594





Rent
expense was approximately $134,838 for the year ended December 31, 2008
and


$169,988
for the year ended December 31, 2007.








Note
13-  Discontinued operations





On
April11, 2007 IMHI disposed of our wholly-owned subsidiary, WV Fiber,
LLC.  During the fourth quarter of 2007, IMHI approved a plan to
dispose of its wholly- owned subsidiaries, Endavo and
Bidchaser.





In
conjunction with the discontinuance of operations,  IMHI recognized a
loss of $3,142,419 in 2007 to record the impairment of goodwill The assets and
liabilities of the discontinued operations are presented separately under the
captions “Assets of discontinued operations” and “Liabilities of discontinued
operations,” in the accompanying Balance Sheets at December 31, 2008 and 2007,
and consist of the following:










2008
                
                
                2007Assets
      of discontinued operations:Cash
                
                
                
                
                
                $
                99,996Accounts
      receivable
                
                
                -Prepaid
      expenses
                
                
                -Property
      and equipments
                
                
                -Other
      noncurrent assets
                
                
                
                
                
                
                147,949Total
      assets of discontinued operations
                
                
                
                
                
                $
                247,945Liabilities
      of Discontinued operationsAccounts
      payable and accrued expenses
                
                
                
                
                
                $
                1,463,965




There is
no activity in liabilities from the discontinued operation through December 31,
2008.















30










Note
14 - Stockholders' Equity (Deficit)




Conversion
of Debt to Common Stock




During
2007, certain creditors converted $102,701 (2006 -$169,500) of loans and accrued
interest into 2,390,731 shares of common stock (adjusted for reverse split)
and  a subsidiary’s landlord converted $4,400 of unpaid rent into
30,345 shares of common stock.





No
conversion of debt occurred during 2008.




Common
Shares Issued for Service




During
2007, IMHI has issued 360,994 common shares and 112,651 Series A Preferred
shares to consultants under consulting agreements . The associated expenses are
$52,500 and $208,800 respectively.





Series
A Convertible Preferred Stock





The
Series A Preferred Stock has no stated dividend rate and has a liquidation
preference of $.001 per share. The Series A Preferred Stock also has voting
rights that entitle the preferred shareholders to vote with the common
shareholders as if the preferred stock had converted to common. The conversion
ratio of the preferred into common is not subject to revision upon reverse stock
dividends or splits that reduce the total shares outstanding.





As of
December 31, 2008, there are 3,697,611 shares of Series A Convertible Preferred
Stock issued and outstanding.





The
Series C Preferred Stock has no stated dividend rate.  The Series A
Preferred Stock also has voting rights that entitle the preferred shareholders
to vote with the common shareholders as if the preferred stock had converted to
common. The conversion ratio of the preferred into common is not subject to
revision upon reverse stock dividends or splits that reduce the total shares
outstanding.








The
103,143 Series C Preferred Stock was issued on February 21, 2008 as part of the
merger with TeleChem.   These Series C Preferred shares are
convertible into 36,100,000 common shares at the rate of 350:1.





On August
15, 2008 the articles of designation for the Series C Preferred Stock were
amended to limit the conversion to common to shares to 10% of the holders’
original holdings in any quarter.







Options
and warrants





On
January 19, 2008 IMHI issued 1,250,000 warrants, expiring on January 19, 2013,
exercisable at $0.01.  Warrants that were issued generally do not have
a life that exceeds ten years. Information regarding warrants and options
to purchase common shares is summarized below:





Number
      of Options and Warrants
                
                
                Weighted
      Average Exercise Price Per ShareOutstanding
      at December 31, 2006
                
                
                11,965,000
                
                
                $
                0.09Granted
                
                
                -
                
                
                
                -Cancelled/forfeited
                
                
                (3,013,000
                )
                
                
                -Expired
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2007
                
                
                8,952,000
                
                
                $
                0.10Granted
                
                
                1,250,000
                
                
                $
                0.01Cancelled/forfeited
                
                
                (8,952,000
                )
                
                
                -Expired
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2008
                
                
                1,250,000
                
                
                $
                0.01
















31








The
following table summarizes information about outstanding warrants and options
for common stock at December 31, 2008:





Range
      of Exercise
                        
                        
                        Number
      Outstanding
                        
                        
                        Weighted
      Average Remaining Contractual Life (years)
                        
                        
                        Weighted
      Average Exercise Price
                        
                        
                        Number
      Exercised
                        
                        
                        Average
      Exercise Price$
                        0.01
                        
                        
                        
                        1,250,000
                        
                        
                        
                        5
                        
                        
                        
                        0.01
                        
                        
                        
                        0
                        
                        
                        $
                        0.01










Note
15 – Reverse Merger Accounting




On
      February 6, 2008, Integrated Media Holdings, Inc., a Delaware corporation
      (“IMHI” or the “Company”), filed a Current Report on Form 8-K (the
      “Original Filing”) announcing, among other things, the merger of TeleChem
      International, Inc. (“TeleChem”) a privately held Delaware
      corporation  (“TeleChem”) with and into a wholly-owned
      subsidiary of IMHI (the “Merger”), and that as a result TeleChem became a
      wholly owned subsidiary of IMHI.
              
              It
      is the intention of the parties for IMHI to divest itself of those
      operations designated as Discontinued Operations in IMHI's December 31,
      2007 Form 10-KSB, upon completion of the merger.
              
              For
      accounting purposes, this transaction was treated as an acquisition of
      IMHI and a recapitalization of TeleChem. TeleChem is the accounting
      acquirer and the results of its operations carryover. Accordingly, the
      operations of IMHI are not carried
over.





(a)Issue Preferred Shares for
TeleChem's net assets and consultants fees


Issue
Warrants for Consultants




Effective
February 21, 2008, we completed the Plan and Agreement of Merger by and among
us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly owned subsidiary of the
Company.  Consummation of the merger did not require a vote of our
shareholders.  We issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary and also as compensation for services in connection with the
acquisition..




The
former shareholders of TeleChem and the consultants now own approximately 98.51%
of the outstanding interest and voting rights of the parent
company.  The Preferred Stock is convertible into 36,100,000 shares of
common stock after, but not before, the effective date of the reverse split of
the outstanding Integrated Media common stock, with conversions in any quarter
being limited to 25% of the original issued Series C preferred shares to the
holder.




The value
of the 3,143 Series C preferred shares issued to consultants, convertible at 350
to one common shares was determined by applying the close on the OTCBB of $0.09
to yield $99,000




On
January 19, 2008 IMHI issued 1,250,000 warrants to some IMHI noteholders,
expiring on January 19, 2013 exercisable at $0.01, in connection with the
Arrayit business combination.  At February 21, 2008 the market value
of the IMHI shares was $0.09, yielding an expense of $100,000.




(b)Elimination of IMHI’s
Stockholders’ Equity.





In
accordance with reverse acquisition accounting, the financial statements
subsequent to the date of the transaction will be presented as a continuation of
Arrayit and as a result the stockholders' equity of IMHI which is equal to the
book value of net assets, has been eliminated as follows:




Total Elimination




IMHI
additional paid in
capital                      32,878,201


IMHI accumulated
deficit                           (29,335,887)


Adjusted book value of IMHI net assets       
3,542,314




(f)Restatement of Share Capital
      Under Reverse Merger Accounting
              
              In
      accounting for this reverse merger, the legal share capital is that of
      IMHI (the legal parent) and the value of the share capital is calculated
      as described above.
              
              Upon
      completion of this transaction, Arrayit will have 17,499,262 of its $
      0.001 par value common share issued and outstanding and 3,697,611 of its $
      0.001 pare value Series A preferred shares issued and outstanding and nil
      of its $ 0.001 par value Series C preferred shares issued and
      outstanding.
              
              In
      addition, Arrayit will have 1,250,000 warrants and options to purchase
      common shares after reflecting the cancellation of 1,750,000 common stock
      purchase warrants surrendered as consideration for the disposition of the
      former Endavo subsidiary of IMHI.


















32









NOTE
16 – INCOME TAXES




At
December 31, 2008, the Company had net operating loss (NOL) carry-forwards
available to offset future taxable income of approximately $12 million including
approximately $11.5 million from IMHI at date of the merger. The utilization of
the NOL carry-forwards is dependent upon the tax laws in effect at the time the
NOL carry-forwards can be utilized. It is also likely that utilization of the
NOL carry-forwards are limited based on changes in control from the merger. A
valuation allowance has been recorded against the deferred tax asset due to the
uncertainty surrounding its realization caused by the Company’s recurring
losses. The NOL carryforwards will expire in 2018.




Prior to
merger, the financial statements of TeleChem did not include a provision for
income taxes because the taxable income of Telechem was included in the income
tax returns of the stockholders under Internal Revenue Service "S" Corporation
elections. Upon completion of the merger, Telecom ceased to be treated as an “S”
Corporation for income tax purposes income tax purposes.





NOTE
17 – RESTATEMENT OF PREVIOUSLY ISSUED FINANICAL STATEMENTS





Summary
of Restatement Items





The
condensed consolidated financial statements for the year ended December 31, 2008
and related disclosures in this Amendment No. 1 to the Annual Report on Form
10-K/A have been restated in accordance with the changes described
below:





The
Company Management together with outside legal counsel determined that the
disposal of discontinued operations should have been reflected at December 31,
2008.





B








Balance
sheet impact





The
following table sets forth the effects of the restatement adjustments on the
Company’s consolidated balance sheet as of December 31, 2008 and 2007 as
compared to the balance sheets initially filed in the December 31, 2008 Form
10-K.





December
      31, 2008As initially reported
              
              Adjustment
              
              
              As restatedCurrent
      assets
              $
              746,024
              
              $
              -
              
              
              $
              746,024Property
      and equipment, net
              
              41,451
              
              
              -
              
              
              
              41,451Assets
      of discontinued operations
              
              247,945
              
              
              (247,945)
              (a)
              
              
              0Restricted
      cash
              
              100,734
              
              
              -
              
              
              
              100,734Deposits
              
              18,924
              
              
              -
              
              
              
              18,924Total
      assets
              
              1,155,079
              
              
              (247,946)
              
              
              
              907,133Current
      liabilities:Accounts
      payable and accrued liabilities
              
              5,994,084
              
              
              (850,462)
              (b)
              
              
              5,143,622Bank
      overdraft
              
              9,110
              
              
              -
              
              
              
              9,110Due
      to related parties
              
              349,950
              
              
              -
              
              
              
              349,950Accrued
      expenses
              
              444,669
              
              
              850,462
              (b)
              
              
              1,295,131Customer
      deposits
              
              62,798
              
              
              -
              
              
              
              62,798Derivative
      liability
              
              1,525,684
              
              
              -
              
              
              
              1,525,684Notes
      payable, current portion
              
              3,457,087
              
              
              (336,669)
              (a)
              
              
              3,120,418Total
      current liabilities
              
              11,843,382
              
              
              (336,669)
              
              
              
              11,506,713Notes
      payable, long term
              
              248,412
              
              
              -
              
              
              
              248,412Liabilities
      of discontinued operations
              
              1,463,966
              
              
              (1,463,966)
              (a)
              
              
              0Total
      liabilities
              
              13,555,760
              
              
              (1,800,635)
              
              
              
              11,755,125Stockholders’
      deficit:Preferred
      “A”
              
              3,697
              
              
              -
              
              
              
              3,697Preferred
      “B”
              
              103
              
              
              -
              
              
              
              103Common
      stock
              
              17,499
              
              
              -
              
              
              
              17,499Additional
      paid-in capital
              
              (4,701,848)
              
              
              6,022,228
              (c)
              
              
              1,320,380Deficit
      accumulated
              
              (7,720,133)
              
              
              (4,469,538)
              (c)
              
              
              (12,189,671)Total
      stockholders’ deficit
              
              (12,400,681)
              
              
              1,552,689
              
              
              
              (10,847,992)Total
      liabilities and stockholders’ deficit
              $
              1,155,079
              
              $
              (247,946)
              
              
              $
              907,133





(a)
            To
      record divestiture of assets and liabilities related to discontinued
      operations.  .


(b)
            To
      break out the portion of accrued interest that had been grouped with
      accounts payable and other accrued
liabilities.


(c)
            To
      reclassify equity accounts to properly record effects of
      divestiture.








December
      31, 2007As
      initially reported
              
              Adjustment
              
              
              As
      restatedCurrent
      assets
              $
              723,432
              
              $
              -
              
              
              $
              723,432Total
      assets
              
              1,149,532
              
              
              -
              
              
              
              1,149,532Current
      liabilities:Accounts
      payable and accrued liabilities
              
              4,796,835
              
              
              5,121
              (a)
              
              
              4,801,956Bank
      overdraft
              
              29,495
              
              
              -
              
              
              
              29,495Due
      to related parties
              
              337,616
              
              
              -
              
              
              
              337,616Accrued
      expenses
              
              0
              
              
              850,462
              (a)
              
              
              850,462Customer
      deposits
              
              29,580
              
              
              -
              
              
              
              29,580Derivative
      liability
              
              0
              
              
              326,544
              (a)
              
              
              326,544Notes
      payable, current portion including related parties
              
              3,222,218
              
              
              -
              
              
              
              3,222,218Total
      current liabilities
              
              8,415,744
              
              
              1,182,127
              
              
              
              9,597,871Notes
      payable, long term
              
              327,340
              
              
              -
              
              
              
              327,340Liabilities
      of discontinued operations
              
              1,463,966
              
              
              -
              
              
              
              1,463,966Total
      liabilities
              
              10,207,050
              
              
              1,182,127
              
              
              
              11,389,177Stockholders’
      deficit:Preferred
      “A”
              
              3,810
              
              
              -
              
              
              
              3,810Preferred
      “B”
              
              103
              
              
              -
              
              
              
              103Common
      stock
              
              16,419
              
              
              -
              
              
              
              16,419Additional
      paid-in capital
              
              (3,387,409)
              
              
              3,387,409
              (a)
              
              
              0Deficit
      accumulated
              
              (5,690,441)
              
              
              (4,569,536)
              (a)
              
              
              (10,259,977)Total
      stockholders’ deficit
              
              (9,057,518)
              
              
              (1,182,127)
              
              
              
              (10,239,645)Total
      liabilities and stockholders’ deficit
              $
              1,149,532
              
              $
              -
              
              
              $
              1,149,532





(a)
            To
      adjust balance sheet to for effects of reverse merger
      accounting.





Impact
on Statements of Changes in Stockholders’ Equity





The
impact of the above restatement on the Company’s consolidated statements of
changes in stockholder’s equity, specifically on Additional Paid In Capital and
Accumulated Deficit, for the years ended December 31, 2008 and 2007 is
summarized below.





Additional
Paid-In Capital:


Years
      ended December 31, 2007 and 2008As
      initially reported
              
              Adjustment
              
              
              As
      restatedBalance,
      December 31, 2006
              $
              31,832,986
              
              $
              -
              
              
              $
              31,832,986Issuance
      of common stock for services
              
              52,139
              
              
              -
              
              
              
              52,139Issuance
      for compensation
              
              784,615
              
              
              -
              
              
              
              784,615Issuance
      of common stock for unpaid rent
              
              4,370
              
              
              -
              
              
              
              4,370Settlement
      of unpaid note interest
              
              51,750
              
              
              -
              
              
              
              51,750Conversion
      of notes to common stock
              
              48,560
              
              
              -
              
              
              
              48,560Surrender
      for cancellation of common stock on disposal of WV Fiber
              
              (486,900)
              
              
              -
              
              
              
              (486,900)Common
      stock issued for cash
              
              106,893
              
              
              -
              
              
              
              106,893Preferred
      shares issued for services
              
              208,687
              
              
              -
              
              
              
              208,687Re-acquisition
      of Series A Preferred on disposal of WV Fiber
              
              (930,708)
              
              
              -
              
              
              
              (930,708)Re-issuance
      of Series A Preferred for acquisitions in 2006
              
              1,106,912
              
              
              -
              
              
              
              1,106,912Issuance
      of Series C Preferred
              
              98,897
              
              
              -
              
              
              
              98,897Eliminate
      IMHI equity under reverse merger accounting
              
              (36,265,610)
              
              
              3,387,409
              (a)
              
              
              (32,878,201)Balance,
      December 31, 2007
              
              (3,387,409)
              
              
              3,387,409
              
              
              
              -Restate
      share capital
              
              (1,314,439)
              
              
              1,082,129
              (b)
              
              
              (232,310)Spin
      off of certain assets and liabilities assumed with earlier
      mergers
              
              -
              
              
              1,552,690
              (c)
              
              
              1,552,690Balance,
      December 31, 2008
              $
              (4,701,848)
              
              
              6,022,228
              
              
              $
              1,320,380





(a)
            To
      correct the statements of changes in equity for the effects of reverse
      merger accounting.


(b)
            To
      correct the restatement of IMHI’s in conjunction with the
      merger.


(c)
            To
      record the divestiture of assets and liabilities related to discontinued
      operations that were included in the
merger.





Accumulated
Deficit:


Years
      ended December 31, 2007 and 2008As
      initially reported
              
              Adjustment
              
              
              As
      restatedBalance,
      December 31, 2006
              $
              (37,820,426)
              
              $
              -
              
              
              $
              (37,820,426)Eliminate
      IMHI equity under reverse merger accounting
              
              37,820,426
              
              
              (8,484,539)
              (a)
              
              
              29,335,887Net
      loss for the year ended December 31, 2007
              
              (5,690,441)
              
              
              3,915,003
              (a)
              
              
              (1,775,438)Balance,
      December 31, 2007
              
              (5,690,441)
              
              
              (4,569,536)
              
              
              
              (10,259,977)Net
      loss for the year ended December 31, 2008
              
              (2,029,693)
              
              
              99,999
              
              
              
              (1,929,694)Balance,
      December 31, 2008
              $
              (7,720,134)
              
              
              (4,469,537)
              
              
              $
              (12,289,671)





(a)
            To
      correct the statements of changes in equity for the effects of reverse
      merger accounting.





Impact
on Statements of Operations





The
impact of the above restatement on the Company’s consolidated statement of
operations for the year ended December 31, 2008 is summarized
below.





Year
      ended December 31, 2008As
      initially reported
              
              Adjustment
              
              
              As
      restatedTotal
      revenues
              $
              4,063,149
              
              $
              -
              
              
              $
              4,063,149Cost
      of sales
              
              2,643,974
              
              
              -
              
              
              
              2,643,974Gross
      margin
              
              1,419,175
              
              
              
              
              
              
              1,419,175Selling,
      general, and administrative expense
              
              1,346,046
              
              
              -
              
              
              
              1,346,046Legal
      expense
              
              82,274
              
              
              
              
              
              
              82,274Interest
      expense
              
              721,408
              
              
              -
              
              
              
              721,408Loss
      (gain) on derivative liability
              
              1,299,139
              
              
              (99,999)
              (a)
              
              
              1,199,140Net
      loss for the year
              
              2,029,692
              
              
              (99,999)
              
              
              
              1,929,693Net
      loss per common share - basic and diluted
              $
              (0.12)
              
              
              0.01
              (a)
              
              $
              (0.11)Weighted
      average shares - basic and diluted
              
              17,499,262
              
              
              -
              
              
              
              17,499,262





(a)
            To
      correct arithmetic error.





Impact on Statements of Cash Flows





The
impact of the above restatement on the Company’s consolidated statement of cash
flows for the year ended December 31, 2008  is summarized
below.





Year ended December 31,
  2008As initially reported
              
              Adjustment
              
              
              As restatedCash
      flows from operating activities:Net
      loss
              $
              (2,029,692)
              
              $
              99,999
              (a)
              
              $
              (1,929,693)Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation
              
              13,943
              
              
              -
              
              
              
              13,943Gain
      (loss) on derivatives
              
              1,299,139
              
              
              (99,999)
              (a)
              
              
              1,199,140Changes
      in operating assets and liabilities:(Increase)
      decrease in assetsAccounts
      receivable
              
              32,529
              
              
              -
              
              
              
              32,529Inventories
              
              (175,122)
              
              
              -
              
              
              
              (175,122)Prepaids
              
              120,000
              
              
              -
              
              
              
              120,000Restricted
      cash
              
              3,101
              
              
              -
              
              
              
              3,101Increase
      (decrease) in liabilitiesAccounts
      payable & accrued liabilities
              
              786,914
              
              
              -
              
              
              
              786,914Due
      to related parties
              
              12,333
              
              
              -
              
              
              
              12,333Bank
      overdraft
              
              (20,384)
              
              
              -
              
              
              
              (20,384)Customer
      deposits
              
              33,218
              
              
              -
              
              
              
              33,218Net
      cash provided by (used in) for operating activities
              
              75,979
              
              
              
              
              
              
              75,979Net
      cash provided by (used in) for investing activities
              
              -
              
              
              -
              
              
              
              -Net
      cash provided by (used in) financing activities
              
              (75,979)
              
              
              -
              
              
              
              (75,979)Net
      increase (decrease)  in cash
              
              0
              
              
              -
              
              
              
              0Cash,
      Beginning of yearCash,
      End of year
              $
              nil
              
              
              -
              
              
              $
              nilSupplemental
      cash flow informationCash
      Paid for interest
              $
              159,892
              
              
              -
              
              
              $
              159,892





(a)
            To
      correct arithmetic error.








ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM
9A. CONTROLS AND PROCEDURES





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act, as amended.  Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2008. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework.  A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be
prevented or detected on a timely basis.








Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting. Management’s
review and evaluation of the company’s internal controls over financial
reporting did not involve a recognized framework for financial controls and was
limited to the identification of risks associated with the limited number of
personnel employed by the company and the direct involvement of the CEO and
CFO  in most business functions. In its assessment of the
effectiveness of internal control over financial reporting as of December 31,
2008, our management determined that there were control deficiencies that
constituted material weaknesses, as described below.





Lack of Effective Corporate
Governance Policies and Procedures. We do not have effective policies
regarding the independence of or directors and do not have independent
directors. The lack of independent directors means that there is no effective
review, authorization, or oversight of management or management’s actions by
persons that were not involved in approving or executing those actions. This has
resulted in inconsistent practices.  Further, the Board of Directors
does not currently have any independent members and no director qualifies as an
audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation
S-B.  Since these entity level programs have a pervasive effect across
the organization, management has determined that these circumstances constitute
a material weakness.





We have
no conflicts of interest policies and there is no provision for the review and
approval of transactions between the Company and interested members of
management.





Lack of Effective Policies Regarding
the General Accounting System. We do not have any documented processes
for the input, accumulation, or testing of financial data that would provide
assurance that all transactions are accurately and timely recorded or that the
financial reports will be prepared on a periodic basis.





Lack of Effective Control over
Financial Statement Disclosure.We do not maintain effective
controls over financial statement disclosure. Specifically, controls were not
designed and in place to ensure that all disclosures required were originally
addressed in our financial statements.   Accordingly, management
has determined that this control deficiency constitutes a material
weakness.





Because
of these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2008, based on the criteria established in "Internal Control-Integrated
Framework" issued by the COSO.





Management
has determined that the Company does not have the financial resources or
personnel to address any of the material weaknesses identified or to conduct a
more robust evaluation of its controls. As resources become available,
management will develop and implement remedial actions to address the material
weaknesses it has identified.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.




Changes
in internal control over financial reporting





There
were no changes in our internal control over financial reporting during our most
recent fiscal quarter that materially affected, or were reasonably likely to
materially affect, our internal control over financial reporting.





ITEM
9B. OTHER INFORMATION





None.















33










PART
III





ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The
following sets forth our officers and Directors as of the date of this
filing:








Name
              Position
              Year
      of AppointmentRene
      Schena
              Chairman,
      Director and CEO
              2007Todd
      J Martinsky
              Vice
      President and Director
              2007Mark
      Schena, Ph.D
              President,
      Chief Technology Officer, Secretary and Treasury
              2007Paul
      Haje
              Director
      of Advertising and Public Relations
              2007William
      L. Sklar
              Director
              2007








Ms. Schena
holds a degree in Language Studies from the University of California Santa Cruz.
She has 23 years experience in international business, including translation,
contract documentation and commodities trading with a subsidiary of ConAgra from
1985 to 1988, and as a chemical import and distribution specialist, department
manager, and later President of NuSource Chemical Corporation.





She
founded TeleChem International, Inc. in 1993, continuing the import and export
chemical distribution specialty, expanding into government bid business, and
moving into the biotech sector in 1996.  TeleChem is a market leader
in DNA microarray technology, providing tools and expertise for the explosive
functional genomics and diagnostic screening markets.  In 2002 and
again in 2003, TeleChem made Inc. Magazine’s list of the top 500 fastest growing
privately held companies in the USA. In 2005, the Silicon Valley Business
Journal recognized Ms Schena as the President of the 11 th  largest
woman-owned business enterprise in the Silicon Valley.  Ms. Schena’s
long-term contacts in the chemical industry, strong business background and
management expertise are key contributions to TeleChem's
infrastructure.





Mr.
Martinsky , Co-founder of TeleChem International, Inc., previously served
as director of education and consulting at the Codd and Date Consulting
Group.  Mr. Martinsky has led the Arrayit Division to play a
significant role in the microarray industry. He has authored several book
chapters and other scientific literature and has become an internationally
recognized lecturer, writer, consultant and teacher.  In addition to
providing consulting services, Mr. Martinsky has spearheaded Arrayit’s technical
support team since 1997. Along with his daily technical and business
direction of the Arrayit Product line, Mr. Martinsky established successful
alliances with corporate partners in manufacturing, reagents, equipment and
distribution.  He is responsible for an educational outreach program
that ensures that the broadly patented Arrayit Micro Spotting Device is applied
in the field with optimal scientific and technological accuracy. He is currently
serving on the panel that is crafting future regulatory requirements for
microarray manufacturing for the United States Pharmacopeia.




Dr. Schena
is a world-renowned biochemist whose research focuses on microarray technology,
genomics, proteomics, genotyping, molecular diagnostics, and gene
expression.  Dr. Schena and his colleagues at Stanford University
published the first paper on microarrays in 1995 (Science 270, 467-470),
catalyzing the explosive proliferation of microarray technology at academic and
commercial institutions internationally.  The 95’ Science paper is the
most highly cited paper in the history of Arabidopsis research and a recent
article in The Scientist places Dr. Schena at positions 1 and 2 on the
“microarray family tree”, confirming his role as the founder of microarray
technology and substantiating his status as the Father of Microarray Technology.
More than 20,000 laboratories in 35 countries are using microarrays to explore
basic questions in biology, chemistry, agriculture and medicine, and the
proliferation of the technology has resulted in more than 26,000 publications
since the original 95’ Science publication.




Dr.
Schena is currently a Visiting Scholar and Consultant in the Arrayit® Life
Sciences Division at TeleChem International, Inc.  Dr. Schena is also
the Chairman of NGS-Arrayit, Inc and the Founder and President of Mark Schena
Inc., an educational consulting company providing consulting services to a
host


















34










of
leading organizations such as Affymetrix,  AlphaGene, Arrayit,
Biodot,  Cartesian Technologies,
Clontech,  diaDexus,  General Scanning, Genomic
Solutions,  GSI Lumonics,  Incyte Pharmaceuticals, Irell and
Manella, Johnson & Johnson, Morrison & Foerster, Motorola, Packard
Instruments, Perkins Coie, Roche, Synteni, Technology Mentors, TeleChem
International, Wilson Sonsini, Goodrich & Rosati, and others.  Dr.
Schena resides with Ms. Rene Schena, the Chairman & CEO of TeleChem
International, Inc., in Los Altos, California.







Mr. Haje
joined TeleChem in 1999 as the Director of Advertising and Public
Relations.  He has successfully produced 63 major trade shows in the
USA and Canada, 17 workshops, 11 VIP events, 76 unique full page print
advertising campaigns, 18 direct mail campaigns, e-mail blasts, web site imagery
and two full color company catalogs.  In 2003, Mr. Haje won the 2003
Signet Advertising Award for Best Full Page Ad in the life sciences
sector.  Mr. Haje represented the company at the United States Food
and Drug Administration’s Microarray Quality Control projects I and II, drawing
important attention in the scientific press to the company and its H25K Whole
Human Genome Chip.  H25K was one of only seven microarray platforms
allowed to participate in the project, including Affymetrix, Agilent, Illumina,
GE Healthcare and Applied BioSystems.  Mr. Haje has promoted the
Arrayit brand name through company exposure on prime time television, in cover
stories, feature articles, trade publications, newsletters and web
broadcasts.  TV includes PBS NOVA, ABC Night Line, CNBC Business
Odyssey.  He has regularly booked cover stories and feature articles
in Science, The Scientist, Nature, Genetic Engineering News, BioTechniques,
Genome Technology, American Chemical Society, JAMA, PharmaGenomics, Genomics and
Proteomics, BioScience Technology, BioArray News, BioInform, and Genome
Web.





Independence
of Directors




We are
not required to have independent members of our Board of Directors, and do not
anticipate having independent Directors until such time as we are required to do
so.





Audit
Committee and Financial Expert




The
Company is not required to have an audit committee and as such, does not have
one.





Code
of Ethics for the CEO and CFO




On Feb
21, 2008, the Board of Directors of the Company adopted a Code of Ethics for the
Company’s senior officers.  The Board of Directors believes that these
individuals must set an exemplary standard of conduct, particularly in the areas
of accounting, internal accounting control, auditing and
finance.  This code sets forth ethical standards to which the
designated officers must adhere and other aspects of accounting, auditing and
financial compliance.








SECTION
16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
16(a) of the securities Exchange Act of 1934, as amended, requires our
directors, executive officers and persons who own more than 10% of a class of
our equity securities which are registered under the Exchange Act of 1324, as
amended, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of such registered securities.
Such executive officers, directors and greater than 10% beneficial owners are
required by Commission regulation to furnish us with copies of all Section 16(a)
forms filed by such reporting persons.

















35










ITEM
11. EXECUTIVE COMPENSATION





SUMMARY
COMPENSATION TABLE








Name
      and Principal Position
                Year
                
                Salary
                
                
                Bonus
                
                
                Stock
      Awards
                
                
                Options
      Awards
                
                
                All
      Other Compensation
                
                
                Total($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)Rene
      A Schena
                2008
                
                $
                45,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                45,000Chairman,
      Director and CEO
                2007
                
                $
                22,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                22,500Todd
      J Martinsky
                2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                5,707
                
                
                $
                5,707Vice
      President and Director
                2007
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                1,900
                
                
                $
                1,900Mark
      Schena, Ph.D
                2008
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                250,000
                
                
                $
                250,000President,
      Chief Technology Officer, Secretary & Treasury
                2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                250,000
                
                
                $
                250,000William
      L. Sklar (3)
                2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                18,000
                
                
                $
                18,000CFO
                2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Paul
      Haje
                2008
                
                $
                96,845
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                96,845Director
      of Advertising and Public Relations
                2007
                
                $
                99,448
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                99,448








Our
compensation and benefits programs are administered by our Board of Directors
and intended to retain and motivate individuals with the necessary experience to
accomplish our overall business objectives within the limits of our available
resources.  Consequently, the guiding principles of our compensation
programs are:






            simplicity,
      clarity, and fairness to both the employee and the
  Company;
            preservation
      of Company resources, including available cash;
  and









            opportunity
      to receive fair compensation if the Company is
  successful.





Each
element of our compensation program contributes to these overall goals in a
different way.






            Base
      Salary and Benefits are designed to provide a minimum threshold to attract
      and retain employees identified as necessary for our
    success.
            Cash
      Bonuses and equity awards are designed to provide supplemental
      compensation when the Company achieves financial or operational goals
      within the limits of our available
resources.





















36










All
compensation payable to the Chief Executive Officer and the other named
executive officers is reviewed annually by the Board of Directors and changes or
awards are approval by the Board of Directors.





Board
Compensation





The
following table sets forth summary information concerning the compensation we
paid to directors during the year ended December 31, 2008:





Name
                
                Fees
      Earned or Paid in Cash
                  ($)
                
                
                Stock
      Awards
                  ($)
                
                
                Option
      Awards
                  ($)
                
                
                All
      Other Compensation
                  ($)
                
                
                Total
                  ($)Rene
      Schena (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Mark
      Schena (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Todd
      Martinsky (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -William
      L. Sklar (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -








(1) None
of the Board members received any additional consideration for their services to
the Board of Directors other than what they were paid as officers of the
Company, as provided above, and as such, they have not been included in the
table above.





















37













ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





Beneficial
ownership of the common stock is determined in accordance with the rules of
the Securities and Exchange Commission and includes any shares of common stock
over which a person exercises sole or shared voting or investment powers, or of
which a person has a right to acquire ownership at any time within 60 days of
March 24, 2009.  Except as otherwise indicated, and subject to applicable
community property laws, the persons named in this table have sole voting and
investment power with respect to all shares of common stock held by them. 
Applicable percentage ownership in the following table is based on 82,079,504
shares of common stock outstanding as of March 24, 2009 plus, for each
individual, any securities that individual has the right to acquire within 60
days of March 24, 2009.





The
following table sets forth a description of any substantial interest, direct or
indirect of each person who has been a director or executive officer of the
registrant at any time since the beginning of the last fiscal
year.  The address of each person, unless otherwise noted, is 524 East
Weddell Drive, Sunnyvale, California 94089. Additionally we have included
information about persons more than 5% of the total voting rights.







Common
      Stock
              
              
              
              
              
              Series
      A Preferred Stock
              
              
              Series
      C Preferred Stock
              
              
              Total
      Voting Shares Based on All Voting Shares Outstanding
              
              
              Total
      %Officers
      and DirectorsRene
      A Schena,
              
              
              0
              
              
              
              
              
              
              0
              
              
              
              42,857
              
              
              
              14,999,950
              
              
              
              16.8
              %Chief
      Executive Officer,Chief
      Financial Officer and DirectorMark
      Schena, Director
              
              
              0
              
              
              
              
              
              
              0
              
              
              
              14,286
              
              
              
              5,000,100
              
              
              
              5.6
              %William
      L. Sklar, Director
              
              
              19,996
              
              
              
              
              
              
              98,807
              
              
              
              0
              
              
              
              968,539
              
              
              
              1.1
              %Todd
      Martinsky, Director
              
              
              0
              
              
              
              
              
              
              0
              
              
              
              28,571
              
              
              
              9,999,850
              
              
              
              11.2
              %Paul
      K. Haje
              
              
              0
              
              
              
              
              
              
              0
              
              
              
              14,286
              
              
              
              5,000,100
              
              
              
              5.6
              %Director
      of Advertising and Public RelationsGreater
      Than 5% ShareholdersWV
      Fiber, LLC (2)
              
              
              4,055,448
              
              
              
              
              
              
              0
              
              
              
              0
              
              
              
              4,055,448
              
              
              
              4.6
              %Mashrua
      Shipping & Transport Ltd. (3)
              
              
              1,000,000
              
              
              
              
              
              
              0
              
              
              
              0
              
              
              
              1,000,000
              
              
              
              1.1
              %WEM
      Equity Capital Investments, Ltd. (4)
              
              
              71,946
              
              
              
              (1
              )
              
              
              355,505
              
              
              
              0
              
              
              
              3,484,797
              
              
              
              3.9
              %Briarpatch,
      Ltd. (5)
              
              
              71,946
              
              
              
              (1
              )
              
              
              355,505
              
              
              
              0
              
              
              
              3,484,797
              
              
              
              3.9
              %Donald
      Sapaugh
              
              
              44,003
              
              
              
              (1
              )
              
              
              217,432
              
              
              
              0
              
              
              
              2,131,352
              
              
              
              2.4
              %Hunter
      Carr
              
              
              43,452
              
              
              
              (1
              )
              
              
              214,707
              
              
              
              0
              
              
              
              2,104,639
              
              
              
              2.4
              %First
      Sage Equity, Inc. (6)
              
              
              50,137
              
              
              
              (1
              )
              
              
              247,739
              
              
              
              0
              
              
              
              2,428,430
              
              
              
              2.7
              %Phillip
      Johnson
              
              
              41,781
              
              
              
              (1
              )
              
              
              206,449
              
              
              
              0
              
              
              
              2,023,691
              
              
              
              2.3
              %Jukka
      Tolonen
              
              
              40,151
              
              
              
              (1
              )
              
              
              198,398
              
              
              
              0
              
              
              
              1,944,768
              
              
              
              2.2
              %Fairfield
      Financing, Inc. (7)
              
              
              50,137
              
              
              
              (1
              )
              
              
              247,739
              
              
              
              0
              
              
              
              2,428,430
              
              
              
              2.7
              %All of the Officers and
      Directors as a Group (5 Persons)
              
              
              19,996
              
              
              
              
              
              
              
              98,807
              
              
              
              100,000
              
              
              
              35,968,539
              
              
              
              40.40







(1)  Held
under the terms of a custodian agreement that grants exclusive voting,
dispositive and any other economic rights to the beneficial owners named in the
agreements and provides that no beneficial owner is affiliated with any other
beneficial owner and the beneficial owners are not acting and will not act as a
group.


(2)  The
Company is not aware of the individual with investment authority over the shares
beneficially owned by WV Fiber, LLC, which entity is currently in
Bankruptcy.


(3)  The
Company is not aware of the individual with investment authority over the shares
beneficially owned by Mashrua Shipping & Transport Ltd.


(4)  The
natural person with dispositive authority over securities of the company is
William E. McIlwain at the above address.


(5)  The
natural person with dispositive authority over securities of the company is Brad
Fleming at the above address.


(6)  The
natural person with dispositive authority over securities of the company is Joe
Wiley.


(7)  The
natural person with dispositive authority over securities of the company is O.
Preston Smith.








ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





Pursuant
to a consulting agreement with Dr. Mark Schena, the Company is obligated to pay
a royalty of 5% of gross sales to him as a royalty for unfettered use of his
patents and knowledge.   Amounts outstanding at December 31, 2008
and 2007 of $349,950 and $337,616 respectively are unsecured, non-interest
bearing and due on demand.





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit
Fees





The
aggregate fees billed for each of the fiscal years ended December 31, 2008 and
2007 for professional services rendered by the principal accountants for the
audit of the Company's annual financial statements and the review of the
Company's quarterly financial statements were $100,408 and $98,456,
respectively.





Audit
Related Fees


None.





Tax
Fees


None for
2008 and $4,050 for  2007





All
Other Fees


None for
2008 and $13,600 for 2007


















38










ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)
Exhibits





Exhibit
      No.
            Description
      of Exhibit3.1(2)
            Amended
      and Restated Articles of Incorporation3.2(2)
            Amended
      and Restated Bylaws3.3(3)
            Amendment
      to the Bylaws of the Company




10.1(1)
            Agreement
      and Plan of Reorganization among IMHI, Telechem, dated Feb 21, 2008
      (without Exhibits).14.1*
            Code
      of Ethics dated Feb 21, 2008








21.1
            Subsidiaries31.1*
            Certificate
      of the Chief Executive Officer and Principal Accounting Officer pursuant
      Section 302 of the Sarbanes-Oxley Act of 200232.1*
            Certificate
      of the Chief Executive Officer and Principal Accounting Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 200210.2
            8%
      Senior Notes, filed as exhibit 41 to Form 8-K on February 25, 2005 on
      Commission number 001-16381-064244810.3*
            SovCap
      Equity Partners, Ltd., Notes


*
Filed herein.





(1) Filed
as exhibits to the Company’s Form 8-K/A filed with the Commission on July 28,
2008, and incorporated herein by reference.





(2) Filed
as exhibits to the Company’s Definitive Schedule 14C filing, filed with the
Commission on xxxx, and incorporated herein by reference.





(3) Filed
as an exhibit to the Company’s Form 8-K, filed with the Commission on xxx, and
incorporated herein by reference.





















39







SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




Arrayit
Corporation





DATED: 
      June 3, 2009
            By:
      /s/ Rene SchenaRene
      SchenaChariman,
      Director and CFO





In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.





NAME
              TITLE
              DATE/s/
      Rene Schena
              
              June
      3, 2009Rene
      Schena
              Chariman,
      Director and CEO/s/
      Todd Martinsky
              
              June
      3, 2009Todd
      Martinsky
              V.
      President and Director/s/
      Mark Schena
              
              June
      3, 2009Mark
      Schena
              President
      and Director/s/
      William L Sklar
              
              June
      3, 2009William
      L. sklar
              Director





















40





Exhibit
31.1


Certification
of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)























CERTIFICATION
PURSUANT TO




18 U.S.C.
SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002







I, Rene
A. Schena certify that:







1.
            I
      have reviewed this Annual Report on Form 10-K/A of Arrayit
      Corporation;







2.
            Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;







3.
            Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;







4.
            The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) for the registrant and
  have:







(a)
            Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;







(b)
            Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;







(c)
            Evaluated
      the effectiveness of the registrant’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such
  evaluation; and







(d)
            Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and







5.
            The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of the registrant’s
      board of directors (or persons performing the equivalent
      functions):







(a)
            All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant’s ability to record,
      process, summarize and report financial
    information; and







(b)
            Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant’s internal control
      over financial reporting.







/s/  Rene
A. Schena





Rene A.
Schena


Chief
Executive Officer




June 3,
2009









41










Exhibit
31.2


Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)


















CERTIFICATION
PURSUANT TO


18 U.S.C.
SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002







I, Rene
A. Schena certify that:







1.
            I
      have reviewed this Annual Report on Form 10-K/A of Arrayit
      Corporation;







2.
            Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;







3.
            Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;







4.
            The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) for the registrant and
  have:







(a)
            Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;








(b)
            Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;







(c)
            Evaluated
      the effectiveness of the registrant’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such
  evaluation; and








(d)
            Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and







5.
            The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of the registrant’s
      board of directors (or persons performing the equivalent
      functions):







(a)
            All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant’s ability to record,
      process, summarize and report financial
    information; and








(b)
            Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant’s internal control
      over financial reporting.







/s/  Rene A.
Schena





Rene A.
Schena


Chief
Financial Officer




June 3,
2009

















42










Exhibit
32.1


Certification
of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. 1350

















CERTIFICATION
PURSUANT TO


18 U.S.C.
SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002







In
connection with the Annual Report of Arrayit Corporation(the “Company”) on
Form 10-K/A for the period ending December 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I,
Rene A. Schena certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:







(1) The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and







(2) The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.







/s/  Rene A.
Schena





Rene A.
Schena


Chief
Executive Officer




June 3,
2009










43










Exhibit
32.2


Certification
of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. 1350



















CERTIFICATION
PURSUANT TO


18 U.S.C.
SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002







In
connection with the Annual Report of Arrayit Corporation(the “Company”) on
Form 10-K/A for the period ending December 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I,
Rene A. Schena certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:







(1) The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and







(2) The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.







/s/  Rene
A. Schena





Rene A.
Schena


Chief
Financial Officer




June 3,
2009









44


Integrated
Media Holdings, Inc.




CODE
OF BUSINESS ETHICS




1.0
INTRODUCTION




Integrated
Media Holdings, Inc. and its subsidiaries ("Integrated Media", "we", or "our")
are committed to conducting our business with uncompromising integrity and
ethics. This Code of Business Ethics (this "Code") outlines the standards of
business conduct in furtherance of this commitment. All of our directors,
officers, employees and representatives, including all agents, consultants, and
contractors, are expected to read and understand this Code, uphold these
standards in day-to-day activities, and comply with all other applicable
Integrated Media policies and procedures.




The
principles described in this Code are general in nature and are intended to
provide guidance in recognizing and resolving legal and ethical issues that may
arise in conducting our business. Integrated Media may modify this Code at any
time. This Code does not include all of our policies. Please consult our
policies and procedures for more specific instruction. If you still have
questions or remain uncertain about how to handle a particular matter, please
contact the human resources personnel or General Counsel for further
direction.




2.0
IMPORTANCE OF COMPLIANCE




Ethical
business conduct is crucial to our reputation and success. Our reputation for
integrity and ethics cannot be taken for granted. To maintain our reputation, it
is your responsibility to respect and comply with this Code and the law, and to
exercise good judgment in your decisions and actions.




Part of
your job and ethical responsibility is to help enforce this Code. Violations or
possible violations of law, this Code, or other Integrated Media policies and
procedures should be reported to the human resources personnel, Counsel, the
Chief Executive Officer or other appropriate Integrated Media management. We
will promptly respond to your report of unlawful or unethical conduct, and if
necessary, assign an independent party to investigate and make recommendations.
You are expected to cooperate in any internal or external investigations of
possible violations. Violations of law, this Code or other Integrated Media
policies and procedures by Integrated Media employees can lead to disciplinary
action, up to and including termination of employment.




We
strictly prohibit retaliation against any person who in good faith reports a
violation or a suspected violation of law, this Code or our other policies, or
against any person who is assisting in any investigation or process with respect
to such a violation. Any retaliation against an employee because the employee,
in good faith, sought help or filed a report will result in disciplinary action,
up to and including termination of employment.




3.0
RESPONSIBILITIES AS AN Integrated Media EMPLOYEE




3.1Positive Work
Environment




We
endeavor to maintain a positive work environment for our employees. We strictly
prohibit discrimination and harassment of any kind based on race, color,
national origin, religion, gender, pregnancy, sexual orientation, disability,
age, veteran status, or other factors that are unrelated to our business
interests. Integrated Media expects you to exercise good judgment to ensure the
safety and welfare of others in the workplace, and to foster a work environment
emphasizing respect and teamwork. These standards do not only apply while
working on our premises, but also when you are at offsite locations where our
business is being conducted, at Integrated Media-sponsored business and social
events, or at any other place where you are a representative of Integrated
Media.




3.2Avoiding Conflicts of
Interest




While we
respect the privacy of our employees in the conduct of their personal affairs,
you should avoid any activity in which your personal interests may come into
conflict, or appear to conflict, with our interests. The following are some
examples of conflicts of interest:




3.2.1Employment/Outside
Employment.




As an
employee of Integrated Media, you are expected to devote your best efforts,
time, ability and attention to the business interests of Integrated Media. You
are not to engage in any activity that interferes with your performance or
responsibilities to Integrated Media or is otherwise in conflict with or
prejudicial to Integrated Media. You must disclose to Integrated Media any
interest that you have that may conflict with our business. For example, if you
are employed by or are otherwise providing services on behalf of another
company, it is a conflict of interest to market products in competition with our
current or future products. Further, such separate employment may not conflict
with your invention-rights or confidentiality obligations to Integrated
Media.

















45







3.2.2Service on Outside Boards and
Committees.




You
cannot serve on a board of directors or trustees, or on a committee of any
entity whose interests reasonably could be expected to conflict with those of
Integrated Media. You must obtain prior written approval from the Chief
Executive Officer before accepting any outside board or committee position. If
approved, and you hold such a position, you must do so on your own time and must
not hold yourself out as a representative of Integrated Media in connection with
providing such services. Any compensation you receive should be commensurate to
your responsibilities. Such approval may be conditioned upon the completion of
specified actions. In the event that Integrated Media requests that you serve on
a board to represent our interests, you will be paid as an employee and are not
to receive any remuneration as a result of serving on such board.
Notwithstanding the above, you are not required to seek permission to sit on a
board for non-profit or charitable organizations where the likelihood of any
conflict of interest is remote.




3.2.3Business
Interests.




If you
are considering an investment in a customer, supplier or competitor of
Integrated Media, and you are in a position to influence a decision relating to
such customer, supplier or competitor, we urge you to first ensure that these
investments do not compromise your responsibilities to Integrated Media. Many
factors should be taken into account when determining whether a conflict exists,
including the size and nature of the investment; your ability to influence our
decisions; your access to our confidential information or of the other company;
and the nature of the relationship between Integrated Media and the other
company.




3.2.4Family Members.




The
actions of family members may give rise to conflicts of interest because they
may influence your objectivity in making decisions on behalf of Integrated
Media. As a general rule, you should avoid conducting our business with a
relative or significant other, or with a business in which a relative or
significant other is associated in any significant role. Relatives include
spouse, sister, brother, daughter, son, mother, father, grandparents, aunts,
uncles, nieces, nephews, cousins, step relationships and in-laws. Significant
others include persons living in a spousal or familial fashion with an
employee.




Integrated
Media prohibits the employment of close relatives and significant others in
positions or assignments where there is a direct or indirect reporting
relationship or where an actual or appearance of a conflict of interest exists.
Please refer to our Employment of Relatives policy for further
guidance.




3.2.5Other
Situations.




Other
conflicts of  may arise that have not been addressed above. If you
have a doubt whether a proposed transaction or situation raises a conflict of
interest, please contact the Human Resources Department or the Legal
Department.




Integrated
Media requires that you disclose any situation that could be expected to give
rise to a conflict of interest. If you suspect that you have a conflict of
interest, or something that others could reasonably perceive as a conflict of
interest, you must report it immediately to the Human Resources Department or
the Legal Department. While such situations are not automatically prohibited,
they are not desirable and may only be waived by our Chief Financial Officer or
Chief Executive Officer and with the concurrence of the General Counsel.
Conflicts of interest of our Board of Directors, executive officers or other
principal officers may only be waived by our Board of Directors and/or the
appropriate committee of our Board of Directors and will be disclosed to the
public as required by law.




3.3Avoiding Exploitation of Corporate
Opportunities for Personal Gain




Each of
us has an obligation to put the interests of Integrated Media ahead of our
personal interests and to advance our interests when the opportunity to do so
arises. Accordingly, you may not exploit for your own personal gain business
opportunities that are discovered through the use of corporate property,
information or position if in conflict with our interests. For example, if you
become aware of an opportunity to purchase equipment at below market rates
through your employment with Integrated Media, you cannot seek to personally
gain from such opportunity if such opportunity will conflict with our
interests.

















46







3.4Gifts and Other
Activities




Receiving
and giving business gifts of nominal value is permissible where customary.
Receiving cash or gifts of significant value is strictly prohibited. Customary
business activities, including meals, transportation and celebratory events, are
proper unless the value, cost, or frequency of the business activities are such
that they could be interpreted as affecting an otherwise objective business
decision. Gifts and other activities should never compromise, or appear to
compromise, your ability to make objective and fair business decisions. Please
refer to our Gift and Activity Policy for additional information.




Gifts
given by Integrated Media to suppliers or customers should always be appropriate
to the circumstances and should never be of a kind or nature that could create
an appearance of impropriety. The nature and cost must always be accurately
recorded in our books and records.




3.5Protecting our Confidential
Information and Intellectual Property




Our
confidential information is a valuable asset and protecting it is the
responsibility of all of us. our confidential information includes but is not
limited to: data, know-how, trade secrets, designs, mask works, plans, drawings,
specifications, algorithms, developmental or experimental work, test results,
reports, pricing and financial information, product plans, product roadmaps,
customer and supplier lists, marketing techniques and materials, organizational
charts, and personnel information. This information is the property of
Integrated Media and may be protected by patent, trademark, copyright, mask
work, trade secret, and other laws. This obligation extends to confidential
information of third parties, which we have rightfully received under
Non-Disclosure Agreements. Please see Handling Confidential Information of
Others set forth in Section 4.4 of this Code.




3.4.1Employee Confidentiality and
Invention Agreement.




When you
joined Integrated Media, you signed an agreement to protect our confidential and
proprietary information. This agreement remains in effect for as long as you
work for Integrated Media and after you leave Integrated Media. Under this
agreement, you may not disclose our confidential information to anyone or use it
to benefit anyone other than Integrated Media unless compelled to do so by court
order.




3.4.2Disclosure of Company Confidential
Information.




From time
to time, we may disclose our confidential information to third parties to
further our business. However, you should never make such disclosure without
first carefully considering its potential benefits and risks. If you determine,
in consultation with your manager and other appropriate Integrated Media
management, that disclosure of confidential information is necessary, you must
then contact the Legal Department to ensure that an appropriate written
nondisclosure agreement is signed prior to any disclosure. We have standard
nondisclosure agreements suitable for most disclosures.




3.4.3Requests by Regulatory
Authorities.




Integrated
Media and its employees must cooperate with appropriate government inquiries and
investigations. In this context, however, it is important to protect the legal
rights of Integrated Media with respect to its confidential information. All
government requests for information, documents or investigative interviews must
be referred to our Chief Financial Officer or General Counsel. No information
may be disclosed to regulatory authorities without the prior approval of the
Chief Financial Officer or General Counsel.















47







3.4.4Public
Communications.




Integrated
Media has established an External Communications Policy regarding who may
communicate information to the press and the financial analyst community. All
inquiries or calls from the press and financial analysts should be referred to
the Chief Financial Officer. Integrated Media has designated certain individuals
in the External Communications Policy who are authorized to act as a
spokesperson on its behalf. These designees and other individuals designated by
them from time to time are the only people who may communicate with the press or
financial analysts on our behalf. Making statements, answering questions, or
otherwise communicating with the press or financial analysts outside the narrow
guidelines of our External Communications Policy is strictly
prohibited.




3.6Safeguarding our
Assets




3.4.1
General. Safeguarding our assets is the responsibility of everyone. Each of us
must use care to ensure that assets are not misappropriated, loaned to others,
sold or donated, without appropriate authorization. You are also responsible for
the proper use of our assets, and must safeguard such assets against loss,
damage, misuse or theft. Our equipment and assets are to be used only for our
business purposes. You may not use our assets for non-incidental personal use,
nor allow other persons to use our assets.




3.4.2Physical Access
Control.




Integrated
Media has and will continue to develop procedures covering physical access
control to ensure privacy of communications, maintenance of the security of its
communication equipment and to safeguard its assets from theft, misuse and
destruction. You are personally responsible for complying with the level of
access control that has been implemented in the facility where you work on a
permanent or temporary basis. You must not defeat or cause to be defeated the
purpose for which the access control was implemented.




3.4.3Company Funds.




Every
employee is personally responsible for all our funds over which he or she
exercises control. Our agents, consultants and contractors should not be allowed
to exercise control over our funds without the prior written approval of the
Chief Executive Officer or the Chief Financial Officer. In all cases, our funds
must be used only for our business purposes. Each of us must take reasonable
steps to ensure that we receive good value for Company funds spent, and must
maintain accurate and timely records of each and every expenditure.




3.4.4Computers and Other
Equipment.




Integrated
Media provides you with the equipment necessary to efficiently and effectively
perform your job. This equipment remains our property. It is your responsibility
to take all reasonable actions to care and protect our equipment while it is in
your possession. If you use our equipment at your home or off-site, you should
take precautions to protect it from theft or damage. Please refer to our
Teleworking Policy for additional information. Our equipment is for business
purposes, and you may not use it for non-incidental personal use. Once you cease
working for Integrated Media, you must immediately return all of our
equipment.




3.4.5Software.




Software
is protected from unauthorized copying and use by federal and state law. All
software used by employees on Integrated Media systems must be appropriately
licensed. Unauthorized copying or use of software exposes Integrated Media and
you to potential civil and criminal liability. Our Information Technology
Department may inspect our computers periodically to verify that only licensed
software has been installed. Any non-licensed software will be
removed.

















48







3.4.6Electronic Communications Systems
Security.




Integrated
Media requires employees to utilize electronic communication systems in a legal,
ethical and appropriate manner. Electronic communications systems within the
organization, include but are not limited to computers, software, e-mail,
connections to the Internet, intranet and extranet and any other public or
private networks, voicemail, video conferencing, facsimiles and telephones. They
also include all communications and records, files, software, and electronic
communications or messages sent, received, or contained in such systems. Posting
or discussing information concerning our products or business on the Internet
without the prior written consent of our Chief Financial Officer or other
designated officer is prohibited. Any other form of electronic communication
provided by Integrated Media, that is used by employees currently or in the
future, is also intended to be encompassed under this policy. It is not possible
to identify every standard and rule applicable to the use of electronic
communications devices. You are therefore encouraged to use sound judgment
whenever using any feature of our communications systems. Please refer to our
Electronic Communications Systems Security Policy for additional
information.




You are
not entitled to an expectation of privacy with respect to information
transmitted over, received by or stored in any electronic communications system
owned, leased or operated in whole or in part by or on behalf of Integrated
Media. To the extent permitted by applicable law, Integrated Media retains the
right to gain access to any information received by, transmitted by or stored in
any such electronic communications system, by and through its employees, agents,
contractors or representatives, at any time, either with or without an
employee's or third party's knowledge, consent or approval.




3.7Recording and Reporting
Information




3.7.1Accounting and Financial
Reporting.




As a
public company, we are required to report financial information accurately and
completely, and have appropriate internal controls to ensure that accounting and
financial reporting complies with the law. Accurate accounting records and
compliance with Generally Accepted Accounting Principles are critical in
providing full, fair, accurate and understandable information in filings with
the Securities and Exchange Commission and disclosures we provide to the public.
If you have responsibilities for, or are involved in these areas, you must
comply with applicable laws and our policies. Violations of the laws associated
with accounting and financing reporting can result in fines, penalties, and
imprisonment, as well as damaging our reputation.




3.7.2Accurate Books and
Records.




Integrated
Media fully and accurately records all transactions in its books and records in
compliance with all applicable laws. Regardless of whether the reporting is
required by law, false or misleading entries, unrecorded funds or assets, or
payments without appropriate supporting documentation and approval are strictly
prohibited. All documentation supporting a transaction should fully and
accurately describe the nature of the transaction and be processed in a timely
fashion. Employees are required to fill out and submit expense reports
accurately and representing expenses actually incurred. Please refer to our
Travel and Entertainment Policy for additional information.




3.8Document Retention and
Preservation




You are
encouraged to maintain a clean and efficient workspace, and to discard
unnecessary documents. Nonetheless, Integrated Media is required by various
laws, rules and regulations to retain certain records and to follow specific
guidelines in managing its records. Records include paper documents, CDs,
computer hard disks, e-mail, floppy disks, microfiche, microfilm or all other
media. Civil and criminal penalties for failure to comply can be severe for you
and Integrated Media. Please consult with Document Control or the Legal
Department if you are uncertain about your document retention
obligations

















49







Document
destruction procedures will be suspended when necessary to preserve appropriate
records under special circumstances, such as litigation or government
investigations. Our Legal Department determines and identifies what types of
Company records or documents are required to be placed under a legal hold. You
must comply with this policy. Failure to comply with this policy may subject you
to disciplinary action, and potentially to criminal prosecution.




Our Legal
Department will notify you if a legal hold is placed on records for which you
are responsible. Records that have been placed under a legal hold must not be
destroyed, altered or otherwise modified. Our Legal Department will notify you
when the legal hold has been removed. If you are unsure whether a document has
been placed under a legal hold, you should preserve and protect that document
while you check with our Legal Department.




3.9No Improper Political
Contributions




We
encourage our employees to participate in the political process as individual
citizens on their own time. However, business contributions to political
campaigns are strictly regulated by federal, state, local and other laws,
including laws that may exist in non-US countries. Our funds  must not
be used for, or be contributed to, political campaigns or political practices
under any circumstances without the prior written approval of our Chief
Financial Officer and, if required, the Board of Directors.




4.0 OUR
RESPONSIBILITIES TO OTHERS




4.1Relationships with
Customers




It is
critical for all employees to remember that you represent Integrated Media to
the people with whom you are dealing and that you act in a manner that creates
value for our customers and helps to build a relationship based upon trust.
Integrated Media and its employees have provided products and services for many
years, and have built up significant goodwill and trust with our customers over
that time. This goodwill and trust are among our most important assets, and our
employees, agents, consultants and contractors must act to preserve and enhance
our reputation.




4.2Relationships with
Suppliers




Our
suppliers make significant contributions to our success. We strive to create an
environment where our suppliers seek to work with Integrated Media. To this end,
they must be confident that we will treat them lawfully and in an ethical
manner. Our policy is to purchase supplies based on need, quality, service,
price and terms and conditions. Our policy is to select significant suppliers or
enter into significant supplier agreements through a competitive bid process
where possible. Payments made for goods or services must be commensurate with
the goods or services received. Under no circumstances should any Integrated
Media employee, agent or contractor attempt to coerce suppliers in any way. The
confidential information of a supplier is entitled to the same protection as
that of any other third party and must not be received before an appropriate
nondisclosure agreement has been signed.




4.3Relationships with
Competitors




In the
normal course of business, it is not unusual to obtain information about other
companies, including competitors. Indeed, we gather information about
competitors from a variety of legitimate sources in an effort to analyze the
relative strength of our products, services, marketing methods, and financial
performance. There are, however, limits on how you should acquire and use
information about competitors. You should not use any type of improper means to
acquire a competitor's confidential information. Illegal methods such as
stealing, wiretapping, and trespassing are clearly forbidden. Similarly,
improper practices such as hiring a competitor's employees to acquire
confidential information or improperly soliciting confidential information from
a competitor's employees are prohibited. Please remember to exercise good
judgment and discretion when utilizing information about other companies,
including competitors.

















50







4.4Confidential Information of
Others




We have
many kinds of business relationships with many companies and individuals. During
the course of these relationships, these companies and individuals may want to
share confidential information with Integrated Media for a particular purpose.
To avoid claims of misappropriation or misuse of the confidential information,
it is important that a written agreement between the parties governing the use
of the confidential information be signed before Integrated Media receives such
information. We will then use and safeguard the confidential information in
accordance with the terms of the written agreement. If you have any questions
regarding the confidential information of others, you should immediately consult
the Legal Department.




5.0 OUR
RESPONSIBILITIES UNDER THE LAW




5.1Compliance With All
Applicable Laws and Regulations




Each of
us must obey all applicable laws and regulations. Employees located outside of
the United States must comply with laws, regulations, rules and regulatory
orders of the United States, including the Foreign Corrupt Practices Act and the
U.S. Export Control Act, in addition to applicable local laws. In conducting our
business, you may encounter legal issues in the areas described below. You must
be aware of potential violations and know when to seek advice from the Human
Resources Department or the Legal Department on specific Company policies and
procedures. Failure to comply with applicable laws may subject Integrated Media
and the individuals involved to criminal or civil liability, as well as to
discipline by Integrated Media.




5.2Free and Fair
Competition




Most
countries have well-developed laws designed to protect consumers and competitors
against unfair business practices and to promote and preserve competition. These
laws are known as antitrust, competition, consumer protection or unfair
competition laws. We are committed to obeying both the letter and spirit of
these laws.




These
laws often regulate our relationship with our distributors, resellers, dealers,
competitors, and customers. Competition laws generally address the following
areas: pricing practices (including price discrimination), discounting, terms of
sale, credit terms, promotional allowances, secret rebates, exclusive
dealerships or distributorships, product bundling, restrictions on carrying
competing products, termination and many other practices. The following is a
summary of actions that are clear violations of U.S. antitrust
laws:




*
            Price
      Fixing. We may not agree with our competitors to raise, lower or stabilize
      price or any element of price, including discounts and credit terms. In
      addition, we may not set the prices at which customers resell our
      products.




*
            Limitation
      of Supply. We may not agree with our competitors to limit our production
      or restrict the supply of our
services.




*
            Allocation
      of Business. We may not agree with our competitors to divide or allocate
      markets, territories or customers.




*
            Boycott.
      We may not agree with our competitors to refuse to sell or purchase
      products from third parties. In addition, we may not prevent a customer
      from purchasing or using non-Company products or
  services.




*
            Tying.
      We may not require a customer to purchase a product that it does not want
      as a condition to the sale of a different product that the customer does
      wish to purchase.

















51







Antitrust
laws also govern, usually quite strictly, relationships between Integrated Media
and our competitors. As a general rule, contacts with competitors should be
limited and should always avoid subjects such as prices or other terms and
conditions of sale, customers and suppliers. Employees, agents or contractors of
Integrated Media may not knowingly make false or misleading statements regarding
our competitors or the products of our competitors, customers or
suppliers.




No
employee, agent or contractor shall enter into an agreement or understanding,
written or oral, express or implied, with any competitor concerning prices,
discounts, other terms or conditions of sale, profits or profit margins, costs,
allocation of product or geographic markets, allocation of customers,
limitations on production, supplier's terms and conditions, boycotts of
customers or suppliers, bids or the intent to bid or even discuss or exchange
information on these subjects. In some cases, legitimate joint ventures with
competitors may permit exceptions to these rules, as may,bona
fide  purchases from or sales to competitors, but our Chief
Executive Officer or Chief Financial Officer must review all such proposed
ventures, purchases or sales in advance. These prohibitions are absolute and
strict observance is required. Collusion among competitors is illegal, and the
consequences of a violation are severe, including possible criminal
prosecution.




Participating
with competitors in a trade association or in a standards creation body is
acceptable when the association has been properly established, has a legitimate
purpose and has limited its activities to that purpose. However, you should not
discuss pricing policy or other competitive terms, or other proprietary and
confidential information.




Although
the spirit of these laws may be straightforward, their application to particular
situations can be quite complex. To ensure that we comply fully with these laws,
each of us should have a basic knowledge of them and whenever doubt exists as to
the legality of a particular action or arrangement, it is your responsibility to
contact the Legal Department promptly for assistance, approval, and
review.




5.3Export Control
Laws




A number
of countries maintain controls on the destinations to which products or software
may be exported. The United States maintains some of the strictest export
controls against countries that the U.S. government considers unfriendly or as
supporting international terrorism. The U.S. regulations are complex and apply
both to exports from the United States and to exports of products from other
countries, when those products contain U.S.-origin components or technology. In
some circumstances, an oral presentation containing technical data made to
foreign nationals in the United States may constitute a controlled export. To
ensure compliance, all shipments of product, software and technology must be
cleared through our Traffic and Customs Department. Additionally, we can provide
guidance on which countries are prohibited destinations for our products or
whether a proposed technical presentation to foreign nationals may require a
U.S. government license.




5.4Insider Trading
Laws




In the
normal course of business, officers, directors and employees, as well as agents,
consultants and contractors of Integrated Media may come into possession of
significant, sensitive information. You may not profit from it by buying or
selling Integrated Media securities yourself, or by passing on the information
to others, to enable them to profit or for them to profit on your behalf. You
need to be aware of your legal responsibilities and understand that the misuse
of such significant and sensitive information is contrary to our policy and
securities laws.

















52







"Insider
trading" refers to the purchase or sale of a company stock or other securities
while in possession of material, non-public information relating to that
company. Information is "material" if a reasonable investor would consider it
important in a decision to buy, hold or sell stock or other securities.
Information is "non-public" if it has not been made generally available to the
public by means of a press release or other means of widespread distribution. It
is generally understood that insider trading includes the following: (i) trading
by insiders while in possession of material, non-public information; (ii)
trading by persons other than insiders while in the possession of material,
non-public information where the information either was in breach of an
insider's fiduciary duty to keep it confidential or was misappropriated; or
(iii) communicating or tipping material, non-public information to others,
including recommending the purchase or sale of a security while in possession of
such information. Penalties for insider trading are quite substantial. For more
details, you should review our Non-Public Information and the Prevention of
Insider Trading Policy.




Integrated
Media has adopted Pre-Clearance and Blackout policies for its officers and Board
of Directors that further restricts when such officers and Directors may trade
in Integrated Media securities. If you are unsure as to whether you can trade in
our securities or have questions regarding our Non-Public Information and the
Prevention of Insider Trading Policy, please contact our Chief Financial Officer
or General Counsel.




5.5Prohibition on Short Selling of
Company Stock




No
Integrated Media Board of Director, officer or other designated employee may,
directly or indirectly, sell any equity security, including derivatives, of
Integrated Media if he or she (1) does not own the security sold, or (2) if he
or she owns the security, does not deliver it against such sale (a "short sale
against the box") within twenty days thereafter, or does not within five days
after such sale deposit it in the mail or other usual channel of transportation.
No Integrated Media director, officer or other designated employee may engage in
short sales. A short sale, as defined in this policy, means any transaction
whereby one may benefit from a decline in our stock price. Transactions in put
and call options for our securities constitute a short sale for the purposes of
this paragraph and are therefore prohibited.




5.6Foreign Corrupt Practices
Act




Integrated
Media requires full compliance with the Foreign Corrupt Practices Act of 1977
(FCPA) by all of its employees, agents, consultants and contractors. The FCPA
prohibits Integrated Media, its directors, officers and employees, and agents,
consultants and contractors from offering or giving money or any other item of
value to win or retain business or to influence any act or decision of any
governmental official, political party, candidate for political office or
official of a public international organization. Violation of the FCPA can
result in civil and criminal liability for Integrated Media, its directors,
officers, ,employees, agents, consultants and contractors.




The use
of our funds or assets for any unlawful or improper purpose is strictly
prohibited. No payment shall be made to, or for the benefit of, government
employees for the purpose of, or otherwise in connection with, the securing of
sales to or obtaining favorable action by a government agency. Gifts of
substantial value to, or lavish entertainment of, government employees are
prohibited since they can be construed as attempts to influence government
decisions in matters affecting our operation. Any entertaining of public
officials or the furnishing of assistance in the form of transportation or other
services should be of such nature that the official's integrity or reputation
will not be compromised.




The
offer, payment or promise to transfer company funds or the delivery
of  anything of value to foreign officials, foreign political parties
or officials or candidates of foreign political parties is strictly prohibited
for the purpose of influencing any act or decision of any such person in his or
her official capacity. Influence includes the decision to fail to perform his or
her official functions or to use such persons or party's influence with a
foreign government or instrumentality in order to affect or to influence any act
or decision of such government or instrumentality in order to assist Integrated
Media in obtaining or retaining business for or with, or directing business to
any person or entity.

















53







All of
our employees, agents and contractors, whether located in the United States or
abroad, are responsible for FCPA compliance and the procedures to ensure FCPA
compliance. All managers and supervisory personnel are expected to monitor
continued compliance with the FCPA to ensure compliance with the highest moral,
ethical and professional standards of Integrated Media. Any employee who learns
of or suspects a violation of this policy should promptly report the matter to
General Counsel, the Chief Financial Officer or the Chief Executive
Officer.




5.7Environmental, Safety and Health
Laws




We are
firmly committed to the environment, safety, and health of our employees and the
community. We will comply with all applicable health, safety and environmental
laws and regulations. We emphasize individual involvement by each of us to
ensure that Integrated Media is a safe and healthy workplace, and that we
operate our business in an environmentally sound manner. If you become aware of
any violation of environmental, safety, or health laws, you should immediately
report it to the Human Resources Department or the Legal
Department.




5.8Governmental Laws and
Regulations




It is our
policy to comply fully with all applicable laws and regulations governing
contact and dealings with government employees and public officials, and to
adhere to high ethical, moral and legal standards of business conduct. It is
also our policy to fully comply with all applicable laws and regulations that
apply to government contracting.




6.0
WAIVERS OF OUR CODE




Waivers
of this Code will be granted on a case-by-case basis and only in extraordinary
circumstances. Any waiver of any provision of this Code for a member of our
Board of Directors or an executive officer must be approved in writing by our
Board of Directors and promptly disclosed to the public. Any waiver of any
provision of this Code with respect to any other employee, agent or contractor
must be approved in writing by our Chief Financial Officer or Chief Executive
Officer.




7.0
ENFORCMENT OF OUR CODE




The
subjects covered in this Code are of the utmost importance to Integrated Media,
its stockholders and its business partners, and are essential to our ability to
conduct business consistent with the highest standards of business ethics. Each
of us must abide by these rules when conducting our business.




We are
committed to ensuring that each of our directors, officers and employees, and
agents, contractors and consultants adhere to this Code. We will take
appropriate action against any person whose actions are found to violate these
policies or any of our other policies. Disciplinary actions may include
termination of employment or business relationship at our sole discretion. Where
we have suffered a loss, and to the extent legally allowed, we may pursue our
remedies against the individuals or entities responsible. Where laws have been
violated, we will cooperate fully with the appropriate authorities.













54








ARRAYIT
CORPORATION





A
Nevada Corporation





Bylaws





ARTICLE
I


Principal
Executive Office





The
principal office of the Corporation shall be located 524 East Weddell Drive,
Sunnyvale, CA 94089.  The Board of Directors shall have the power and
discretion to change from time to time the location of the principal office of
the Corporation.





ARTICLE
II


Stockholders





SECTION
1.                                Place
of Meetings.  All annual and special meetings of stockholders shall be
held at the principal executive office of the Corporation or at such other place
within or without the State of Nevad as the board of directors may determine and
as designated in the notice of such meeting.





SECTION
2.                                Annual
Meeting.  A meetings of the stockholders of the Corporation for the
election of directors and for the transaction of any other business of the
Corporation shall be held annually at such date and time as the board of
directors may determine.





SECTION
3.                                Special
Meetings. Special meeting of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the board of directors of the
Corporation, or by a committee of the board of directors which as been duly
designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the By Laws of the
Corporation, include the power and authority to call such meetings but such
special meetings may not be called by another person or persons.





SECTION
4.                                Conduct
of Meetings.  Annual and special meetings shall be conducted in
accordance with these By Laws or as otherwise prescribed by the board of
directors.  The chairman or the chief executive officer of the
Corporation shall preside at such meetings.





SECTION
5.                                Notice
of Meeting.  Written notice stating the place, day and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
mailed by the secretary or the officer performing his duties, not less than ten
days nor more than fifty days before the meeting to each stockholder of record
entitled to vote at such meeting.  If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to
the stockholder at his address as it appears on the stock transfer books or
records of the Corporation as of the record date prescribed in Section 6, with
postage thereon prepaid.  If a stockholder be present at a meeting, or
in writing waive notice thereof before or after the meeting, notice of the
meeting to such stockholder shall be unnecessary.  When any
stockholders’ meeting, either annual or special, is adjourned for thirty days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting.  It shall not be necessary to give any notice of the
time and place of any meeting adjourned for less than thirty days or of the
business to be transacted at such adjourned meeting, other than an announcement
at the meeting at which such adjournment is taken.





SECTION
6.                                Fixing
of Record Date.  For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders, or any adjournment
thereof, or stockholders entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purpose, the
board of directors shall fix in advance a date as the record date for any such
determination of stockholders.  Such date in any case shall be not
more than sixty days, and in case of a meeting of stockholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken.





When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof.







By
Laws-Nevada(Classified Board)















55













SECTION
7.                                Voting
Lists.                                The
officer or agent having charge of the stock transfer books for shares of the
Corporation shall make, at least ten days before each meeting of stockholders, a
complete record of the stockholders entitled to vote at such meeting or any
adjournment thereof, with the address of and the number of shares held by
each.  The record, for a period of ten days before such meeting, shall
be kept on file at the principal executive office of the Corporation, whether
within or outside the State of Texas, and shall be subject to inspection by any
stockholder for any purpose germane to the meeting at any time during usual
business hours.  Such record shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder for any purpose germane to the meeting during the whole time of the
meeting.  The original stock transfer books shall be prima facie
evidence as to who are the stockholders entitled to examine such record or
transfer books or to vote at any meeting of stockholders.





SECTION
15.                                Quorum.  One-fourth
of the outstanding shares of the Corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
stockholders.  If less than one-fourth of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice.  At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.  The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.





SECTION
9.                                Proxies.  At
all meetings of stockholders, a stockholder may vote by proxy executed in
writing by the stockholder or by his duly authorized attorney in
fact.  Proxies solicited on behalf of the management shall be voted as
directed by the stockholder or, in the absence of such direction, as determined
by a majority of the board of directors.  No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided in
the proxy.





SECTION
10.                                Voting.  At
each election for directors every stockholder entitled to vote at such election
shall be entitled to one vote for each share of stock held.  Unless
otherwise provided by the Articles of Incorporation, by statute, or by these By
Laws, a majority of those votes cast by stockholders at a lawful meeting shall
be sufficient to pass on a transaction or matter, except in the election of
directors, which election shall be determined by a plurality of the votes of the
shares present in person or by proxy at the meeting and entitled to vote on the
election of directors.





SECTION
11.                                Voting
of Shares in the Name of Two or More Persons.  When ownership of stock
stands in the name of two or more persons, in the absence of written directions
to the Corporation to the contrary, at any meeting of the stockholders of the
Corporation any one or more of such stockholders may cast, in person or by
proxy, all votes to which such ownership is entitled.  In the event an
attempt is made to cast conflicting votes, in person or by proxy, by the several
persons in whose name shares of stock stand, the vote or votes to which these
persons are entitled shall be cast as directed by a majority of those holding
such stock and present in person or by proxy at such meeting, but no votes shall
be cast for such stock if a majority cannot agree.





SECTION
12.                                Voting
of Shares by Certain Holders.  Shares standing in the name of another
corporation may be voted by any officer, agent or proxy as the By Laws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.  Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his
name.  Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.  Shares
standing in the name of a receiver may be voted by such receiver, and shares
held by or under the control of a receiver may be voted by such receiver without
the transfer thereof into his name if authority to do so is contained in an
appropriate order of the court or other public authority by which such receiver
was appointed.





A
stockholder whose shares are pledged shall be entitled to vote such shares until
the shares have been transferred into the name of the pledgee and thereafter the
pledgee shall be entitled to vote the shares so transferred.







By
Laws-Nevada(Classified Board)















56










Neither
treasury shares of its own stock held by the Corporation, nor shares held by
another corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the Corporation,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time for purposes of any meeting.





SECTION
13.                                Inspectors
of Election.  In advance of any meeting of stockholders, the chairman
of the board or the board of directors may appoint any persons, other than
nominees for office, as inspectors of election to act at such meeting or any
adjournment thereof.  The number of inspectors shall be either one or
three.  If the board of directors so appoints either one or three
inspectors, that appointment shall not be altered at the meeting.  If
inspectors of election are not so appointed, the chairman of the board may make
such appointment at the meeting.  In case any person appointed as
inspector fails to appear or fails or refuses to act, the vacancy may be filled
by appointment in advance of the meeting or at the meeting by the chairman of
the board or the president.





Unless
otherwise prescribed by applicable law, the duties of such inspectors shall
include: determining the number of shares of stock and the voting power of each
share, the shares of stock represented at the  meeting, the existence
of a quorum, the authenticity, validity and effect of proxies; receiving votes,
ballots or consents; hearing and determining all challenges and questions in any
way arising in connection with the right to vote; counting and tabulating all
votes or consents; determining the result; and such acts as may be proper to
conduct the election or vote with fairness to all stockholders.





SECTION
14.                                Nominating
Committee.  The board of directors or a committee appointed by the
board of directors shall act as nominating committee for selecting the
management nominees for election as directors.  Except in the case of
a nominee substituted as a result of the death or other incapacity of a
management nominee, the nominating committee shall deliver written nominations
to the secretary at least twenty days prior to the date of the annual
meeting.  Provided such committee makes such nominations, no
nominations for directors except those made by the nominating committee shall be
voted upon at the annual meeting unless other nominations by stockholders are
made in writing and delivered to the secretary of the Corporation in accordance
with the provisions of the Corporation’s Articles of Incorporation.





SECTION
15.                                New
Business.  Any new business to be taken up at the annual meeting shall
be stated in writing and filed with the secretary of the Corporation in
accordance with the provisions of the Corporation’s Articles of
Incorporation.  This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, directors
and committees, but in connection with such reports no new business shall be
acted upon at such annual meeting unless stated and filed as provided in the
Corporation’s Articles of Incorporation.








ARTICLE
III


Board
of Directors





SECTION
1.                                General
Powers.  The business and affairs of the Corporation shall be under
the direction of its board of directors.  The chairman shall preside
at all meetings of the board of directors.





SECTION
2.                                Number,
Term and Election.  The number of directors of the Corporation shall
be such number, not less than one nor more than 15 (exclusive of directors, if
any, to be elected by holders of preferred stock of the Corporation), as shall
be provided from time to time in a resolution adopted by the board of directors,
provided that no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director, and provided further that no
action shall be taken to decrease or increase the number of directors from time
to time unless at least two-thirds of the directors then in office shall concur
in said action.  Exclusive of directors, if any, elected by holders of
preferred stock, vacancies in the board of directors of the Corporation, however
caused, and newly created directorships shall be filled by a vote of two-thirds
of the directors then in office, whether or not a quorum, and any director so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of the class to which the director has been
chosen expires and when the director’s successor is elected and
qualified.  The board of directors shall be classified in accordance
with the provisions of Section 3 of this Article III.







By
Laws-Nevada(Classified Board)













57













SECTION
3.                                Classified
Board.  The board of directors of the Corporation (other than
directors which may be elected by the holders of preferred stock), shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III.  The members of each class shall be elected for a
term of three years and until their successors are elected and
qualified.  Such classes shall be as nearly equal in number as the
then total number of directors constituting the entire board of directors shall
permit, exclusive of directors, if any, elected by holders of preferred stock,
with the terms of office of all members of one class expiring each
year.  Should the number of directors not be equally divisible by
three, the excess director or directors shall be assigned to Classes I or II as
follows: (1) if there shall be an excess of one directorship over the number
equally divisible by three, such extra directorship shall be classified in Class
I; and (2) if there be an excess of two directorships over a number equally
divisible by three, one shall be classified in Class I and the other in Class
II.  At the organizational meeting of the Corporation, directors of
Class I shall be elected to hold office for a term expiring at the first annual
meeting of stockholders, directors of Class II shall be elected to hold office
for a term expiring at the second succeeding annual meeting of stockholders and
directors of Class III shall be elected to hold office for a term expiring at
the third succeeding annual meeting thereafter.  Thereafter, at each
succeeding annual meeting, directors of each class shall be elected for three
year terms.  Notwithstanding the foregoing, the director whose term
shall expire at any annual meeting shall continue to serve until such time as
his successor shall have been duly elected and shall have qualified unless his
position on the board of directors shall have been abolished by action taken to
reduce the size of the board of directors prior to said meeting.





Should
the number of directors of the Corporation be reduced, the directorship(s)
eliminated shall be allocated among classes as appropriate so that the number of
directors in each class is as specified in the position(s) to be
abolished.  Notwithstanding the foregoing, no decrease in the number
of directors shall have the effect of shortening the term of any incumbent
director.  Should the number of directors of the Corporation be
increased, other than directors which may be elected by the holders of preferred
stock, the additional directorships shall be allocated among classes as
appropriate so that the number of directors in each class is as specified in the
immediately preceding paragraph.





Whenever
the holders of any one or more series of preferred stock of the Corporation
shall have the right, voting separately as a class, to elect one or more
directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article III.  Notwithstanding the foregoing, and
except as otherwise may be required By Law, whenever the holders of any one or
more series of preferred stock of the Corporation elect one or more directors of
the Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.





SECTION
4.                                Regular
Meetings.  A regular meeting of the board of directors shall be held
at such time and place as shall be determined by resolution of the board of
directors without other notice than such resolution.





SECTION
5.                                Special
Meetings.  Special meetings of the board of directors may be called by
or at the request of the chairman, the chief executive officer or one-third of
the directors.  The person calling the special meetings of the board
of directors may fix any place as the place for holding any special meeting of
the board of directors called by such persons.





Members
of the board of the directors may participate in special meetings by means of
telephone conference or similar communications equipment by which all persons
participating in the meeting can hear each other.  Such participation
shall constitute presence in person.





SECTION
6.                                Notice.  Written
notice of any special meeting shall be given to each director at least two days
previous thereto delivered personally or by telegram or at least seven days
previous thereto delivered by mail at the address at which the director is most
likely to be reached.  Such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid if mailed or when delivered to the telegraph company if sent by
telegram.  Any director may waive notice of any meeting by a writing
filed with the secretary.  The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the







By
Laws-Nevada(Classified Board)















58










meeting
is not lawfully called or convened.  Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.





SECTION
7.                                Quorum.  A
majority of the number of directors fixed by Section 2 shall constitute a quorum
for the transaction of business at any meeting of the board of directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time.  Notice of any
adjourned meeting shall be given in the same manner as prescribed by Section 5
of this Article III.





SECTION
15.                                Manner
of Acting.  The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors,
unless a greater number is prescribed by these By Laws, the Articles of
Incorporation, or the Nevada Revised Statutes.





SECTION
9.                                Action
Without a Meeting.  Any action required or permitted to be taken by
the board of directors at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
directors.





SECTION
10.                                Resignation.  Any
director may resign at any time by sending a written notice of such resignation
to the home office of the Corporation addressed to the
chairman.  Unless otherwise specified therein such resignation shall
take effect upon receipt thereof by the chairman.





SECTION
11.                                Vacancies.  Any
vacancy occurring on the board of directors shall be filled in accordance with
the provisions of the Corporation’s Articles of Incorporation.  Any
directorship to be filled by reason of an increase in the number of directors
may be filled by the affirmative vote of two-thirds of the directors then in
office or by election at an annual meeting or at a special meeting of the
stockholders held for that purpose.  The term of such director shall
be in accordance with the provisions of the Corporation’s Articles of
Incorporation.





SECTION
12.                                Removal
of Directors.  Any director or the entire board of directors may be
removed only in accordance with the provisions of the Corporation’s Articles of
Incorporation.





SECTION
13.                                Compensation.  Directors,
as such, may receive compensation for service on the board of
directors.  Members of either standing or special committees may be
allowed such compensation as the board of directors may determine.





SECTION
14.                                Age
Limitation.  No person 150 years or more of age shall be eligible for
election, reelection, appointment or reappointment to the board of the
Corporation.  No director shall serve as such beyond the annual
meeting of the Corporation immediately following the director becoming 150 years
of age.  This age limitation does not apply to an advisory
director.








ARTICLE
IV


Committees
of the Board of Directors





The board
of directors may, by resolution passed by a majority of the whole board,
designate one or more committees, as they may determine to be necessary or
appropriate for the conduct of the business of the Corporation, and may
prescribe the duties, constitution and procedures thereof.  Each
committee shall consist of one or more directors of the Corporation appointed by
the chairman.  The chairman may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee.





The
chairman shall have power at any time to change the members of, to fill
vacancies in, and to discharge any committee of the board.  Any member
of any such committee may resign at any time by giving notice to the
Corporation; provided, however, that notice to the board, the chairman of the
board, the chief executive officer, the chairman of such committee, or the
secretary shall be deemed to constitute notice to the
Corporation.  Such resignation shall take effect upon receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective.  Any member of any







By
Laws-Nevada(Classified Board)











59










such
committee may be removed at any time, either with or without cause, by the
affirmative vote of a majority of the authorized number of directors at any
meeting of the board called for that purpose.








ARTICLE
V


Officers





SECTION
1.                                Positions.  The
officers of the Corporation shall be a chairman, a president, one or more vice
presidents, a secretary and a treasurer, each of whom shall be elected by the
board of directors.  The board of directors may designate one or more
vice presidents as executive vice president or senior vice
president.  The board of directors may also elect or authorize the
appointment of such other officers as the business of the Corporation may
require.  The officers shall have such authority and perform such
duties as the board of directors may from time to time authorize or
determine.  In the absence of action by the board of directors, the
officers shall have such powers and duties as generally pertain to their
respective offices.





SECTION
2.                                Election
and Term of Office.  The officers of the Corporation shall be elected
annually by the board of directors at the first meeting of the board of
directors held after each annual meeting of the stockholders.  If the
election of officers is not held at such meeting, such election shall be held as
soon thereafter as possible.  Each officer shall hold office until his
successor shall have been duly elected and qualified or until his death or until
he shall resign or shall have been removed in the manner hereinafter
provided.  Election or appointment of an officer, employee or agent
shall not of itself create contract rights.  The board of directors
may authorize the Corporation to enter into an employment contract with any
officer in accordance with state law; but no such contract shall impair the
right of the board of directors to remove any officer at any time in accordance
with Section 3 of this Article V.





SECTION
3.                                Removal.  Any
officer may be removed by vote of two-thirds of the board of directors whenever,
in its judgment, the best interests of the Corporation will be served thereby,
but such removal, other than for cause, shall be without prejudice to the
contract rights, if any, of the person so removed.





SECTION
4.                                Vacancies.  A
vacancy in any office because of death, resignation, removal, disqualification
or otherwise, may be filled by the board of directors for the unexpired portion
of the term.





SECTION
5.                                Remuneration.  The
remuneration of the officers shall be fixed from time to time by the board of
directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the Corporation.





SECTION
6.                                Age
Limitation.  No person 150 or more years of age shall be eligible for
election, reelection, appointment or reappointment as an officer of the
Corporation.  No officer shall serve beyond the annual meeting of the
Corporation immediately following the officer becoming 150 or more years of
age.








ARTICLE
VI


Contracts,
Loans, Checks and Deposits





SECTION
1.                                Contracts.  To
the extent permitted by applicable law, and except as otherwise prescribed by
the Corporation’s Articles of Incorporation or these By Laws with respect to
certificates for shares, the board of directors or the executive committee may
authorize any officer, employee, or agent of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation.  Such authority may be general or confined to
specific instances.





SECTION
2.                                Loans.  No
loans shall be contracted on behalf of the Corporation and no evidence of
indebtedness shall be issued in its name unless authorized by the board of
directors.  Such authority may be general or confined to specific
instances.





SECTION
3.                                Checks,
Drafts, Etc.  All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by one or more officers,







By
Laws-Nevada(Classified Board)















60










employees
or agents of the Corporation in such manner, including in facsimile form, as
shall from time to time be determined by resolution of the board of
directors.





SECTION
4.                                Deposits.  All
funds of the Corporation not otherwise employed shall be deposited from time to
time to the credit of the Corporation in any of its duly authorized depositories
as the board of directors may select.








ARTICLE
VII


Certificates
for Shares and Their Transfer





SECTION
1.                                Certificates
for Shares.  The shares of the Corporation shall be represented by
certificates signed by the chairman of the board of directors or the president
or a vice president and by the treasurer or an assistant treasurer or the
secretary or an assistant secretary of the Corporation, and may be sealed with
the seal of the Corporation or a facsimile thereof.  Any or all of the
signatures upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation.  If any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before the certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.





SECTION
2.                                Form
of Share Certificates.  All certificates representing shares issued by
the Corporation shall set forth upon the face or back that the Corporation will
furnish to any stockholder upon request and without charge a full statement of
the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined, and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series.





Each
certificate representing shares shall state upon the face
thereof:  that the Corporation is organized under the laws of the
State of Nevad; the name of the person to whom issued; the number and class of
shares, the designation of the series, if any, which such certificate
represents; the par value of each share represented by such certificate, or a
statement that the shares are without par value.  Other matters in
regard to the form of the certificates shall be determined by the board of
directors.





SECTION
3.                                Payment
for Shares.  No certificate shall be issued for any share until such
share is fully paid.





SECTION
4.                                Form
of Payment for Shares.  The consideration for the issuance of shares
shall be paid in accordance with the provisions of the Corporation’s Articles of
Incorporation.





SECTION
5.                                Transfer
of Shares.  Transfer of shares of capital stock of the Corporation
shall be made only on its stock transfer books.  Authority for such
transfer shall be given only to the holder of record thereof or by his legal
representative, who shall furnish proper evidence of such authority, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Corporation.  Such transfer shall be made only on surrender for
cancellation of the certificate for such shares.  The person in whose
name shares of capital stock stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.





SECTION
6.                                Lost
Certificates.  The board of directors may direct a new certificate to
be issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen, or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen,
or destroyed.  When authorizing such issue of a new certificate, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.










By
Laws-Nevada(Classified Board)















61










ARTICLE
VIII


Fiscal
Year; Annual Audit





The
fiscal year of the Corporation shall end on the last day of December of each
year.  The Corporation shall be subject to an annual audit as of the
end of its fiscal year by independent public accountants appointed by and
responsible to the board of directors.





ARTICLE
IX


Dividends





Dividends
upon the stock of the Corporation, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the board of directors at any regular
or special meeting, pursuant to law.  Dividends may be paid in cash,
in property or in the Corporation’s own stock.





ARTICLE
X


Corporation
Seal





The
corporate seal of the Corporation shall be in such form as the board of
directors shall prescribe.





ARTICLE
XI


Amendments





In
accordance with the Corporation’s Articles of Incorporation, these By Laws may
be repealed, altered, amended or rescinded by the stockholders of the
Corporation only by vote of not less than 75% of the voting power of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose (provided
that notice of such proposed repeal, alteration, amendment or rescission is
included in the notice of such meeting).  In addition, the board of
directors may repeal, alter, amend or rescind these By Laws by vote of
two-thirds of the board of directors at a legal meeting held in accordance with
the provisions of these By Laws.





APPROVED
AND ADOPTED this 15th day of April, 2009.





CERTIFICATE
OF SECRETARY





I hereby
certify that I am the Secretary of Arrayit Corporation and that the foregoing
Bylaws, consisting of 15 pages, constitute the Bylaws of Arrayit Corporation as
duly adopted by resolution of the sole director of Arrayit Corporation dated
this 15th day of April, 2009.





IN
WITNESS WHEREOF, I have hereunto subscribed my name this 15th day of April,
2009.





______________________


Mark
Schena, Secretary













By
Laws-Nevada(Classified Board)











62










AMENDED
AND RESTATED ARTICLES OF INCORPORATION




OF




ARRAYIT
CORPORATION




ARTICLE
I




NAME




The name
of the Corporation is Arrayit Corporation (hereinafter, the
“Corporation).




ARTICLE
II




REGISTERED
OFFICE AND AGENT




The name
of the Corporation's resident agent in the State of Nevada is Inc. Plan of
Nevada, and the street address of the said resident agent where process may be
served on the Corporation is 613 Saddle River Court, Henderson, Nevada 89015.
The mailing address and the street address of the said resident agent are
identical.




ARTICLE
III




POWERS




The
purpose for which the Corporation is organized is to transact all lawful
business for which corporations may be incorporated pursuant to the laws of the
State of Nevada. The Corporation shall have all the powers of a corporation
organized under the General Corporation Law of the State of Nevada.




ARTICLE
IV




TERM




The
Corporation is to have perpetual existence.




ARTICLE
V




CAPITAL
STOCK




A.  Number
and Designation.  The total number of shares of all classes that this
Corporation shall have authority to issue shall be 105,000,000, of which
100,000,000 shall be shares of common stock, par value $0.001 per share (“Common
Stock”), and 5,000,000 shall be shares of preferred stock, par value $0.001 per
share (“Preferred Stock”).  The shares may be issued by the
Corporation from time to time as approved by the board of directors of the
Corporation without the approval of the stockholders except as otherwise
provided in this Article V or the rules of a national securities exchange if
applicable.  The consideration for subscriptions to, or the purchase
of, the capital stock to be issued by a corporation shall be paid in such form
and in such manner as the board of directors shall determine.  The
board of directors may authorize capital stock to be issued for consideration
consisting of cash, any tangible or intangible property or any benefit to the
corporation, or any combination thereof.  In the absence of actual
fraud in the transaction, the judgment of the directors as to the value of such
consideration shall be conclusive.  The capital stock so issued shall
be deemed to be fully paid and nonassessable stock upon receipt by the
corporation of such consideration.  In the case of a stock dividend,
the part of the surplus of the Corporation which is transferred to stated
capital upon the issuance of shares as a stock dividend shall be deemed to be
the consideration for their issuance.















63





A
description of the different classes and series (if any) of the Corporation's
capital stock, and a statement of the relative powers, designations, preferences
and rights of the shares of each class and series (if any) of capital stock, and
the qualifications, limitations or restrictions thereof, are as
follows:




B.  Undesignated
Common Stock.  Shares of Common Stock not at the time designated as
shares of a particular series pursuant to this Article (V)(B) or any other
provision of these Articles of Incorporation may be issued from time to time in
one or more additional series or without any distinctive
designation.  The board of directors may determine, in whole or in
part, the preferences, voting powers, qualifications and special or relative
rights or privileges of any such series before the issuance of any shares of
that series.  The board of directors shall determine the number of
shares constituting each series of Common Stock and each series shall have a
distinguishing designation.




C.  Common
Stock.  Except as provided in these Articles or the designation of any
series or class of capital stock, the holders of the Common Stock shall
exclusively posses all voting power.  Subject to the provisions of
these Articles, each holder of shares of Common Stock shall be entitled to one
vote for each share held by such holders.




Whenever
there shall have been paid, or declared and set aside for payment, to the
holders of the outstanding shares of any class or series of stock having
preference over the Common Stock as to the payment of dividends, the full amount
of dividends and sinking fund or retirement fund or other retirement payments,
if any, to which such holders are respectively entitled in preference to the
Common Stock, then dividends may be paid on the Common Stock, and on any class
or series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only when and as
declared by the board of directors of the Corporation.




In the
event of any liquidation, dissolution or winding up of the Corporation, after
there shall have been paid, or declared and set aside for payment, to the
holders of the outstanding shares of any class having  preference over
the Common Stock in any such event, the full preferential amounts to which they
are respectively entitled, the holders of the Common Stock and of any class or
series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.




Each
share of Common Stock shall have the same relative powers, preferences and
rights as, and shall be identical in all respects with, all the other shares of
Common Stock of the Corporation.




D.  Serial
Preferred Stock.  Shares of Preferred Stock not at the time designated
as shares of a particular series pursuant to this Article (V)(D) or any other
provision of these Articles of Incorporation may be issued from time to time in
one or more additional series.  The board of directors may determine,
in whole or in part, the preferences, voting powers, qualifications and special
or relative rights or privileges of any such series before the issuance of any
shares of that series.  The board of directors shall determine the
number of shares constituting each series of Preferred Stock and each series
shall have a distinguishing designation.  Each share of each series of
serial preferred stock shall have the same relative powers, preferences and
rights as, and shall be identical in all respects with, all the other shares of
the Corporation of the same series, except the times from which dividends on
shares which may be issued from time to time of any such series may begin to
accrue.




E.  Series
A Convertible Preferred Stock.  There shall be a series of Convertible
Preferred Stock designated as “Series A Convertible Preferred
Stock.”  Such series is referred to herein as the “Series A Preferred
Stock.”




1.  Amount.  The
number of shares constituting Series A Preferred Stock shall be
4,500,000.




2.  Stated
Capital.  The amount to be represented in stated capital at all times
for each share of Series A Convertible Preferred Stock shall be
$.001.




3.  Rank.  All
shares of Series A Convertible Preferred Stock shall rank prior to all of the
Corporation’s Common Stock, par value $.001 per share (the “Common Stock”), now
or hereafter issued, both as to payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.




4.  Dividends.  No
dividends shall be payable to the holder of shares of Series A Convertible
Preferred Stock.















64





5.  Liquidation
Preference.




(a) The
liquidation value of shares of this Series, in case of the voluntary or
involuntary liquidation, dissolution or winding-up of the Company, shall be
$.001 per share.




(b) In
the event of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company, the holders of shares of this Series shall be entitled to
receive the liquidation value of such shares held by them until the liquidation
value of all shares of Series A Convertible Preferred Stock shall have been paid
in full.  Upon payment in full of the liquidation value to which the
holders of shares of the shares of Series A Convertible Preferred Stock are
entitled, the holders of shares of this Series will not be entitled to any
further participation in any distribution of assets by the Company.




(c)
Neither a consolidation or merger of the Company with or into any other
corporation, nor a merger of any other corporation with or into the Company, nor
a sale or transfer of all or any part of the Company's assets for cash or
securities or other property shall be considered a liquidation, dissolution or
winding-up of the Company within the meaning of this Paragraph 5.




6.  Voting
Rights.  Except as otherwise required by law, each share of
outstanding Series A Convertible Preferred Stock shall entitle the holder
thereof to vote on each matter submitted to a vote of the stockholders of the
Corporation and to have the number of votes equal to the number (including any
fraction) of shares of Common Stock into which such share of Series A
Convertible Preferred Stock is then convertible pursuant to the provisions
hereof at the record date for the determination of shareholders entitled to vote
on such matters or, if no such record date is established, at the date such vote
is taken or any written consent of stockholders becomes
effective.  Except as otherwise required by law or by these Articles,
the holders of shares of Common Stock and Series A Convertible Preferred Stock
shall vote together and not as separate classes.




7.  No
Redemption.  The shares of Series A Convertible Preferred Stock are
not redeemable.




8.  Conversion
Provisions.




(a)
Conversion at Option of the Holders.  Provided that, and only to the
extent that, the Corporation has a sufficient number of shares of authorized but
unissued and unreserved Common Stock available to issue upon conversion, each
share of Series A Convertible Preferred Stock shall be convertible, at the
option of the holder thereof, at any time on or after the date of issue, into
fully paid and nonassessable shares of Common Stock and such other securities
and property as hereinafter provided, initially at the rate of 9.6 shares of
Common Stock for each full share of Series A Convertible Preferred Stock
(“Conversion Ratio”).




(b)
Mechanics of Conversion.  Any holder of shares of Series A Convertible
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates for such shares of Series A
Convertible Preferred Stock at the office of the transfer agent for the Series A
Convertible Preferred Stock, which certificate or certificates, if the
Corporation shall so require, shall be duly endorsed to the Corporation or in
blank, or accompanied by proper instruments of transfer to the Corporation or in
blank, accompanied by irrevocable written notice to the Corporation that the
holder elects so to convert such shares of Series A Convertible Preferred Stock
and specifying the name or names (with address) in which a certificate or
certificates for Common Stock are to be issued.




(c)
Adjustments to Conversion Ratio. The Conversion Ratio shall be subject to
adjustment as follows:






(i) In
case the Company shall (A) pay a dividend or make a distribution in Common
Stock, (B) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (C) reclassification or combination into a smaller
number of shares, the Conversion Ratio in effect immediately prior thereto shall
be adjusted retroactively as provided below so that the Conversion Ratio
thereafter shall be by multiplying the Conversion Ratio at which such shares of
this Series were theretofore convertible by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately following
such action and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior thereto. Such adjustment shall be made
whenever any event listed above shall occur and shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision or reclassification. (ii) In case the Company shall issue rights or
warrants to all holders of its Common Stock entitling them (for a period
expiring within 45 days after the record date therefor) to subscribe for or
purchase shares of Common Stock at a price per share less than the current
market price per share of Common Stock (as determined in accordance with the
provisions of subclause (iv) of this clause (d)) at the record date therefor
(the “Current Market Price”), or in case the Company













65





shall
issue other securities convertible into or exchangeable for Common Stock for a
consideration per share of Common Stock deliverable upon conversion or exchange
thereof less than the Current Market Price; then the Conversion Ratio in effect
immediately prior thereto shall be adjusted retroactively as provided below so
that the Conversion Ratio therefor shall be equal to the price determined by
multiplying the Conversion Ratio at which shares of this Series were theretofore
convertible by a fraction of which the denominator shall be the number of shares
of Common Stock outstanding on the date of issuance of such convertible or
exchangeable securities, rights or warrants plus the number of additional shares
of Common Stock offered for subscription or purchase and of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such shares, convertible or exchangeable securities, rights or
warrants plus the number of additional shares of Common Stock which the
aggregate offering price of the number of shares of Common Stock so offered
would purchase at the Current Market Price per share of Common Stock (as
determined in accordance with the provisions of subclause (iv) of this clause
(d).  Such adjustment shall be made whenever such convertible or
exchangeable securities rights or warrants are issued, and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such securities.  However upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Ratio pursuant to this
subclause (ii), if any such right or warrant shall expire and shall not have
been exercised, the Conversion Ratio shall be recomputed immediately upon such
expiration and effective immediately upon such expiration shall be increased to
the price it would have been (but reflecting any other adjustments to the
Conversion Ratio made pursuant to the provisions of this clause (d) after the
issuance of such rights or warrants) had the adjustment of the Conversion Ratio
made upon the issuance of such rights or warrants been made on the basis of
offering for subscription or purchase only that number of shares of Common Stock
actually purchased upon the exercise of such rights or warrants actually
exercised.




(iii) In
case the Company shall distribute to all holders of its Common Stock (including
any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) shares of capital stock (other than
Common Stock), evidences of its indebtedness or assets (excluding cash
dividends) or rights to subscribe (excluding those referred to in subclause (ii)
of this clause (d)), then in each such case the number of shares of Common Stock
into which each share of this Series shall thereafter be convertible shall be
determined by multiplying the number of shares of Common Stock into which such
share of this Series was theretofore convertible by a fraction of which the
numerator shall be the number of outstanding shares of Common Stock multiplied
by the Current Market Price per share of Common Stock (as determined in
accordance with the provisions of subclause (iv) of this clause (d)) on the date
of such distribution and of which the denominator shall be the product of the
number of outstanding shares of Common Stock and the Current Market Price per
share of Common Stock, less the aggregate fair market value (as determined by
the Board of Directors of the Company, whose determination shall be conclusive,
and described in a statement filed with the transfer agent for the shares of
this Series) of the capital stock, assets or evidences of indebtedness so
distributed or of such subscription rights.  Such adjustment shall be
made whenever any such distribution is made, and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such distribution.




(iv) For
the purpose of any computation under subclause (ii) and (iii) of this clause
(d), the Current Market Price per share of Common Stock at any date shall be
deemed to be the average Sale Price for the thirty consecutive trading days
commencing forty-five trading days before the day in question.  As
used herein, “Sale Price” means the closing sales price of the Common Stock (or
if no sale price is reported, the average of the high and low bid prices) as
reported by the principal national or regional stock exchange on which the
Common Stock is listed or, if the Common Stock is not listed on a national or
regional stock exchange, as reported by national Association of Securities
Dealers Automated Quotation System and if not so reported then as reported by
the Electronic Bulletin Board or the National Quotation Bureau
Incorporated.




(v) No
adjustment in the Conversion Ratio shall be required unless such adjustment
would require an increase of at least 1% in the price then in effect; provided,
however, that any adjustments which by reason of this subclause (v) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.  All calculations under this paragraph 8 shall
be made to the nearest cent.




(vi) In
the event that, at any time as a result of an adjustment made pursuant to
subclause (i) or subclause (iii) of this clause (d), the holder of any share of
this Series thereafter surrendered for conversion shall become entitled to
receive any shares of the Company other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon conversion of any
share of this Series shall be subject to adjustment from time to time in a
manner and on the terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in subclauses (i) through (v) of this
clause (d), and the other provisions of this clause (d) with respect to the
Common Stock shall apply on like terms to any such other shares.




(vii)
Whenever the conversion rate is adjusted, as herein provided, the Company shall
promptly file with the transfer agent for this Series, a certificate of an
officer of the Company setting forth the conversion rate after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and a
computation thereof.  Such certificate shall be conclusive evidence of
the correctness of such adjustment.  The Company shall promptly cause
a notice of the adjusted conversion rate to be mailed to each registered holder
of shares of this Series.















66





(d) If
any of the following events occur, namely (i) any reclassification or change
(other than a combination of reclassification into a smaller number of shares)
of outstanding shares of Common Stock issuable upon conversion of shares of this
Series (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision) or (ii) any
consolidation or merger to which the Company is a party (other than a
consolidation or merger to which the Company is the continuing corporation and
which does not result in any classification of, or change (other than a change
in par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision) in, outstanding shares of Common Stock);
then the Company or such successor, as the case may be, shall provide in its
Certificate of Incorporation that each share of this Series shall be convertible
into the kind and amount of shares of stock and other securities or property
receivable upon such reclassification, change, consolidation or merger by a
holder of the number of shares of Common Stock issuable upon conversion of each
such share of this Series immediately prior to such reclassification, change,
consolidation or merger.  Such Certificate of Incorporation shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in clause (d).  The
Company shall cause notice of the execution of any such event contemplated by
this paragraph to be mailed to each holder of shares of this Series As soon as
practicable.




The above
provisions of this clause (d) shall similarly apply to successive
reclassifications, consolidations and mergers.




(e)  By
duly adopted resolution of its board of directors, the Company at any time may
increase the Conversion Ratio, temporarily or otherwise, by any amount, but in
no event shall such Conversion Ratio require the issuance of Common Stock for
less than the par value of the Common Stock at the time such reduction is
made.




Whenever
the Conversion Ratio is increased pursuant to this subclause (e), the Company
shall mail to the holders a notice of the increased Conversion
Ratio.  The notice shall state the increased Conversion Ratio and the
period it will be in effect.




An
increase in the Conversion Ratio does not change or adjust the Conversion Ratio
otherwise in effect for purposes of subclauses (b) and (c) of this paragraph
8.




9.  Protective
Provisions.




(a)
Reservation of Shares; Transfer Taxes; Etc.  Provided that, and only
to the extent that, the Corporation has a sufficient number of shares of
authorized but unissued and unreserved Common Stock available to issue upon
conversion, the Corporation shall at all times serve and keep available, out of
its authorized and unissued stock, solely for the purpose of effecting the
conversion of the Series A Convertible Preferred Stock, such number of shares of
its Common Stock free of preemptive rights as shall from time to time be
sufficient to effect the conversion of all shares of Series A Convertible
Preferred Stock from time to time outstanding.  The Corporation shall
from time to time, in accordance with the laws of the State of Nevada, increase
the authorized number of shares of Common Stock if at any time the number of
shares of Common Stock not outstanding shall not be sufficient to permit the
conversion of all the then outstanding shares of Series A Convertible Preferred
Stock.




If any
shares of Common Stock required to be reserved for purposes of conversion of the
Series A Convertible Preferred Stock hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon conversion, the Corporation will in good faith
and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be.  If the Common Stock is
listed on the New York Stock Exchange or any other national securities exchange,
the Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon conversion of the Series A Convertible Preferred
Stock.




The
Corporation will pay any and all issue or other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of the
Series A Convertible Preferred Stock.  The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or other securities
or assets) in a name other than that which the shares of Series A Convertible
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.















67





(b) Class
Voting Rights.  So long as the Series A Convertible Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least a majority of all outstanding Series A Convertible
Preferred Stock voting separately as a class, (i) Amend, alter or repeal (by
merger or otherwise) any provision of the Articles of Incorporation or the
By-Laws of the Corporation, as amended, so as adversely to affect the relative
rights, preferences, qualifications, limitations or restrictions of the Series A
Convertible Preferred Stock, (ii) authorize or issue, or increase the authorized
amount of, any additional class or series of stock, or any security convertible
into stock of such class or series, ranking prior to the Series A Convertible
Preferred Stock in respect of the payment of dividends or upon liquidation,
dissolution or winding up of the Corporation or (iii) effect any
reclassification of the Series A Convertible Preferred Stock.  A class
vote on the part of the Series A Convertible Preferred Stock shall, without
limitation, specifically not be deemed to be required (except as otherwise
required by law or resolution of the Corporation’s Board of Directors) in
connection with: (a) the authorization, issuance or increase in the authorized
amount of any shares of any other class or series of stock which ranks junior
to, or on a parity with, the Series A Convertible Preferred Stock in respect of
the payment of dividends and distributions upon liquidation, dissolution or
winding up of the Corporation; or (b) the authorization, issuance or increase in
the amount of any bonds, mortgages, debentures or other obligations of the
Corporation.




The
affirmative vote or consent of the holders of a majority of the outstanding
Series A Convertible Preferred Stock, voting or consenting separately as a
class, shall be required to (a) authorize any sale, lease or conveyance of all
or substantially all of the assets of the Corporation, or (b) approve any
merger, consolidation or compulsory share exchange of the Corporation with or
into any other person unless (i) the terms of such merger, consolidation or
compulsory share exchange do not provide for a change in the terms of the Series
A Convertible Preferred Stock and (ii) the Series A Convertible Preferred Stock
is, after such merger, consolidation or compulsory share exchange on a parity
with or prior to any other class or series of capital stock authorized by the
surviving corporation as to dividends and upon liquidation, dissolution or
winding up other than any class or series of stock of the Corporation prior to
the Series A Convertible Preferred Stock as may have been created with the
affirmative vote or consent of the holders of at least 66-2/3% of the Series A
Convertible Preferred Stock (or other than a class or series into which such
prior stock is converted as a result of such merger, consolidation or share
exchange).




10.  Outstanding
Shares.  For purposes of these Articles, all shares of Series A
Convertible Preferred Stock shall be deemed outstanding except (i) from the date
of surrender of certificates representing shares of Series A Convertible
Preferred Stock, all shares of Series A Convertible Preferred Stock converted
into Common Stock; (ii) the effective date of a recapitalization referred to in
clause 8(c), and (iii) from the date of registration of transfer, all shares of
Series A Convertible Preferred Stock held of record by the Corporation or any
subsidiary of the Corporation.




F.  Series
B Convertible Preferred Stock.  There shall be a series of Preferred
Stock designated as “Series B Convertible Preferred Stock.”  Such
series is referred to herein as the “Series B Convertible Preferred
Stock.”




1.  Amount.  The
number of shares constituting such series shall be 100,000.




2.  Stated
Capital.  The amount to be represented in stated capital at all times
for each share of Series B Convertible Preferred Stock shall be
$.001.




3.  Rank.  All
shares of Series B Convertible Preferred Stock shall rank prior to all of the
Corporation’s Common Stock, par value $.001 per share (the “Common Stock”), now
or hereafter issued, both as to payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.




4.  Dividends.  No
dividends shall be payable to the holders of shares of Series B Convertible
Preferred Stock.




5.  Liquidation
Preference.




(a)  The
liquidation value of shares of this Series, in case of the voluntary or
involuntary liquidation, dissolution or winding-up of the Company, shall be
$.001 per share.















68





(b)  In
the event of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company, the holders of shares of this Series shall be entitled to
receive the liquidation value of such shares held by them until the liquidation
value of all shares of Series B Convertible Preferred Stock shall have been paid
in full.  Upon payment in full of the liquidation value to which the
holders of shares of the shares of Series B Convertible Preferred Stock are
entitled, the holders of shares of this Series will not be entitled to any
further participation in any distribution of assets by the Company.




(c)  Neither
a consolidation or merger of the Company with or into any other corporation, nor
a merger of any other corporation with or into the Company, nor a sale or
transfer of all or any part of the Company's assets for cash or securities or
other property shall be considered a liquidation, dissolution or winding-up of
the Company within the meaning of this Paragraph 5.




6.  Voting
Rights.  Except as otherwise required by law, each share of
outstanding Series B Convertible Preferred Stock shall entitle the holder
thereof to vote on each matter submitted to a vote of the stockholders of the
Corporation and to have the number of votes equal to the number (including any
fraction) of shares of Common Stock into which such share of Series B
Convertible Preferred Stock is then convertible pursuant to the provisions
hereof at the record date for the determination of shareholders entitled to vote
on such matters or, if no such record date is established, at the date such vote
is taken or any written consent of stockholders becomes
effective.  Except as otherwise required by law or by this
Certificate, the holders of shares of Common Stock and Series B Convertible
Preferred Stock shall vote together and not as separate classes.




7.  No
Redemption.  The shares of Series B Convertible Preferred Stock are
not redeemable.




8.  Conversion
Provisions.




(a)  Conversion
at Option of Holders.  Provided that, and only to the extent that, the
Corporation has a sufficient number of shares of authorized but unissued and
unreserved Common Stock available to issue upon conversion, each share of Series
B Convertible Preferred Stock shall be convertible, at the option of the holder
thereof, at any time on or after issuance, into the number of fully paid and
non-assessable shares of Common Stock as specified by the Conversion Ratio that
is in effect at the time of conversion; provided that, and only to the extent
that, the Corporation has a sufficient number of shares of authorized but
unissued and unreserved Common Stock available to issue upon conversion of all
outstanding shares of Series C Preferred Stock.  The initial
“Conversion Ratio” for the Series B Preferred Stock is 150:1.  The
Conversion Ratio shall be subject to adjustment from time to time as provided in
this Section 7.




For the
purpose of these Certificate of Designation, the term “Common Stock” shall
initially mean the class designated as Common Stock, par value $.001 per share,
of the Corporation as of August 8, 2004 subject to adjustment as hereinafter
provided.




(b)  Mechanics
of Conversion.  Any holder of shares of Series B Convertible Preferred
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares of Series B Convertible Preferred
Stock at the office of the transfer agent for the Series B Convertible Preferred
Stock, which certificate or certificates, if the Corporation shall so require,
shall be duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Series B Convertible Preferred Stock and specifying the
name or names (with address) in which a certificate or certificates for Common
Stock are to be issued.




(c)  Adjustment
of Conversion Ratio.  The Conversion Ratio for each share of Series B
Preferred Stock and the kind of securities issuable upon the conversion of any
share of Series B Preferred Stock shall be adjusted from time to time as
follows:




(i)  Subdivision
or Combination of Shares.  If the Corporation at any time effects an
increase in the number of outstanding shares of Common Stock by subdivision, the
Conversion Ratio shall be increased in the same proportions as the Common Stock
is subdivided, in each case effective automatically upon, and simultaneously
with, the effectiveness of the subdivision which gives rise to the
adjustment.  If the Corporation at any time effects a decrease in the
number of outstanding shares of Common Stock by combination or any other means,
the Conversion Ratio shall remain the same and unchanged.















69





(ii)  Reclassification,
Consolidation or Merger.  If at any time, as a result of (A) a capital
reorganization or reclassification (other than a subdivision or combination
which gives rise to an adjustment of the Conversion Ratio pursuant to Section
7(d)(i)); or (B) a merger or consolidation of the Corporation with another
corporation (whether or not the Corporation is the surviving corporation), the
Common Stock issuable upon the conversion of the Series B Preferred Stock shall
be changed into or exchanged for the same or a different number of shares of any
class or classes of stock of the Corporation or any other corporation, or other
securities convertible into such shares, then, as a part of such reorganization,
reclassification, merger or consolidation, appropriate adjustments shall be made
in the terms of the Series B Preferred Stock (or of any securities into which
the Series B Preferred Stock is changed or for which the Series B Preferred
Stock is exchanged), so that: (x) the holders of Series B Preferred Stock or of
such substitute securities shall thereafter be entitled to receive, upon
conversion of the Series B Preferred Stock or of such substitute securities, the
kind and amount of shares of stock, other securities, money and property which
such holders would have received at the time of such capital reorganization,
reclassification, merger, or consolidation, if such holders had converted their
Series B Preferred Stock immediately prior to such capital reorganization,
reclassification, merger, or consolidation, and (y) the Series B Preferred Stock
or such substitute securities shall thereafter be adjusted on terms as nearly
equivalent as may be practicable to the adjustments theretofore provided in this
Section 7(d).  No consolidation or merger in which the Corporation is
not the surviving corporation shall be consummated unless the surviving
corporation shall agree, in writing, to the provisions of this Section
7(d)(ii).  The provisions of this Section 7(d)(ii) shall similarly
apply to successive capital reorganizations, reclassifications, mergers, and
consolidations.




(iii)  Other
Action Affecting Common Stock.  If at any time the Corporation takes
any action affecting its Common Stock which, in the opinion of the Board of
Directors of the Corporation, would have an adverse effect upon the Conversion
Rights of the Series B Preferred Stock and the foregoing conversion ratio
adjustment provisions are not strictly applicable but the failure to make any
adjustment would adversely affect the Conversion Rights, then the Conversion
Ratio and the kind of securities issuable upon the conversion of Series B
Preferred Stock shall be adjusted to preserve, without dilution, the Conversion
Rights in such manner and at such time as the Board of Directors of the
Corporation may in good faith determine to be equitable in the
circumstances.




(iv)  Notice
of Adjustments.  Whenever the Conversion Ratio or the kind of
securities issuable upon the conversion of any one of or all of the Series B
Preferred Stock shall be adjusted pursuant to Sections 8(c)(i) - (iii) above,
the Corporation shall make a certificate signed by its Chief Financial Officer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Corporation made any determination hereunder), and the
Conversion Ratio and the kind of securities issuable upon the conversion of the
Series B Preferred Stock after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (by first class mail postage prepaid) to
each holder of Series B Preferred Stock promptly after each
adjustment.




(d)  Increase
of Conversion Ratio.  By duly adopted resolution of its board of
directors, the Company at any time may increase the Conversion Ratio,
temporarily or otherwise, by any amount, but in no event shall such Conversion
Ratio require the issuance of Common Stock for less than the par value of the
Common Stock at the time such reduction is made.




Whenever
the Conversion Ratio is increased pursuant to this subclause (d), the Company
shall mail to the holders a notice of the increased Conversion
Ratio.  The notice shall state the increased Conversion Ratio and the
period it will be in effect.




9.  Protective
Provisions.




(a)  Reservation
of Shares; Transfer Taxes; Etc.  Provided that, and only to the extent
that, the Corporation has a sufficient number of shares of authorized but
unissued and unreserved Common Stock available to issue upon conversion, the
Corporation shall at all times serve and keep available, out of its authorized
and unissued stock, solely for the purpose of effecting the conversion of the
Series B Convertible Preferred Stock, such number of shares of its Common Stock
free of preemptive rights as shall from time to time be sufficient to effect the
conversion of all shares of Series B Convertible Preferred Stock from time to
time outstanding.  The Corporation shall from time to time, in
accordance with the laws of the State of Delaware, increase the authorized
number of shares of Common Stock if at any time the number of shares of Common
Stock not outstanding shall not be sufficient to permit the conversion of all
the then outstanding shares of Series B Convertible Preferred
Stock.















70





If any
shares of Common Stock required to be reserved for purposes of conversion of the
Series B Convertible Preferred Stock hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon conversion, the Corporation will in good faith
and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be.  If the Common Stock is
listed on the New York Stock Exchange or any other national securities exchange,
the Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon conversion of the Series B Convertible Preferred
Stock.




The
Corporation will pay any and all issue or other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of the
Series B Convertible Preferred Stock.  The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or other securities
or assets) in a name other than that which the shares of Series B Convertible
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.




(b)  Class
Voting Rights.  So long as the Series B Convertible Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least a majority of all outstanding Series B Convertible
Preferred Stock voting separately as a class, (i) Amend, alter or repeal (by
merger or otherwise) any provision of the Certificate of Incorporation or the
By-Laws of the Corporation, as amended, so as adversely to affect the relative
rights, preferences, qualifications, limitations or restrictions of the Series B
Convertible Preferred Stock, (ii) authorize or issue, or increase the authorized
amount of, any additional class or series of stock, or any security convertible
into stock of such class or series, ranking prior to the Series B Convertible
Preferred Stock in respect of the payment of dividends or upon liquidation,
dissolution or winding up of the Corporation or (iii) effect any
reclassification of the Series B Convertible Preferred Stock.  A class
vote on the part of the Series B Convertible Preferred Stock shall, without
limitation, specifically not be deemed to be required (except as otherwise
required by law or resolution of the Corporation’s Board of Directors) in
connection with: (a) the authorization, issuance or increase in the authorized
amount of any shares of any other class or series of stock which ranks junior
to, or on a parity with, the Series B Convertible Preferred Stock in respect of
the payment of dividends and distributions upon liquidation, dissolution or
winding up of the Corporation; or (b) the authorization, issuance or increase in
the amount of any bonds, mortgages, debentures or other obligations of the
Corporation.




The
affirmative vote or consent of the holders of a majority of the outstanding
Series B Convertible Preferred Stock, voting or consenting separately as a
class, shall be required to (a) authorize any sale, lease or conveyance of all
or substantially all of the assets of the Corporation, or (b) approve any
merger, consolidation or compulsory share exchange of the Corporation with or
into any other person unless (i) the terms of such merger, consolidation or
compulsory share exchange do not provide for a change in the terms of the Series
B Convertible Preferred Stock and (ii) the Series B Convertible Preferred Stock
is, after such merger, consolidation or compulsory share exchange on a parity
with or prior to any other class or series of capital stock authorized by the
surviving corporation as to dividends and upon liquidation, dissolution or
winding up other than any class or series of stock of the Corporation prior to
the Series B Convertible Preferred Stock as may have been created with the
affirmative vote or consent of the holders of at least 66-2/3% of the Series B
Convertible Preferred Stock (or other than a class or series into which such
prior stock is converted as a result of such merger, consolidation or share
exchange).




10.  Outstanding
Shares.  For purposes of this Certificate of Designation, all shares
of Series B Convertible Preferred Stock shall be deemed outstanding except (i)
from the date of surrender of certificates representing shares of Series B
Convertible Preferred Stock, all shares of Series B Convertible Preferred Stock
converted into Common Stock; (ii) the effective date of a Recapitalization Event
defined in clause 8(b), and (iii) from the date of registration of transfer, all
shares of Series B Convertible Preferred Stock held of record by the Corporation
or any subsidiary of the Corporation.




11.  Preemptive
Rights.  The Convertible Preferred is not entitled to any preemptive
or subscription rights in respect of any securities of the
Corporation.




G.  Series
C Convertible Preferred Stock




1.  DESIGNATION.  This
series of Preferred Stock shall be designated “Series C Convertible Preferred
Stock.”  Such series is referred to herein as the “Series C Preferred
Stock.”















71





2.  NUMBER
OF SHARES AND PAR VALUE.  The number of shares constituting the Series
C Preferred Stock shall be equal to 103,143.  Each share of the Series
C Preferred Stock shall have $.001 par value.




3.  RELATIVE
SENIORITY.  The Series C Preferred Stock shall, in respect of the
right to participate in distributions or payments in the event of any
liquidation, dissolution or winding up of the Corporation, rank (a) pari passu
with the Common Stock (as defined below) of the Corporation and with any other
class or series of stock of the Corporation, the terms of which specifically
provide that such class or series shall rank pari passu with the Series C
Preferred Stock in respect of the right to participate in distributions or
payments in the event of any liquidation, dissolution or winding up of the
Corporation; and (b) junior to any other class or series of stock of the
Corporation, the terms of which specifically provide that such class or series
shall rank senior to the Series C Preferred Stock in respect of the right to
participate in distributions or payments in the event of any liquidation,
dissolution or winding up of the Corporation.  The term “COMMON STOCK”
shall mean all shares now or hereafter authorized of any class of common stock
of the Corporation.




4.  NO
LIQUIDATION PREFERENCE.  In the event of any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, after distribution
in full of the preferential amounts, if any, to be distributed to the holders of
shares of any series of Preferred Stock, having a priority on liquidation
superior to that of the Series C Preferred Stock, the holders of shares of
Series C Preferred Stock shall be entitled to participate with the Common Stock
in all of the remaining assets of the Corporation available for distribution to
its stockholders, ratably with the holders of Common Stock in proportion to the
number of shares of Common Stock held by them, assuming for each holder of
Series C Preferred Stock on the record date for such distribution that each
holder was the holder of record of the number (including any fraction) of shares
of Common Stock into which the shares of Series C Preferred Stock then held by
such holder are then convertible.  A liquidation, dissolution, or
winding-up of the Corporation, as such terms are used in this Section 4, shall
not be deemed to be occasioned by or to include any merger of the Corporation
with or into one or more corporations or other entities, any acquisition or
exchange of the outstanding shares of one or more classes or series of the
Corporation, or any sale, lease, exchange, or other disposition of all or a part
of the assets of the Corporation.




5.  VOTING
RIGHTS.  Except as otherwise required by law, each share of
outstanding Series C Preferred Stock shall entitle the holder thereof to vote on
each matter submitted to a vote of the stockholders of the Corporation and to
have the number of votes equal to the number (including any fraction) of shares
of Common Stock into which such share of Series C Preferred Stock is then
convertible pursuant to the provisions hereof at the record date for the
determination of shareholders entitled to vote on such matters or, if no such
record date is established, at the date such vote is taken or any written
consent of stockholders becomes effective.  Except as otherwise
required by law or by this Certificate, the holders of shares of Common Stock
and Series C Preferred Stock shall vote together and not as separate
classes.




6.  DIVIDENDS
AND DISTRIBUTIONS.  If any dividend or other distribution payable in
cash, securities or other property, including a dividend payable in shares of
Common Stock, is declared on the Common Stock, each holder of shares of Series C
Preferred Stock on the record date for such dividend or distribution shall be
entitled to receive on the date of payment or distribution of such dividend or
other distribution the same cash, securities or other property which such holder
would have received on such record date if such holder was the holder of record
of the number (including any fraction) of shares of Common Stock into which the
shares of Series C Preferred Stock then held by such holder are then
convertible.  No dividend or other distribution shall be declared or
paid on the Common Stock unless an equivalent dividend or other distribution
that satisfies this Section 6 is declared or paid on the Series C Preferred
Stock.




7.  CONVERSION.  The
holders of the Series C Preferred Stock shall have conversion rights as
follows:




(a)  Conversion
Ratio.  The holder of each share of Series C Preferred Stock shall
have the right (the “Conversion Right”), at such holder’s option, to convert
such share, without cost, on the terms and at the times specified in this
Section 7, into the number of fully paid and non-assessable shares of Common
Stock as specified by the Conversion Ratio that is in effect at the time of
conversion; provided that, and only to the extent that, the Corporation has a
sufficient number of shares of authorized but unissued and unreserved Common
Stock available to issue upon conversion of all outstanding shares of Series C
Preferred Stock.  The initial “Conversion Ratio” for the Series C
Preferred Stock is 350:1.  The Conversion Ratio shall be subject to
adjustment from time to time as provided in this Section 7.




(b)  Shares
Eligible for Conversion.  The below specified number of shares of
Series C Preferred Stock shall be eligible for conversion during each successive
90 days, commencing 90 days after the effective date of an increase in the
number of authorized but unissued shares of Common Stock sufficient to issue
upon conversion of all outstanding shares of Series C Preferred
Stock.









72





The
number of Series C Preferred Shares eligible for conversion during each 90 day
period is 10% (ten percent) of the original number of shares of Series C
Preferred Stock issued to each original holder (“Eligible
Shares”).  Any Eligible Shares not converted during any 90 day period
may not be cumulated and carried forward to the next 90 day
period.  Any subsequent owner or holder of all or any part of Series C
Preferred Stock shall be subject to the same eligibility provisions applicable
to the original holder of such shares.




(c)  Mechanics
of Conversion.  A holder of any share of Series C Preferred Stock may
exercise the Conversion Right of such share by surrendering the certificate
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series C Preferred Stock, together with a written notice to the
Corporation which shall state: (A) that such holder elects to convert the same,
(B) the number of shares issued to the original holder of such shares; and (C)
the number of Eligible Shares and the number of shares of Series C Preferred
Stock being converted.  Thereupon the Corporation shall promptly issue
and deliver to the holder of such shares a certificate or certificates for the
number of whole shares of Common Stock to which such holder shall be
entitled.  In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then fair market value (as determined in good faith by the
Board of Directors of the Corporation) of the Common Stock.  If the
certificate evidencing the Series C Preferred Stock being converted shall also
evidence shares of Series C Preferred Stock not being converted, then the
Corporation shall also deliver to the holder of such certificate a new stock
certificate evidencing the Series C Preferred Stock not
converted.  The conversion of any shares of Series C Preferred Stock
shall be deemed to have been made immediately prior to the close of business on
the date that the shares of Series C Preferred Stock to be converted are
surrendered to the Corporation, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date.  Any dividends or distributions declared but unpaid at the
time of conversion with respect to the Series C Preferred Stock so converted,
including any dividends declared on the Common Stock to which the Series C
Preferred Stock is entitled pursuant to Section 6 above, shall be paid to the
holder of Common Stock issued upon conversion of the Series C Preferred Stock
upon the payment date therefore.




The
Corporation shall give written notice to each holder of a share of Series C
Preferred Stock promptly upon the liquidation, dissolution or winding up of the
Corporation, and not more than fifty (50) nor less than twenty (20) days before
the anticipated date of consummation of any acquisition of the Corporation or
any sale of all or substantially all of the assets of the Corporation and no
such acquisition of the Corporation or sale of assets shall be effective until
such notice shall have been given.




(d)  Adjustment
of Conversion Ratio.  The Conversion Ratio for each share of Series C
Preferred Stock and the kind of securities issuable upon the conversion of any
share of Series C Preferred Stock shall be adjusted from time to time as
follows:




(i)  Subdivision
or Combination of Shares.  If the Corporation at any time effects an
increase in the number of outstanding shares of Common Stock by subdivision, the
Conversion Ratio shall be increased in the same proportions as the Common Stock
is subdivided, in each case effective automatically upon, and simultaneously
with, the effectiveness of the subdivision which gives rise to the
adjustment.  If the Corporation at any time effects a decrease in the
number of outstanding shares of Common Stock by combination or any other means,
the Conversion Ratio shall remain the same and unchanged.




(ii)  Reclassification,
Consolidation or Merger.  If at any time, as a result of (A) a capital
reorganization or reclassification (other than a subdivision or combination
which gives rise to an adjustment of the Conversion Ratio pursuant to Section
7(d)(i)); or (B) a merger or consolidation of the Corporation with another
corporation (whether or not the Corporation is the surviving corporation), the
Common Stock issuable upon the conversion of the Series C Preferred Stock shall
be changed into or exchanged for the same or a different number of shares of any
class or classes of stock of the Corporation or any other corporation, or other
securities convertible into such shares, then, as a part of such reorganization,
reclassification, merger or consolidation, appropriate adjustments shall be made
in the terms of the Series C Preferred Stock (or of any securities into which
the Series C Preferred Stock is changed or for which the Series C Preferred
Stock is exchanged), so that: (x) the holders of Series C Preferred Stock or of
such substitute securities shall thereafter be entitled to receive, upon
conversion of the Series C Preferred Stock or of such substitute securities, the
kind and amount of shares of stock, other securities, money and property which
such holders would have received at the time of such capital reorganization,
reclassification, merger, or consolidation, if such holders had converted their
Series C Preferred Stock immediately prior to such capital reorganization,
reclassification, merger, or consolidation, and (y) the Series C Preferred Stock
or such substitute securities shall thereafter be adjusted on terms as nearly
equivalent as may be practicable to the adjustments theretofore provided in this
Section 7(d).  No consolidation or merger in which the Corporation is
not the surviving corporation shall be consummated unless the surviving
corporation shall agree, in writing, to the provisions of this Section
7(d)(ii).  The provisions of this Section 7(d)(ii) shall similarly
apply to successive capital reorganizations, reclassifications, mergers, and
consolidations.















73





(iii)  Other
Action Affecting Common Stock.  If at any time the Corporation takes
any action affecting its Common Stock which, in the opinion of the Board of
Directors of the Corporation, would have an adverse effect upon the Conversion
Rights of the Series C Preferred Stock and the foregoing conversion ratio
adjustment provisions are not strictly applicable but the failure to make any
adjustment would adversely affect the Conversion Rights, then the Conversion
Ratio and the kind of securities issuable upon the conversion of Series C
Preferred Stock shall be adjusted to preserve, without dilution, the Conversion
Rights in such manner and at such time as the Board of Directors of the
Corporation may in good faith determine to be equitable in the
circumstances.




(iv)  Notice
of Adjustments.  Whenever the Conversion Ratio or the kind of
securities issuable upon the conversion of any one of or all of the Series C
Preferred Stock shall be adjusted pursuant to Sections 7(d)(i) - (iii) above,
the Corporation shall make a certificate signed by its Chief Financial Officer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Corporation made any determination hereunder), and the
Conversion Ratio and the kind of securities issuable upon the conversion of the
Series C Preferred Stock after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (by first class mail postage prepaid) to
each holder of Series C Preferred Stock promptly after each
adjustment.




(e)  Full
Consideration.  All shares of Common Stock which shall be issued upon
the conversion of any Series C Preferred Stock (which is itself fully paid and
non-assessable) will, upon issuance, be fully paid and
non-assessable.  The Corporation will pay such amounts and will take
such other action as may be necessary from time to time so that all shares of
Common Stock which shall be issued upon the conversion of any Series C Preferred
Stock will, upon issuance and without cost to the recipient, be free from all
pre-emptive rights, taxes, liens and charges with respect to the issue
thereof.




(f)  No
Impairment.  The Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in
the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the holders of the Series C Preferred Stock
against impairment.




(g)  Cancellation
of Series C Preferred Stock.  No share of Series C Preferred Stock
acquired by the Corporation upon conversion, redemption or purchase shall be
reissued and all such shares shall be canceled, retired and returned to the
status of authorized and unissued shares of undesignated preferred
stock.  The Corporation may take such appropriate corporate action to
reduce the authorized number of Series C Preferred Stock
accordingly.




8.  PROTECTIVE
PROVISIONS.  In addition to any other rights provided by law, so long
as at least one share of Series C Preferred Stock is outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of the outstanding shares of
the Series C Preferred Stock voting together as a single class:




(a)  amend
or repeal any provision of the Corporation’s Articles of Incorporation, Bylaws
or this Certificate of Designation if such action would materially and adversely
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Series C Preferred
Stock;




(b)  increase
or decrease (other than by conversion) the total number of authorized shares of
Series C Preferred Stock;




(c)  create
or issue any series or class, reclassify any authorized capital stock of the
Corporation into stock of any series or class, increase the authorized or issued
amount of any class or series of stock, or authorize, create, issue or
reclassify any obligation or security convertible or exchangeable into or
evidencing a right to purchase capital stock of any class or series, that ranks
prior to the Series C Preferred Stock as to dividends or rights upon
liquidation, dissolution or winding up;













74





(d)  issue
any Common Stock after the date on which Series C Preferred Stock has been last
issued and sold, whether or not subsequently reacquired or retired by the
Corporation, for a consideration per share less than fair market value of the
Common Stock (as determined in good faith by the Board of Directors of the
Corporation) at such issuance or deemed issuance other than: (1) shares of
Common Stock issued in transactions giving rise to adjustments under Sections
7(d)(i) or (ii) above, (2) shares of Common Stock issued upon conversion of
shares of Series C Preferred Stock, or (3) shares issued upon the conversion of
Convertible Securities (as defined below) if the issuance of such Convertible
Securities did not violate Section 8(e) below;




(e)  issue
any Convertible Securities with respect to which the Effective Price is less
than the fair market value of the Common Stock (as determined in good faith by
the Board of Directors of the Corporation), at such issuance or deemed
issuance.  “CONVERTIBLE SECURITIES” means all rights or options for
the purchase of, or stock or other securities convertible into, Common Stock
(other than Common Stock issued for the purposes set forth in Sections 8(d)(1)
or (2) above) or other Convertible Securities, whenever and each time
issued.  The “EFFECTIVE PRICE” with respect to any Convertible
Securities means the result of dividing: (1) the sum of (x) the total
consideration, if any, received by the Corporation for the issuance of such
Convertible Securities, plus (y) the minimum consideration, if any, payable to
the Corporation upon exercise or conversion of such Convertible Securities
(assuming that the full amount of securities issuable upon exercise or
conversion are issued), plus (z) the minimum consideration, if any, payable to
the Corporation upon exercise or conversion of any Convertible Securities
issuable upon exercise or conversion of such Convertible Securities, by: (2) the
maximum number of Common Stock (other than Common Stock issued for the purposes
set forth in Sections 8(d)(1) or (2) above) issuable upon exercise or conversion
of such Convertible Securities or of any Convertible Securities issuable upon
exercise or conversion of such Convertible Securities; or




(f)  sell,
convey, or otherwise dispose of or encumber all or substantially all of its
property or business or merge or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of.




9.  SEVERABILITY
OF PROVISIONS.  If any voting powers, preferences and relative,
participating, optional and other special rights of the Series C Preferred Stock
and qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations, and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed
herein.




H.  Certain
Definitions.  As used in these Articles, the following terms shall
have the following respective meanings:




“Affiliate”
of any specified person means any other person directly or indirectly
controlling or controlled by or under common control with such specified
person.  For purposes of this definition, “control” when used with
respect to any person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of voting
securities or otherwise; and the term “controlling” and “controlled” having
meanings correlative to the foregoing.




“Common
Shares” shall mean any stock of the Company which has no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is not subject
to redemption by the Company.  However, Common Shares issuable upon
conversion of shares of this series shall include only shares of the class
designated as common Shares as of the original date of issuance of shares of
this Series, or shares of the Company of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from such reclassifications bears to the total
number of shares of all classes resulting from all such
reclassifications.














75







ARTICLE
VI




PREEMPTIVE
RIGHTS




No holder
of any of the shares of any class or series of stock or of options, warrants or
other rights to purchase shares of any class or series of stock or of other
securities of the Corporation shall have any preemptive right to purchase or
subscribe for any unissued stock of any class or series, or any unissued bonds,
certificates of indebtedness, debentures or other securities convertible into or
exchangeable for stock or carrying any right to purchase stock may be issued
pursuant to resolution of the board of directors of the Corporation to such
persons, firms, corporations or associations, whether or not holders thereof,
and upon such terms as may be deemed advisable by the board of directors in the
exercise of its sole discretion.




ARTICLE
VII




REPURCHASE
OF SHARES




The
Corporation may from time to time, pursuant to authorization by the board of
directors of the Corporation and without action by the stockholders, purchase or
otherwise acquire shares of any class, bonds, debentures, notes, scrip,
warrants, obligations, evidences or indebtedness, or other securities of the
Corporation in such manner, upon such terms, and in such amounts as the board of
directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.




ARTICLE
VIII




MEETINGS
OF STOCKHOLDERS; CUMULATIVE VOTING




A.  No
action that is required or permitted to be taken by the stockholders of the
Corporation at any annual or special meeting of stockholders may be effected by
written consent of stockholders in lieu of a meeting of stockholders, unless the
action to be effected by written consent of stockholders and the taking of such
action by such written consent have expressly been approved in advance by the
board of directors of the Corporation.




B.
Special meeting of the stockholders of the Corporation for any purpose or
purposes may be called at any time by the board of directors of the Corporation,
or by a committee of the board of directors which has been duly designated by
the board of directors and whose powers and authorities, as provided in a
resolution of the board of directors or in the bylaws of the Corporation,
include the power and authority to call such meetings but such special meetings
may not be called by another person or persons.




C.  There
shall be no cumulative voting by stockholders of any class or series in the
election of directors of the Corporation.




D.  Meetings
of stockholders may be held at such place as the bylaws may
provide.















76







ARTICLE
IX




NOTICE
FOR NOMINATIONS AND PROPOSALS




A.  Nominations
for the election of directors and proposals for any new business to be taken up
at any annual or special meeting of stockholders may be made by the board of
directors of the Corporation or by any stockholder of the Corporation entitled
to vote generally in the election of directors. In order for a stockholder of
the Corporation to make any such nominations and/or proposals at an annual
meeting or such proposals at a special meeting, he or she shall give notice
thereof in writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation of not less than thirty
days or more than sixty days prior to any such meeting; provided, however, that
if less than forty days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
the Corporation not later than the close of the tenth day following the day on
which notice of the meeting was mailed to stockholders. Each such noticegiven by a stockholder with respect to nominations for the
election of directors shall set forth (1) the name, age, business address and,
if known, residence address of each nominee proposed in such notice, (2) the
principal occupation or employment of each such nominee, and (3) the number of
shares of stock of the Corporation which are beneficially owned by each such
nominee. In addition, the stockholder making such nomination shall promptly
provide any other information reasonably requested by the
Corporation.




B.  Each
such notice given by a stockholder to the Secretary with respect to business
proposals to bring before a meeting shall set forth in writing as to each
matter: (1) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting; (2) the
name and address, as they appear on the Corporation's books, of the stockholder
proposing such business; (3) the class and number of shares of the Corporation
which are beneficially owned by the stockholder; and (4) any material interest
of the stockholder in such business. Notwithstanding anything in these Articles
to the contrary, no business shall be conducted at the meeting except in
accordance with the procedures set forth in this Article.




C.  The
Chairman of the annual or special meeting of stockholders may, if the facts
warrant, determine and declare to such meeting that a nomination or proposal was
not made in accordance with the foregoing procedure, and, if he should so
determine, he shall so declare to the meeting and the defective nomination or
proposal shall be disregarded and laid over for action at the next succeeding
adjourned, special or annual meeting of the stockholders taking place thirty
days or more thereafter. This provision shall not require the holding of any
adjourned or special meeting of stockholders for the purpose of considering such
defective nomination or proposal.




ARTICLE
X




DIRECTORS




A.  Number;
Vacancies.  The number of
directors of the Corporation shall be such number, not less than one nor more
than 15 (exclusive of directors, if any, to be elected by holders of preferred
stock of the Corporation), as shall be provided from time to time in a
resolution adopted by the board of directors, provided that no decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director, and provided further that no action shall be taken to
decrease or increase the number of directors from time to time unless at least
two-thirds of the directors then in office shall concur in said
action.  Exclusive of directors, if any, elected by holders of
preferred stock, vacancies in the board of directors of the Corporation, however
caused, and newly created directorships shall be filled by a vote of two-thirds
of the directors then in office, whether or not a quorum, and any director so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of the class to which the director has been
chosen expires and when the director's successor is elected and qualified. The
board of directors shall be classified in accordance with the provisions of
Section B of this Article X.




B.  Classified
Board.  The board of directors of the Corporation (other than
directors which may be elected by the holders of preferred stock) shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III. The members of each class shall be elected for a term of three
years and until their successors are elected and qualified. Such classes shall
be as nearly equal in number as the then total number of directors constituting
the entire board of directors shall permit, exclusive of directors, if any,
elected by holders of preferred stock, with the terms of office of all members
of one class expiring each year. Should the number of directors not be equally
divisible by three, the excess director or directors shall be assigned to
Classes I or II as follows: (1) if there shall be an excess of one directorship
over the number equally divisible by three, such extra directorship shall be
classified in Class I; and (2) if there be an excess of two directorships over a
number equally divisible by three, one shall be classified in Class I and the
other in Class II. At the first meeting of the board of directors of the
Corporation, directors of Class I shall be elected to hold office for a term
expiring at the first annual meeting of stockholders, directors of Class II
shall be elected to hold office for a term expiring at the second succeeding
annual meeting of stockholders and directors of Class III shall be elected to
hold office for a term expiring at the third succeeding annual meeting
thereafter. Thereafter, at each succeeding annual meeting, directors of each
class shall be elected for three-year terms. Notwithstanding the foregoing, the
director whose term shall expire at any annual meeting shall continue to serve
until such time as his successor shall have been duly elected and shall have
qualified unless his position on the board of directors shall have been
abolished by action taken to reduce the size of the board of directors prior to
said meeting.















77







C.  Increase
and Reduction in Directors.  Should the number of directors of the
Corporation be reduced, the directorship(s) eliminated shall be allocated among
classes as appropriate so that the number of directors in each class is as
specified in the position(s) to be abolished. Notwithstanding the foregoing, no
decrease in the number of directors shall have the effect of shortening the term
of any incumbent director.  Should the number of directors of the
Corporation be increased, other than directors which may be elected by the
holders of preferred stock, the additional directorships shall be allocated
among classes as appropriate so that the number of directors in each class is as
specified in the immediately preceding paragraph.




D.  Directors
Elected by Preferred Stockholders.  Whenever the holders of any one or
more series of preferred stock of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
board of directors shall include said directors so elected in addition to the
number of directors fixed as provided in this Article
X.  Notwithstanding the foregoing, and except as otherwise may be
required by law, whenever the holders of any one or more series of preferred
stock of the Corporation elect one or more directors of the Corporation, the
terms of the director or directors elected by such holders shall expire at the
next succeeding annual meeting of stockholders.




E.  In
furtherance, but not in limitation of the powers conferred by statute, the board
of directors is expressly authorized to do the following:




(a)  Designate
one (1) or more committees, each committee to consist of one or more of the
directors of the Corporation and such number of natural persons who are not
directors as the board of directors shall designate, which to the extent
provided in the Resolution, or in the by-laws of the Corporation, shall have and
may exercise the powers of the board of directors in the management of the
business and affairs of the Corporation.




(b)  As
provided by Nevada Revised Statutes 78.140, without repeating the section in
full here, the same is adopted and no contract or other transaction between this
Corporation and any of its officers, agents or directors shall be deemed void or
voidable solely for that reason.  The balance of the provisions of the
code section cited, as it now exists, allowing such transactions, is hereby
incorporated into this Article as though more fully set forth, and such Article
shall be read and interpreted to provide the greatest latitude in its
application.




(c)  As
provided by Nevada Revised Statutes 78.207, without repeating the section in
full here, the board of directors shall have the authority to change the number
of shares of any class or series, if any, of authorized stock by increasing or
decreasing the number of authorized shares of the class or series and
correspondingly increasing or decreasing the number of issued and outstanding
shares of the same class or series held by each stockholder of record at the
effective date and time of the change by a resolution adopted by the board of
directors, without obtaining the approval of the stockholders.




(d)  If
a proposed increase or decrease in the number of issued and outstanding shares
of any class or series would adversely alter or change any preference or any
relative or other right given to any other class or series of outstanding
shares, then the decrease must be approved by the vote, in addition to any vote
required, of the holders of shares representing a majority of the voting power
of each class or series whose preference or rights are adversely affected by the
increase or decrease, regardless of limitations or restrictions on the voting
power thereof.  The increase or decrease does not have to be approved
by the vote of the holders of shares representing a majority of the voting power
in each class or series whose preference or rights are not adversely affected by
the increase or decrease.




(e)
Special meetings of the stockholders may be called only by the board of
directors or a committee of the board of directors that is delegated the power
to call special meetings by the board of directors.




(f)  Change
the name of the Corporation at any time and from time to time to any name
authorized by Nevada Revised Statutes 78.039.

















78







ARTICLE
XI




REMOVAL
OF DIRECTORS




Notwithstanding
any other provision of these Articles or the bylaws of the Corporation, any
director or all the directors of a single class (but not the entire board of
directors) of the Corporation may be removed, at any time, but only for cause
and only by the affirmative vote of the holders of at least 75% of the voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that
purpose.  Notwithstanding the foregoing, whenever the holders of any
one or more series of preferred stock of the Corporation shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the preceding provisions of this Article XI shall not apply with respect to the
director or directors elected by such holders of preferred stock.




ARTICLE
XII




INDEMNIFICATION




Any
person who was or is a party or is or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (whether or not by or in the right of
the Corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, incorporator, employee,
partner, trustee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the Corporation to the full extent then permitted
by law against expenses (including counsel fees and disbursements), judgments,
fines (including excise taxes assessed on a person with respect to an employee
benefit plan), and amounts paid in settlement incurred by him in connection with
such action, suit, or proceeding and, if so requested, the Corporation shall
advance (within two business days of such request) any and all such expenses to
the person indemnified; provided, however, that (i) the foregoing obligation of
the Company shall not apply to a claim that was commenced by the person
indemnified without the prior approval of the Board of Directors. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article XV. Such right of
indemnification shall continue as to a person who has ceased to be a director,
officer, incorporator, employee, partner, trustee, or agent and shall inure to
the benefit of the heirs and personal representatives of such a person. The
indemnification provided by this Article XV shall not be deemed exclusive of any
other rights which may be provided now or in the future under any provision
currently in effect or hereafter adopted of the bylaws, by any agreement, by
vote of stockholders, by resolution of disinterested directors, by provisions of
law, or otherwise.




ARTICLE
XIII




LIMITATIONS
ON DIRECTORS' LIABILITY




No
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for damages for breach of fiduciary duty as a
director or officer, except: (A) for acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law; or (B) the payment of
distributions in violation of Nevada Revised Statutes Sec.78.300.  If
the General Corporation law of the State of Nevada is amended after the date of
filing of these Articles to further eliminate or limit the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of the State of Nevada, as so amended. Any repeal or modification of the
foregoing paragraph by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.




ARTICLE
XIV




AMENDMENT
OF BYLAWS




In
furtherance and not in limitation of the powers conferred by statute, the board
of directors of the Corporation is expressly authorized to adopt, repeal, alter,
amend and rescind the bylaws of the Corporation by a vote of two-thirds of the
board of directors.




ARTICLE
XV




AMENDMENT
OF ARTICLES OF INCORPORATION




Subject
to the provisions hereof, the Corporation reserves the right to repeal, alter,
amend or rescind any provision contained in these Articles in the manner now or
hereafter prescribed by law, and all rights conferred on stockholders herein are
granted subject to this reservation.




















_______________________________________________


Created by 10KWizard
    www.10KWizard.comSource: Integrated Media Hol, 10-K,
April 15, 2009





79




CERISTAR, INC.PROMISSORY NOTE
 $175,000.00
 Original
Issue Date: November 25, 2003
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices
at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street,
P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as
may be designated by the holder hereof in writing, the principal sum of ONE
HUNDDRED, SEVENTY-FIVE THOUSAND DOLLARS ($175,000), without interest, except as
specified herein.
  1.  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120th day
following the issue date of this Note. The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by
law. For purposes of this Note, the Repayment Percentage shall mean one and
one-half percent (1.5%) of the outstanding principal amount of this Note. All
payments by the Maker on account of principal, premium, interest or fees
hereunder shall be made in money of the United States of America that at the
time of payment is legal tender, by wire transfer of immediately available
funds.
  2.  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum. Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law.
  3.  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a.  Working
Capital
 b.  Employee/Management
Compensation
 c.  Equipment
Lease/Purchase Payments
 d.  Consulting
Fees
  4. Conversion.
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock").
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium).
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price. Fractional shares will not be issued.
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder. For purposes of this Note,
the "Conversion Price" shall mean the product of (a) .75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date.
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice. The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date."
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder. Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company.
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date.
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder' is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder' on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1,0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice. The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4.
  (h)  If any
adjustment to the Conversion Price to be made pursuant to clause (j) of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment.
  80
 (i)         Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time. All shares of Common Stock issued upon conversion of this Note
shall be
  fully
paid and nonassessable. The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be.
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows:
  (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.
 
 (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place. In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire. For purposes of this
Agreement, "Organic Change" means any recapitalization, reorganization,
reclassification, consolidation, merger, or sale of all or substantially all of
the Maker's assets to another Person (as defined below), or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock; and
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder. The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission.
  81
 (1)      Unless
the Note is under Default (as defined in Section 5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(n) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following the
conversion. For purposes of the foregoing proviso, the aggregate number of
shares of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act.
  5.  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable; (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due; (c) the Maker shall make a general
assignment for the benefit of creditors; (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing; then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver.
  6.  NEGATIVE
COVENANTS. The provisions of this Section 6 shall remain in effect so long as
any of the Bridge Notes shall remain outstanding
  (a)     Restrictions
on Debt. Hereafter, the Company will not create, assume, or incur or become or
at any time be liable in respect of, any Debt, except: Bridge Notes issued
pursuant to this Agreement; Debt outstanding on the date hereof to the extent
reflected on the most recent balance sheet of the Company or incurred in the
ordinary course of business thereafter and debt incurred to accomplish duties
and obligations of the Company under contracts to provide customer premises
equipment, services, or other related obligations to existing or new customers
of the Company as a result of business contracts; Purchase money security
interests not to exceed $250,000 per year; and Secured debt in an aggregate
principal amount up to $20 million.
 (i)      Definition
of Debt. For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean: all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument; all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise; all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable; all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness; all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession of such property all bankers' acceptances
and letters of credit; and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA
  (b)  Restrictions
on Equity Sales. The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below.
  (c)  Restrictions
on Transactions with Affiliates. The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business The Company will not increase the salary of any executive officer, or
the remuneration of any director.
  82
 (d)  Restrictions
on Investments. Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided
however,that the Company may enter into contracts relating to the
expansion of its business and may invest its Excess Cash as defined below in:
securities issued or directly and fully guaranteed or insured by the United
States government or any agency thereof having maturities of not more than one
year from the date of acquisition; certificates of deposit or eurodollar
certificates of deposit, having maturities of not more than one hundred eighty
days from the date of acquisition, or one year from the date of acquisition in
the case of certificates of deposit or eurodollar certificates of deposit being
used to secure the Company's reimbursement obligations under letters of credit
(provided that nothing contained herein shall be construed to permit letters of
credit not otherwise permitted under this Agreement); commercial paper of any
Person that is not a subsidiary or an Affiliate of the Company, maturing within
one hundred eiahtv davs after
the date of acquisition0 bank
loan participations* and money market instruments having maturities of not more
than one hundred eighty days from the date of acquisition, or one year from the
date of acquisition in the case of money market instruments being used to secure
the Company's reimbursement obligations under letters of credit (provided that
nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement); in all cases of such credit quality
as a prudent business person would invest in. As used in this Section, "Excess Cash"shall mean that
portion of the proceeds of the Bridge Notes that has not been invested as
described in Section 3 hereof.
  (e)     Change
in Business; Operations. The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in Business").The business of
the Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity.
  (f)     Exceptions
With Consent of Purchasers. The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in the sole discretion of Purchaser, satisfactorily responding to any
Purchaser inquiries about the requested action. The Company may undertake any
such requested action otherwise prohibited by this Section 6 only after
receiving the advance written consent of Purchaser hereunder.
  7.  No Waiver: Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder.
  8.  Costs and Expenses.
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  9.  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
  10.  Governing Law; Jurisdiction
and Service of Process. This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process. Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served.
 
 11.  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  83
 12.  Notice, Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof.
  13.  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  14.  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
  15.  Set-off.
Counterclaim. In the event the holder hereof seeks to enforce its rights
under this Note, the Maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder.
  16.  Headings. The
headings in this Note are solely for the convenience of reference and shall be
given no effect in the construction or interpretation of this Note.
 
 
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as date first
above written.
 [CORPORATE
SEAL]
 
 
 
 COUNTY OF
SALT LAKE ) STATE OF UTAH ) Subscribed and sworn to
before me this
25thdav of
November 2003
  Notary
Public Residing in Salt Lake City, Utah / My Commission Expires:
1/15/2007
   84
  EXHIBIT A
  CONVERSION NOTICE
  Reference
is made to terms and conditions of the Note, dated November 25,2003, in the
principal amount of $175,000.00, and registered in the name of SovCap Equity
Partners, Ltd {NAME OF HOLDER} (the "Note").In accordance with
and pursuant to the terms of the Note, the undersigned hereby elects
to
 convert
$                            in
principal amount of the Note into shares of Common Stock, $ 001 par
value
 per share
(the "Common Stock"),of
the Company, by tendering the original Note specified below as of the date
specified below.
  Date of
Conversion:
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
  Please
confirm the following information:
  Conversion
Price:
  Number of
shares of Common Stock to be issued:
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address:
  Issue
to:
 
  Facsimile
Number:
  Authorization:
  By:
 Title:
 Dated:
  If
electronic book entry transfer, complete the following:
 Account
Number:
 Transaction
Code
Number:
 
 
 
 
 
 
 COMPANY
ACKNOWLEDGEMENT TO CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED: CERISTAR,
INC.
 
 
  By:___________________________________
 Name:
Title:
  Date:
  85
  IRREVOCABLE
STOCK OR BOND POWER
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖    If
stock, complete this portion:
 
  shares
of
the                                                       stock
of_
 
  represented
by certificate(s) Number(s)_
 
  In the
name of the undersigned on the books of said company.
 
 
  ❖    If Bonds,
complete this portion:
  bonds ofIMHI (fka
Ceristar, Inc.)
 
 
 
 
  in the principal amount
of  $175,000Number(s) November 25,
2003
 
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 Date
  86
 
  EXHIBIT 10.3
  CERISTAR, INC. PROMISSORY
NOTE
 $35,000.00
 Original
Issue Date: May 28, 2004
 
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices
at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street,
P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as
may be designated by the holder hereof in writing, the principal sum of
THIRTY-FIVE THOUSAND DOLLARS ($35,000.00), without interest, except as specified
herein.
  1.  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120th day
following the issue date of this Note. The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by
law. For purposes of this Note, the Repayment Percentage shall mean one and
one-half percent (1.5%) of the outstanding principal amount of this Note. All
payments by the Maker on account of principal, premium, interest or fees
hereunder shall be made in money of the United States of America that at the
time of payment is legal tender, by wire transfer of immediately available
funds.
  2.  Interest. Without
limiting any of the tights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum. Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law.
  3.  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a.  May 2004
budget, as provided by the Company in attached Exhibit B
  b.  Consulting
fees, as agreed
  4. Conversion.
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock").
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium).
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price. Fractional shares will not be issued.
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder. For purposes of this Note,
the "Conversion Price" shall mean the product of (a) .75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date.
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice. The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date."
  87
 (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder. Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company.
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date.
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1.0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice. The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4.
  (h)  If any
adjustment to the Conversion Price to be made pursuant to clause (j) of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment.
 
  (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time. All shares of Common Stock issued upon conversion of this Note
shall be
  fully
paid and nonassessable. The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be.
 
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows:
 
  88
 (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.
  (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place. In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation
or
 merger or
the entity purchasing such assets assumes, by written instrument (in form
and
  substance
satisfactory to Holder), the obligation to deliver to Holder such shares of
stock, securities, or assets as, in accordance with the foregoing provisions,
that Holder may be entitled to acquire. For purposes of this Agreement, "Organic
Change" means any recapitalization, reorganization, reclassification,
consolidation, merger, or sale of all or substantially all of the Maker's assets
to another Person (as defined below), or other similar transaction which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities, or assets
with respect to or in exchange for Common Stock; and "Person" means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, and a government or any
department or agency thereof.
 
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder. The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission.
 
  (1)      Unless
the Note is under Default (as defined in Section 5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following the
conversion. For purposes of the foregoing proviso, the aggregate number of
shares of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act.
  5.  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable; (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due; (c) the Maker shall make a general
assignment for the benefit of creditors; (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing; then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver.
  6.  NEGATIVE
COVENANTS. The provisions of this Section 6 shall remain in effect so long as
any of the Bridge Notes shall remain outstanding.
 
  (a)     Restrictions
on Debt. Hereafter, the Company will not create, assume, or incur or become or
at any time be liable in respect of, any Debt, except: Bridge Notes issued
pursuant to this Agreement; Debt outstanding on the date hereof to the extent
reflected on the most recent balance sheet of the Company or incurred in the
ordinary course of business thereafter and debt incurred to accomplish duties
and obligations of the Company under contracts to provide customer premises
equipment, services, or other related obligations to existing or new customers
of the Company as a result of business contracts; Purchase money security
interests not to exceed $250,000 per year; and Secured debt in an aggregate
principal amount up to $20 million.
 (i)      Definition
of Debt. For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean: all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument; all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise; all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable; all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness; all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  89
 retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession of such property all bankers' acceptances
and letters of credit; and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA.
 
  (b)     Restrictions
on Equity Sales. The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below.
 
 (c)     Restrictions
on Transactions with Affiliates. The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business. The Company will not increase the salary of any executive officer, or
the remuneration of any director.
 
  (d)     Restrictions
on Investments. Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition; certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of deposit or eurodollar certificates of deposit being used to
secure the Company's reimbursement obligations under letters of credit (provided
that nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement); commercial paper of any Person that
is not a subsidiary or an Affiliate of the Company, maturing within one hundred
eighty days after the date of acquisition; bank loan participations; and money
market instruments having maturities of not more than one hundred eighty days
from the date of acquisition, or one year from the date of acquisition in the
case of money market instruments being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement); in all cases of such credit quality as a
prudent business person would invest in. As used in this Section, "Excess Cash"shall mean that
portion of the proceeds of the Bridge Notes that has not been invested as
described in Section 3 hereof.
 
  (e)     Change
in Business; Operations. The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in
  Business").The business of
the Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity.
 
  (f)      Exceptions
With Consent of Purchasers. The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action. The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder.
  7.  No Waiver; Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder.
  8.  Costs and Expenses.
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  9.  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
  10.  Governing Law; Jurisdiction
and Service of Process. This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process. Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served.
  11.  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  90
 12.  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof.
  13.  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  14.  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
  15.  Set-off,
Counterclaim. In the event the holder hereof seeks to enforce its rights
under this Note, the Maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder.
  16.  Headings. The
headings in this Note are solely for the convenience of reference and shall be
given no effect in the construction or interpretation of this Note.
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as date first
above written.
 
 
  CERISTAR,
INC.
 
 
 
  [CORPORATE
SEAL]
  91
  EXHIBIT A
 
 CONVERSION
NOTICE
  Reference
is made to terms and conditions of the Note, dated April 14, 2004, in the
principal amount of $35,000.00, and registered in the name of SovCap Equity
Partners, Ltd {NAME OF HOLDER} (the "Note").In accordance with
and pursuant to the terms of the Note, the undersigned hereby elects
to
 convert
$                                in
principal amount of the Note into shares of Common Stock, $.001 par
value
 per share
(the "Common Stock"),of
the Company, by tendering the original Note specified below as of the date
specified below.
 
  Date of
Conversion:
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please
confirm the following information:
 
  Conversion
Price:
 
  Number of
shares of Common Stock to be issued:
 
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address:
 
  Issue
to:
 
 
  Facsimile
Number:
 
  Authorization:
 
  By:
  Title:
  Dated:
 
  If
electronic book entry transfer, complete the following:
 Account
Number:
 Transaction
Code
Number:
  Date
11/4/07
 Signature
BY:    BARRY W. HERMAN PRESIDENT
 92
  
   COMPANY ACKNOWLEDGEMENT TO
CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED: CERISTAR,
INC.
 
 
  By:
 Name:
Title:
 
  Date:
  
 EXHIBIT
      B CERISTAR BUDGET, DATED APRIL 14,
2004
 Unit
      Name CeriStar, Inc.
      (CTRI)
                Fiscal
      Year 2004
                Budget
      month May 1,
      2004
 Net
      Investment Ending cash balance
 Qwest
     22,000
  22,000
 American
Fork Fiber
   1,500
  1,500
  3,000
 Provo
City utilities
     1,978
  1,978
 Provo
Cable
     1,464
  1,464
 Other/Eschelon
     4,000
  4,000
 Cost
of goods sold
   1,500
  30,942
  32,442
 Salaries
   32,000
  32,000
  64,000
 Commissions
     15,000
  15,000
 Health
insurance
   5,800
    5,800
 Office
rent
   3,967
    3,967
 D&O
Insurance
   5,609
    5,609
 Billing
expenses
   720
    720
 Customer
service
       0
 Employee
expenses
   7,500
  7,500
  15,000
 Audit
& Tax
     5,000
  5,000
 Legal
     20,000
  20,000
 Supplies
     1,000
  1,000
 Marketing
     2,000
  2,000
 Sales
tax
       0
 Website
   1,000
    1,000
 Miscellaneous
     1,000
  1,000
 S.G&A
   56,596
 0
 83,500
 0
 140,096
 Network
capex
   7,300
    7,300
 Move-ins
   13,000
    13,000
 Other
       0
 Test
equipment
       0
 Switch
move to FiberNet
   5,000
    5,000
 Pulver
FreeWorld Dial-up
       0
 Parkway
Phase 2
       0
 Equipment
   25,300
 0
 0
 0
 25,300
 Conference/marketing
   1,000
    1,000
 Aggregate
Networks
   3,000
    3,000
 AlphaWest
Capital
     2,000
  2,000
 Fundraising
       0
 Consulting
expenses
   5,000
    5,000
 Research
       0
 B
of D stipend
       0
 Interest
expense - UTFC
       o
 Interest
expense - Ridgeline
       0
 Other
   9,000
 0
 2,000
 0
 11,000
 Total
Expenses
   92,396
 0
 116,442
 0
 208,838
 FourfhGear
   1,000
    1,000
  Office
Team
   1,500
    1,500
  David
Burns
   500
    500
  Earl
Demorest
       0
  Internal
revenue
       0
  Utah
state tax commission
       0
  Vocal
Data
   10,000
  10,000
  20,000
  Genuity
   500
  500
  1,000
  Ed
Ekstrom
       0
  Dave
Bailey credit card
       0
  American
Banknote
       0
  Westchester
invesment Ptnrs
       0
  George
Kiser, et al
   1,000
    1,000
  Work
Comp
   1,100
    1,100
  Xtend
Communications
   2,500
    2,500
  Swindler,
Berlin
   5,000
    5,000
  Sreve
Stewart
       0
  Accounts
payable
   23,100
 0
 30,500
 0
 53,600
    Total
budget
 Total
budget                             (115,496)0
|          (140,386)                                                   0|(255,882)
 
  Submitted
by:                         Rob
Lester
 Date
Updated:                       May 10,
2004
  Page 12
of 12
 CTRIPromissory
Note_052804
 93
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
  ❖  If
stock, complete this portion:
  shares of
the                                                       stock
of
 represented
by certificate(s)
Number(s)
 In
the name of the undersigned on the books of said company.
  ❖  If
Bonds, complete this portion:
  bonds of IMHI (fka Ceristar,
Inc.)
 
 
  in the principal amount of $
35,000Number(s) May 28,
2009
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
  SOVCAP EQUITY PARTNERS.
LTD
  Signature
 
 
  Date
  Date
11-4-07
  Signature
 BY:
      BARRY W. HERMAN PRESIDENT
 94
  
  CERISTAR, INC. PROMISSORY
NOTE
  $69,000.00
  Original
Issue Date:
 June 16,
2004
 
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices
at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street,
P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as
may be designated by the holder hereof in writing, the principal sum of
SIXTY-NINE THOUSAND DOLLARS ($69,000.00), without interest, except as specified
herein.
  1.  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120th day
following the issue date of this Note. The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by
law. For purposes of this Note, the Repayment Percentage shall mean one and
one-half percent (1.5%) of the outstanding principal amount of this Note. All
payments by the Maker on account of principal, premium, interest or fees
hereunder shall be made in money of the United States of America that at the
time of payment is legal tender, by wire transfer of immediately available
funds.
  2.  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum. Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law.
  3.  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a.
              June
      2004 operating budget, as provided by the Company in attached Exhibit
      B
  b.  Consulting
fees, as agreed
  4. Conversion.
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock").
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium).
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price. Fractional shares will not be issued.
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder. For purposes of this Note,
the "Conversion Price" shall mean the product of (a) .75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date.
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indernnification undertaking with respect to such shares in the case of the
loss, theft, or destruction of this Note) and the originally executed Conversion
Notice. The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date."
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder. Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company.
  95
 (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date.
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1.0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice. The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4.
  (h)  If any
adjustment to the Conversion Price to be made pursuant to clause (j) of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment.
 
  (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time. All shares of Common Stock issued upon conversion of this Note
shall be
  fully
paid and nonassessable. The Maker covenants that if any shares of Common
Stock,
  required
to be reservedfor purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be.
 
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows:
 
  (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.
  96
  (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place. In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire. For purposes of this
Agreement, "Organic Change" means any recapitalization, reorganization,
reclassification, consolidation, merger, or sale of all or substantially all of
the Maker's assets to another Person (as defined below), or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock; and
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
 
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder. The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission.
 
  (1)      Unless
the Note is under Default (as defined in Section 5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following the
conversion. For purposes of the foregoing proviso, the aggregate number of
shares of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act.
  5.  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable; (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due; (c) the Maker shall make a general
assignment for the benefit of creditors; (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing; then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver.
  6.  NEGATIVE
COVENANTS. The provisions of this Section 6 shall remain in effect so long as
any of the Bridge Notes shall remain outstanding.
 
  97
 (a)     Restrictions
on Debt. Hereafter, the Company will not create, assume, or incur or become or
at any time be liable in respect of, any Debt, except: Bridge Notes issued
pursuant to this Agreement; Debt outstanding on the date hereof to the extent
reflected on the most recent balance sheet of the Company or incurred in the
ordinary course of business thereafter and debt incurred to accomplish duties
and obligations of the Company under contracts to provide customer premises
equipment, services, or other related obligations to existing or new customers
of the Company as a result of business contracts; Purchase money security
interests not to exceed $250,000 per year; and Secured debt in an aggregate
principal amount up to $20 million.
 (i)      Definition
of Debt. For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean: all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument; all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise; all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable; all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness; all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession of such property all bankers' acceptances
and letters of credit; and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA.
  (b)  Restrictions
on Equity Sales. The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below.
  (c)  Restrictions
on Transactions with Affiliates. The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business. The Company will not increase the salary of any executive officer, or
the remuneration of any director.
  (d)  Restrictions
on Investments. Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, properly, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition; certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of deposit or eurodollar certificates of deposit being used to
secure the Company's reimbursement obligations under letters of credit (provided
that nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement); commercial paper of any Person that
is not a subsidiary or an Affiliate of the Company, maturing within one hundred
eighty days after the date of acquisition; bank loan participations; and money
market instruments having maturities of not more than one hundred eighty days
from the date of acquisition, or one year from the date of acquisition in the
case of money market instruments being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement); in all cases of such credit quality as a
prudent business person would invest in. As used in this Section, "Excess Cash"shall mean that
portion of the proceeds of the Bridge Notes that has not been invested as
described in Section 3 hereof.
 
  (e)     Change
in Business; Operations. The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in
  Business").The business of
the Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity.
 
  98
 (f)     Exceptions
With Consent of Purchasers. The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action. The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder.
  7.  No Waiver; Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder.
  8.  Costs and Expenses.
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether, or not legal proceedings are initiated.
  9.  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
  10.  Governing Law; Jurisdiction
and Service of Process. This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process. Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served.
  11.  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  12.  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof.
  13.  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  14.  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
  15.  Set-off,
Counterclaim. In the event the holder hereof seeks to enforce its rights
under this Note, the Maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder.
  16.  Headings. The
headings in this Note are solely for the convenience of reference and shall be
given no effect in the construction or interpretation of this Note.
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written.
 
 
 
 
 99
 EXHIBIT A
 CONVERSION
NOTICE
  Reference
is made to terms and conditions of the Note, dated April 14, 2004, in the
principal amount of $69,000.00, and registered in the name of SovCap Equity
Partners, Ltd. {NAME OF HOLDER} (the "Note").In accordance with
and pursuant to the terms of the Note, the undersigned hereby elects
to
 convert
$                                in
principal amount of the Note into shares of Common Stock, $.001 par
value
 per share
(the "Common Stock"),of
the Company, by tendering the original Note specified below as of the date
specified below.
 
  Date of
Conversion:
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please
confirm the following information:
 
  Conversion
Price:
  Number of
shares of Common Stock to be issued:
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address:
 
  Issue
to:
 
 
  Facsimile
Number:
 
  Authorization:
 
  By:
  Title:
  Dated:
 
  If
electronic book entry transfer, complete the following:
 Account
Number:
 Transaction
Code
Number:
  CTRIPromissory
Note_061604                                                                                                                   
- 1 -
 100
  
  
 COMPANY
ACKNOWLEDGEMENT TO CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED: CERISTAR,
INC.
 
 
  By:
 Name:
Title:
 
  Date:
  CTRIPromissory
Note_061604
 101
 EXHIBIT
B CERISTAR JUNE OPERATING BUDGET
  Supplier
 United
Healthcare
  Ridgeline
 Qwest
 Vocal
Data
  Provo
Cable
 Provo
City Utilities
 Amer City
Fork
  Eschelon
 Elliott
Bay Eng
 Highland
Lakes
 Advanced
Tel Group
 
 
 $5,924.00
$5,500.00 $25,000.00 $10,000.00 $1,400.00 $2,000.00 $1,500.00 $2,400.00 $880.00
$728.00 $521.99
  Amount
Current Amount Past Due Total
 $5,924.00
 $5,500.00
Parkway Eq. $20,000.00 $45,000.00 $9,159.00 $19,159.00 $1,528.16 $2,928.16
$2,015.34 $4,015.34
  $1,500.00
Fiber Lease $2,400.00 Bandwidth $880.00 $728.00 Billing $521.99 Long
Distance
 
  
 
  Wired
Attorney SEC Attorney
 
  WIRED
Settlement
 
 $55,853.99
 $35,358.95
$91,212.94
 
  $10,000.00
$10,000.00
  90000
30000 20000 20000 20000
 25000
Equipment replacement
 Payroll
      Schedule
 Sub-total
 
  Medicare
                    
                    
                    Soc
      Sec
                    
                    
                    Payday
                      Totals
                    
                    
                    Annual
      Totals
                    
                    
                    Annual43.50
                    
                    
                    
                    166.00
                    
                    
                    
                    3,229.50
                    
                    
                    
                    83,967
                    
                    
                    
                    78,00036.25
                    
                    
                    
                    185.00
                    
                    
                    
                    2,691.25
                    
                    
                    
                    69,973
                    
                    
                    
                    65,00041.83
                    
                    
                    
                    178.85
                    
                    
                    
                    3,105.29
                    
                    
                    
                    80,738
                    
                    
                    
                    75,00018.07
                    
                    
                    
                    77.26
                    
                    
                    
                    1,341.48
                    
                    
                    
                    34,379
                    
                    
                    
                    32,40033.46
                    
                    
                    
                    143.08
                    
                    
                    
                    2,484.23
                    
                    
                    
                    64,590
                    
                    
                    
                    60,00033.46
                    
                    
                    
                    143.08
                    
                    
                    
                    2,484.23
                    
                    
                    
                    64,590
                    
                    
                    
                    60,00015.62
                    
                    
                    
                    66.77
                    
                    
                    
                    1,159.31
                    
                    
                    
                    30,142
                    
                    
                    
                    28,00033.46
                    
                    
                    
                    143.08
                    
                    
                    
                    2,484.23
                    
                    
                    
                    64,590
                    
                    
                    
                    60,00033.46
                    
                    
                    
                    14108
                    
                    
                    
                    2,484.13
                    
                    
                    
                    64,590
                    
                    
                    
                    60,0002,000.00
                    
                    
                    
                    48,000
                    
                    
                    
                    48,00023.463,75
                    
                    
                    
                    606,058
                    
                    
                    
                    566,400
  
 102
  IRREVOCABLE
STOCK OR BOND POWER
 
 
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
  ❖  if
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s)
Number(s)
 
  In
the name of the undersigned on the books of said company,
  ❖  If
Bonds, complete this portion:
  bonds of IMHI (fka Ceristar,
Inc.)
 
 
  in
the principal amount of $ 69,000Number(s)
June 16, 2004
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 
 
 
  Date
 Signature
BY:    BARRY W. HERMAN PRESIDENT
  11/4/07
 Date
  103
 CERISTAR,
INC PROMISSORY NOTE
 
  $55,000
00
 
 Original
Issue Date July 1,2004
 
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC, a Delaware corporation with offices at
50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD, a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd, Cumberland House #27, Cumberland Street, P O
Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may
be designated by the holder hereof in writing, the principal sum of FIFTY-FIVE
THOUSAND DOLLARS ($55,000.00),without interest, except as specified herein
  1  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120th day
following the issue date of this Note The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by law
For purposes of this Note, the Repayment Percentage shall mean one and one-half
percent (15%) of the outstanding principal amount of this Note All payments by
the Maker on account of principal, premium, interest or fees hereunder shall be
made in money of the United States of America that at the time of payment is
legal tender, by wire transfer of immediately available funds
  2  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  3  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
   
 Wired,
LLC Settlement Agreement, Commitment Letter attached as Exhibit B
 Pemberley
development fiber-to-the-premises, equipment installation Consulting fees, as
agreed
   -12-
 CTRIPromissory
Note_061604
 104
  
  4 Conversion
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock")
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium)
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price Fractional shares will not be issued
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder For purposes of this Note,
the "Conversion Price" shall mean the product of (a) 75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date "
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date
  (g)  If the
Maker shall fail to issue to Holder within five (5)business days following
the date of receipt by the Maker or the Transfer Agent of this Note to be
converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion
of this Note, in addition to all other available remedies which such Holder may
pursue hereunder, the Maker shall pay additional damages to Holder on each day
after the fifth (5th) business day following the date of receipt by the Maker or
the Transfer Agent an amount equal to 1.0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4
  (h)  If anv
adjustment to the Conversion Price to be made pursuant to clause ffi of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment
 
  105
 (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time All shares of Common Stock issued upon conversion of this Note shall
be
  fully
paid and nonassessable The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be
 
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows:
 
  (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased
  (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this
Agreement, "Organic Change" means any recapitalization, reorganization,
reclassification, consolidation, merger, or sale of all or substantially all of
the Maker's assets to another Person (as defined below), or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock, and
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
 
  106
 (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission
 
  (1)      Unless
the Note is under Default (as defined in Section .5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9 99% of the outstanding shares of the Common Stock following the
conversion For purposes of the foregoing proviso, the aggregate number of shares
of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 19.34 Act
  5       Events of Default If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable, (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due, (c) the Maker shall make a general
assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver
 
  6.        NEGATIVE
COVENANTS The provisions of this Section 6 shall remain in effect so long as any
of the Bridge Notes shall remain outstanding
 
  (a)     Restrictions
on Debt   Hereafter, the Company will not create, assume, or
incur or become or at any time be liable in respect of, any Debt, except Bridge
Notes issued pursuant to this Agreement, Debt outstanding on the date hereof to
the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish
duties and obligations of the Company under contracts to provide customer
premises equipment, services, or other related obligations to existing or new
customers of the Company as a result of business contracts, Purchase money
security interests not to exceed $250,000 per year, and Secured debt in an
aggregate principal amount up to $20 million
  (i)      Definition
of Debt For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean: all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument, all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise, all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable, all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Per son, even though such Person
has not assumed or become liable for the payment of such indebtedness, all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession of such property all bankers' acceptances
and letters of credit, and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA
  107
 (b)  Restrictions
on Equity Sales The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below
  (c)  Restrictions
on Transactions with Affiliates, The Company will not make anv loans or advances
to anv of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business The Company will not increase the salary of any executive officer, or
the remuneration of any director
  (d)  Restrictions
on Investments Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition, certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of deposit or eurodollar certificates of deposit being used to
secure the Company's reimbursement obligations under letters of credit (provided
that nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement), commercial paper of any Person that
is not a subsidiary or an Affiliate of the Company, maturing within one hundred
eighty days after the date of acquisition, bank loan participations, and money
market instruments having maturities of not more than one hundred eighty days
from the date of acquisition, or one year from the date of acquisition in the
case of money market instruments being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement), in all cases of such credit quality as a
prudent business person would invest in As used in this Section, "Excess Cash"shall mean that
portion of the proceeds of the Bridge Notes that has not been invested as
described in Section 3 hereof
 
  (e)     Change
in Business, Operations The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in
  Business")The business of the
Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity
 
  (f)      Exceptions
With Consent of Purchasers. The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder
  7  No Waiver. Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  8  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  9  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  10  Governing Law. Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served
  108
 11  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  12  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof
  13  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
 
  14.     Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  15  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  16  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
   109
 
 EXHIBIT
A- CONVERSION NOTICE
  Reference
is made to terms and conditions of the Note, dated July 1, 2004, in the
principal amount of $5.5,000 00 (the "Note"),and registered in the
name of SovCap Equity Partners, Ltd In accordance with
 and
pursuant to the terms of the Note, the undersigned hereby elects to convert
$in
 principal
amount of the Note into shares of Common Stock, $ 001 par value per share (the
"CommonStock"), of the
Company, by tendering the original Note specified below as of the date specified
below
 
  Date of
Conversion
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please
confirm the following information:
 
  Conversion
Price
 
  Number of
shares of Common Stock to be issued:
 
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the
    Issue
to:
 
 
  Facsimile
Number
  Authorization:
 
  By:
  Title
 Dated:
 
  If
electronic book entry transfer, complete the following:
 Account
Number
 Transaction
Code
Number:
  -2-
  CTRIPromissory
Note_070104
 110
  
  COMPANY
ACKNOWLEDGEMENT TO CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED CERISTAR, INC.
 
 
 
  By:
 Name
Title
 
  Date;
  - 11
-
 CTRJ_Promissory
Note_070104
 111
  IRREVOCABLE
STOCK OR BOND POWER
 
 
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖   If
stock, complete this portion:
 
  shares
of
the                                                       stock
of_
 
  represented
by certificate(s) Number(s)_
 
  In
the name of the undersigned on the books of said company.
 
 
  ❖    If
Bonds, complete this portion:
  bonds of   IMHI (fka
Ceristar, Inc.)
  
  in
 
 the
principal amount of $ 55,000Number(s) July 1, 2004
 
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 Signature
Date BY:    BARRY W. HERMAN
  PRESIDENT
  112
 CERISTAR,
INC. PROMISSORY NOTE
 
  $35,000.00
 
 Original
Issue Date July 9, 2004
 
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC , a Delaware corporation with offices
at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD, a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street, P.O
BoxN-10818, Nassau, New Providence, The Bahamas or at such other place as may be
designated by the holder hereof in writing, the principal sum of THIRTY-FIVE
THOUSAND DOLLARS ($35,000.00), without interest, except as specified
herein
  1  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120th day
following the issue date of this Note The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by
law. For purposes of this Note, the R-epayment Percentage shall mean one and
one-half percent (1.5%) of the outstanding principal amount of this Note All
payments by the Maker on account of principal, premium, interest or fees
hereunder shall be made in money of the United States of America that at the
time of payment is legal tender, by wire transfer of immediately available
funds
  2  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law.
  3  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a   July
9, 2004 payroll and other agreed expenses b   Consulting fees, as
agreed 4. Conversion
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock")
  (b)  If the
Holder- elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium)
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price Fractional shares will not be issued
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder For' purposes of this Note,
the "Conversion Price" shall mean the product of (a) 75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Alaker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice. The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date "
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder. Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1.0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4
  (h)  If any
adjustment to the Conversion Price to be made pursuant to clause (j) of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment
 
 113
  (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time AH shares of Common Stock issued upon conversion of this Note shall
be
  fully
paid and nonassessable The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be
 
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows
 
  (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased
  (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this
Agreement, "Organic Change" means any recapitalization, reorganization,
reclassification, consolidation, merger, or sale of all or substantially all of
the Maker's assets to another Person (as defined below), or other similar
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock, and
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
 
  114
 (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission
 
  (1)      Unless
the Note is under Default (as defined in Section 5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9 99% of the outstanding shares of the Common Stock following the
conversion For purposes of the foregoing proviso, the aggregate number of shares
of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 1.3(d) of the 1934 Act
  5  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable, (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due, (c) the Maker shall make a general
assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to
 
  together
with interest accrued thereon, without presentment, demand, protest or notice,
all of which are hereby waiver
  6  NEGATIVE
COVENANTS. The provisions of this Section 6 shall remain in effect so long as
any of the Bridge Notes shall remain outstanding
 
  (a)     Restrictions
on Debt   Hereafter, the Company will not create, assume, or
incur or become or at any time be liable in respect of, any Debt, except: Bridge
Notes issued pursuant to this Agreement, Debt outstanding on the date hereof to
the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish
duties and obligations of the Company under contracts to provide customer
premises equipment, services, or other related obligations to existing or new
customers of the Company as a result of business contracts, Purchase money
security interests not to exceed $250,000 per year, and Secured debt in an
aggregate principal amount up to $20 million
  (i)      Definition
of Debt For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument, all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise, all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable, all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness, all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession of such property all bankers' acceptances
and letters of credit, and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA
  (b)  Restrictions
on Equity Sales The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below
  (c)  Restrictions
on Transactions with Affiliates The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business The Company will not increase the salary of any executive officer, or
the remuneration of any director
  115
 (d)  Restrictions
on Investments Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition, certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of deposit or eurodollar certificates of deposit being used to
secure the Company's reimbursement obligations under letters of credit (provided
that nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement), commercial paper of any Person that
is not a subsidiary or an Affiliate of the Company, maturing within one hundred
eighty days after the date of acquisition, bank loan participations, and money
market instruments having maturities of not more than one hundred eighty days
from the date of acquisition, or one year from the date of acquisition in the
case of money market instruments being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement), in all cases of such credit quality as a
prudent business person would invest in As used in this Section, "Excess Cash"shall mean that portion
of the proceeds of the Bridge Notes that has not been invested as described in
Section 3 hereof
 
  (e)     Change
in Business, Operations The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in
  Business")The business of the
Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity
 
  (f)      Exceptions
With Consent of Purchasers The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder
  7  No Waiver; Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  8  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  9  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  10  Governing Law, Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served
  116
 11  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  12  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof.
  13  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  14  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  15  Set-off, Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  16  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
    117
 
 EXHIBIT A
  CONVERSION NOTICE
  Reference
is made to terms and conditions of the Note, dated July 9,2004, in the principal amount of $35,000 00 (the "Note"),and registered in the
name of SovCap Equity Partners, Ltd In accordance with
 and
pursuant to the terms of the Note, the undersigned hereby elects to convert
$in
 principal
amount of the Note into shares of Common Stock, $.001 par value per share (the
"CommonStock"), of the
Company, by tendering the original Note specified below as of the date specified
below
  Date of
Conversion
  Principal
Amount of Note to be converted
 Redemption
Premium
 Accrued
Interest and/or Fees
 Total
Amount of Note to be Converted
  Please
confirm the following information:
 Conversion
Price:
  Number of
shares of Common Stock to be issued
 
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the
 
 
  Issue
to:
 
 
  Facsimile
Number
 
  Authorization:
 
  By:
 Title
  Dated
 
  If
electronic book entry transfer, complete the following
 Account
Number:
 Transaction
Code
Number:
  118
  
 COMPANY
ACKNOWLEDGEMENT CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED CERISTAR, INC.
 
 
 
  By
 Name:
Title
 
  Date:
  - 11
-
 CTRI_Promissory
Note_070904
 119
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  If
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s) Number(s)_
 
  In the
name of the undersigned on the books of said compay.
 
 
  If
Bonds, complete this portion:
 
  bonds of IMHI (fka Ceristar,
Inc.)
 
 
  in the principal amount of
$35,000Number(s)  July 9,
2004
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 Date
 Date
  Signature
BY:    BARRY W. HERMAN PRESIDENT
 120
   CERISTAR,
INC. PROMISSORY NOTE
 $36,300.00
 
 Original
Issue Date: August 23, 2004
 
 
  FOR VALUE
RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices
at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"),
unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a
Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street,
P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as
may be designated by the holder hereof in writing, the principal sum of
THIRTY-SIX THOUSAND, THREE HUNDRED DOLLARS ($36,300.00), without interest,
except as specified herein.
  1.  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the 120ta day
following the issue date of this Note. The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time. Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by
law. For purposes of this Note, the Repayment Percentage shall mean one and
one-half percent (1.5%) of the outstanding principal amount of this Note. All
payments by the Maker on account of principal, premium, interest or fees
hereunder shall be made in money of the United States of America that at the
time of payment is legal tender, by wire transfer of immediately available
funds.
  2.  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum. Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law.
  3.  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a.  Operating
expenses, as agreed
 b.  Payroll
 c.  Consulting
fees, as agreed
   CTRIPromissory
Note_082304
 121
 4. Conversion
  
  (a)  At any
time after the date that is 120 days following the issue date of this Note and
from time to time, the Holder may convert all or any portion of this Note,
together with the Repayment Percentage, and accrued and unpaid interest and fees
due on this Note (the "Conversion Amount") into shares of common stock of the
Maker (the "Common Stock").
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium).
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price. Fractional shares will not be issued.
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder. For purposes of this Note,
the "Conversion Price" shall mean the product of (a) .75 and (b) the average
closing bid price of the Common Stock for the five trading days ending on the
trading day immediately preceding the Conversion Date.
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice. The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date."
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder. Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company.
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date.
  (a)
  -2-
 CTRIPromissory
Note_082304
 122
  
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder' on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1.0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice. The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4.
  (h)  If any
adjustment to the Conversion Price to be made pursuant to clause (j) of this
Section 4 becomes effective immediately after a record date for an event as
therein described, and conversion occurs prior to such event but after the
record date, the Maker may defer issuing, delivering, or paying to Holder any
additional shares of Common Stock or check for any cash remainder required by
reason of such adjustment until the occurrence of such event, provided that the
Maker delivers to Holder a due bill or other appropriate instrument evidencing
the Holders' right to receive such additional shares or check upon the
occurrence of the event giving rise to the adjustment.
 
  (i)          Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time. All shares of Common Stock issued upon conversion of this Note
shall be
  fully
paid and nonassessable. The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be.
 
  (j)     The
Conversion Price shall be subject to adjustment from time to time
as
  follows:
 
  (i)      If
the Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.
  (ii)     Prior
to the consummation of any Organic Change (as defined below), the Maker will
make appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place. In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and
 satisfactory
to Holder), the obligation to deliver to Holder such shares of stock,
securities, or assets as, in accordance with the foregoing provisions, that
Holder may be entitled to acquire. For purposes of this Agreement, "Organic
Change" means any recapitalization, reorganization, reclassification,
consolidation, merger, or sale of all or substantially all of the Maker's assets
to another Person (as defined below), or other similar transaction which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities, or assets
with respect to or in exchange for Common Stock; and "Person" means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, and a government or any
department or agency thereof.
 
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder. The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission.
 
  123
 (1)      Unless
the Note is under Default (as defined in Section 5 of the Note) or unless prior
to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event
shall the Holder be entitled to convert the Notes in excess of that number,
which upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following the
conversion. For purposes of the foregoing proviso, the aggregate number of
shares of common stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion or
exercise of the Notes with respect to which the determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(i) conversion of the remaining unconverted Notes owned by the Holder or its
affiliates, and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the holder and it affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(1), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act.
  5.  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable; (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due; (c) the Maker shall make a general
assignment for the benefit of creditors; (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing; then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver.
  6.  NEGATIVE
COVENANTS. The provisions of this Section 6 shall remain in effect so long as
any of the Bridge Notes shall remain outstanding.
 
  (a)     Restrictions
on Debt. Hereafter, the Company will not create, assume, or incur or become or
at any time be liable in respect of, any Debt, except: Bridge Notes issued
pursuant to this Agreement; Debt outstanding on the date hereof to the extent
reflected on the most recent balance sheet of the Company or incurred in the
ordinary course of business thereafter and debt incurred to accomplish duties
and obligations of the Company under contracts to provide customer premises
equipment, services, or other related obligations to existing or new customers
of the Company as a result of business contracts; Purchase money security
interests not to exceed $250,000 per year; and Secured debt in an aggregate
principal amount up to $20 million.
 (i)      Definition
of Debt. For purposes of this Agreement, the capitalized term "Debt" of any
Person shall mean: all indebtedness of such Person for borrowed money, including
without limitation obligations evidenced by bonds, debentures, Bridge Notes, or
other similar instrument; all indebtedness guaranteed in any manner by such
Person, or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise; all accounts payable which, to the knowledge of such
Person, have remained unpaid for a period of 90 days after the same become due
and payable in accordance with their respective terms taking into account any
grace period relating to the due date expressly set forth in the applicable
invoice with respect to the payment of such accounts payable; all indebtedness
secured by any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in property owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness; all
indebtedness created or arising under any conditional sale agreement or lease in
the nature thereof (including obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capitalized leases) (but excluding operating leases) or
other title
  retention
agreement with respect to property acquired by such Person, even though the
rights and remedies of the seller or lender- under such agreement in the event
of default are limited to repossession of such property all bankers' acceptances
and letters of credit; and liabilities in respect of unfunded vested benefits
under Plans covered by Title IV of ERISA.
  124
 (b)  Restrictions
on Equity Sales. The Company will not offer or enter into an agreement to sell
equity securities of the Company, under private placement memorandum or other
private offering document or letter, whether of equity securities, convertible
debt securities, or securities or instruments convertible into or exchangeable
for debt or equity securities of the Company, except through an underwritten
public offering or after receiving approval by the purchaser as described in
6(f) below.
  (c)  Restrictions
on Transactions with Affiliates. The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business. The Company will not increase the salary of any executive officer, or
the remuneration of any director.
 
  (d)     Restrictions
on Investments. Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition; certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of deposit or eurodollar certificates of deposit being used to
secure the Company's reimbursement obligations under letters of credit (provided
that nothing contained herein shall be construed to permit letters of credit not
otherwise permitted under this Agreement); commercial paper of any Person that
is not a subsidiary or an Affiliate of the Company, maturing within one hundred
eighty days after the date of acquisition; bank loan participations; and money
market instruments having maturities of not more than one hundred eighty days
from the date of acquisition, or one year from the date of acquisition in the
case of money market instruments being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement); in all cases of such credit quality as a
prudent business person would invest in. As used in this Section, "Excess Cash"
shall mean that portion of the proceeds of the Bridge Notes that has not been
invested as described in Section 3 hereof.
 
  (e)     Change
in Business; Operations. The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in
  Business").
The business of the Company and its subsidiaries shall not be conducted in
violation of any law, ordinance, or regulation of any governmental
entity.
 
  (f)      Exceptions
With Consent of Purchasers. The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action. The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder.
  7.  No Waiver; Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder.
  8.  Costs and Expenses.
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  9.  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
  10.  Governing Law; Jurisdiction
and Service of Process. This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 11 of this Note. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process. Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served.
  125
 11.  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  12.  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual
  13.  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  14.  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
  15.  Set-off,
Counterclaim. In the event the holder hereof seeks to enforce its rights
under this Note, the Maker waives the right to interpose any set-off or
counterclaim of any nature or description against the holder,
  16.  Headings. The
headings in this Note are solely for the convenience of reference and shall be
given no effect in the construction or interpretation of this Note.
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written..
    126
  EXHIBIT
A
  CONVERSION NOTICE
  Reference
is made to terms and conditions of the Note, dated August 23, 2004, in the
principal amount of §36,300.00 (the "Note"),and registered in the
name of SovCap Equity Partners, Ltd. In accordance with
 and
pursuant to the terms of the Note, the undersigned hereby elects to convert
$                                                                                                                                in
 principal
amount of the Note into shares of Common Stock, $ .001 par value per share (the
"Common
 Stock"),
of the Company, by tendering the original Note specified below as of the date
specified below.
 
  Date of
Conversion:
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please confirmthe following
information:
 
  Conversion
Price:
  Number of
shares of Common Stock to be issued:
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address:
 
  Issus
to:
 
 
  Facsimile
Number:
 
  Authorization:
 
  By:
 Title:
  Dated:
 
  If
electronic book entry transfer, complete the following:
 Account
Number:
 Transaction
Code
Number:
  -3-
 CTRIPromissory
Note_082304
 127
  COMPANY
ACKNOWLEDGEMENT TO CONVERSION NOTICE
  ACKNOWLEDGED
AND AGREED: CERISTAR, INC.
 
 
  By:
 Name:
Title:
 
  Date:
  CTRIPromissory
Note_082304
 128
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖   If
stock, complete this portion:
 
  shares
of
the                                                       stock
of_
 
  represented
by certificate(s) Number(s)_
 
  In
the name of the undersigned on the books of said company.
 
 
  ❖   If
Bonds, complete this portion:
  bonds
of IMHI (fka Ceristar, Inc.
 
 
 
 
 
  in
the principal amount of $
36,300                                                                           Number(s)
August 23, 2004
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 
 
 
 
  Date
  Signature
BY:    BARRY W. HERMAN PRESIDENT
 129
 ENDAVO
MEDIA AND COMMUNICATIONS, INC. PROMISSORY
NOTE
  $20,000
 
 Original
Date: August 19, 2005
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd., Cumberland House #27,
Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of TWENTY THOUSAND DOLLARS ($20,000), together with interest, as
specified herein.
  1.  Payments. The Maker
agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note. The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice. All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds.
  2.  Interest. Interest on
this Note shall accrue at the rate of six percent (6%) per annum on the unpaid
principal balance from the date hereof until the principal sum has been paid in
full. Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand). Notwithstanding
anything to the contrary contained herein, no payments that are considered
interest shall accrue or be payable at a rate in excess of the maximum amount
permitted by law.
  3.  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due; (c) the Maker shall make a
general assignment for the benefit of creditors; (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing; then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waived.
    NY\25530U
 130
  
  4.  No Waiver; Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder.
  5.  Costs and Expenses.
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  6.  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
  7.  Governing Law;
Jurisdiction and
Service of Process. This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument. In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 10 of this Note. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Maker shall appear
or answer such summons, complaint, or other process. Should the Maker so served
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Maker shall be deemed in default and judgment may be
entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served.
  8.  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  9.  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof.
  4.
  2
 NY\255301
1
 131
  
  10.  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  11.  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
  12.  Set-off,
Counterclaim. In the event the holder hereof seeks to enforce its rights under
this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder.
  13.  Headings. The
headings in this Note are solely for the convenience of reference and shall be
given no effect in the construction or interpretation of this Note.
 
  [signature
on next page]
  3
 NY\255.301
1
 132
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written.
 
 
  ENDAVO
MEDIA AND COMMUNICATIOS, INC.
 
 
 
 
 
 
 
 
 
   133
 ENDAVO
MEDIA AND COMMUNICATIONS, INC. PROMISSORY
NOTE
  
  $4,500
 Original Date September9,
2005
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd , Cumberland House #27,
Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500), together with
interest, as specified herein
  1  Payments. The Maker
agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Interest. Interest on
this Note shall accrue at the rate of six percent (6%) per annum on the unpaid
principal balance from the date hereof until the principal sum has been paid in
full Without limiting any of the rights of the holder of this Note under Section
4 of this Note, if any payment of principal or premium thereon is not made when
the same shall become due and payable hereunder, a premium shall accrue on the
principal amount due at a rate per annum equal to twenty=four percent (24%) per
annum from the due date (upon demand) Notwithstanding anything to the contrary
contained herein, no payments that are considered interest shall accrue or be
payable at a rate in excess of the maximum amount permitted by law
  3  Events of Default If
any of the following conditions or events shall occur and be continuing; (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless ail defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waived
 
  NY\255301.1
 134
  
  4  No Waiver; Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  5  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  6  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  7  Governing Law; Jurisdiction
and Service of
Process This Note shall be governed by and construed in accordance with
the laws of the State of Utah, without giving effect to conflict of laws The
Maker hereby irrevocably consents to the jurisdiction of the courts of the State
of Utah and of any federal court located in such State in connection with any
action or proceeding arising out of or relating to this Note, any document or
instrument delivered pursuant to, in connection with, or simultaneously with,
this Note or a breach of this Note or any such document or instrument In any
such action or proceeding, the Maker waives personal service of any summons,
complaint, or other process and agrees that service thereof may be made in
accordance with Section 10 of this Note Within 30 days after such service, or
such other time as may be mutually agreed upon in writing by the attorneys for
the parties to such action or proceeding, the Maker shall appear or answer such
summons, complaint, or other process Should the Maker so served fail to appear
or answer within such 30-day period or such extended period, as the case may be,
the Maker shall be deemed in default and judgment may be entered by the Holder
against the Maker as demanded in any summons, complaint, or other process so
served
  8  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and
  its
successors and assigns, including subsequent holders hereof
  9  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof.
  9
  2
 NY\255301.1
 135
  
  10  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction.
  11  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  12  Set-off. Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  13  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  3
 NY\255301.1
 136
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
 
  ENDAVO
MEDIA AND COMMUNTCATONS< INC
 [CORPORATE
SEAL]
  137
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  If
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s) Number(s)_
 
  In the
name of the undersigned on the books of said company.
 
 
  If
Bonds, complete this portion:
  bonds of  IMHI (fka Endavo
Media)
 
  in
the principal amount of $ 4,500Number(s) September 9,
2005
 
 
 
 inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
  
 
  Date
 
 
 
  Date
 
 
 
  11/14/07
 
  138
  ENDAVO MEDIA AND COMMUNICATIONS, INC PROMISSORY
NOTE
  $12,500
 December
16, 2005
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd, Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of TWELVE THOUSAND FIVE-HUNDRED DOLLARS ($12,500), together with
interest, as specified herein
 
  1       Demand
Payments. The Maker agrees to pay the principal of this Note and any accrued
interest thereon immediately upon demand from the Holder requesting payment,
which demand may be made at any time after 45 days from the issue date of this
Note. The Maker shall have the right to prepay this Note in whole at any time or
in part from time to time upon ten (10) business days notice All payments by the
Maker on account of principal, premium, interest or fees hereunder shall be made
in money of the United States of America that at the time of payment is legal
tender, by wire transfer of immediately available funds
 
  2.      Mandatory Payments.
The Maker agrees to make mandatory payments to the Holder in an amount equaling
ten percent (10%) of gross profits (net revenue after cost of sales) received by
the Company during each fiscal quarter, as reported by the Company Payments
shall be made to the Holder within ten (10) days of the date the Maker is able
to produce financial statements or no later than the date upon which the Maker
files financial statements with the Securities and Exchange Commission (SEC)
Mandatory payments made shall be applied to reduce the outstanding principal
amount of this Note, along with accrued interest, until the Note is paid in full
by the Maker, whether by Mandatory or Demand Payments
  3  Interest.
Interest on this Note shall accrue at the rate of twelve percent (12%) per annum
on the unpaid principal balance from the date hereof until the principal sum has
been paid in full Without limiting any of the rights of the holder of this Note
under Section 4 of this Note, if any payment of principal or premium thereon is
not made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand) Notwithstanding anything
to the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  4  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit ->f creditors, (d) the Maker shall
commence a voluntary case under the Federal Bankruptcy Code
 ">ow
      or hereafter in effect); (e) the Maker shall file a petition seeking to
      take advantage of any v relating to bankruptcy, insolvency, or adjustment
      of debts, (f) there shall have
been
  BY:    BARRY
W. HERMAN PRESIDENT
 139
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
  ENDAVO
MEDIA AND COMMUNICATONS< INC
    NY\255301.1
 140
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ♦>    If
stock, complete this portion:
  shares of
the                                                       stock
of
 represented
by certificate(s)
Number(s)
 In
the name of the undersigned on the books of said company.
 
 
  ❖   If
Bonds, complete this portion:
  bonds of IMHI (fka Endavo
Media)
 
 
  in
the principal amount of
$   12,500     Numbers)  December
16, 2005
 
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 
 
 
  Date
 
 
  Date
11/4/07
  141
 ENDAVO
MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE
 
 December
22, 2005
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd., Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of TWENTY THOUSAND FIVE-HUNDRED DOLLARS ($20,500), together with
interest, as specified herein
  1  Demand Payments. The
Maker agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Mandatory Payments.
The Maker agrees to make mandatory payments to the Holder in an amount equaling
ten percent (10%) of gross profits (net revenue after cost of sales) received by
the Company during each fiscal quarter, as reported by the Company Payments
shall be made to the Holder within ten (10) days of the date the Maker is able
to produce financial statements or no later than the date upon which the Maker
files financial statements with the Securities and Exchange Commission (SEC)
Mandatory payments made shall be applied to reduce the outstanding principal
amount of this Note, along with accrued interest, until the Note is paid in full
by the Maker, whether by Mandatory or Demand Payments
  3  Interest. Interest on
this Note shall accrue at the rate of twelve percent (12%) per annum on the
unpaid principal balance from the date hereof until the principal sum has been
paid in full Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand). Notwithstanding
anything to the contrary contained herein, no payments that are considered
interest shall accrue or be payable at a rate in excess of the maximum amount
permitted by law
  4  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been
  
  Signature
BY:    BARRY W. HERMAN
  PRESIDENT
 142
  
  instituted
against the Maker any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings for relief under the Federal
Bankruptcy Code or any other law relating to bankruptcy, insolvency or
adjustment of debts, which are not dismissed within sixty (60) days after such
institution, or (g) the Maker shall take any action for the purposes of
effecting any of the foregoing, then, and in any such event, the Holder may at
any time (unless all defaults shall theretofore have been remedied) at its
option, declare this Note to be due and payable, whereupon this Note shall
forthwith mature and become due and payable, together with interest accrued
thereon, without presentment, demand, protest or notice, all of which are hereby
waived
  5  No Waiver; Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  6  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  7  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  8  Governing Law, jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws The Maker hereby irrevocably consents to the jurisdiction of
the courts of the State of Delaware and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Note, any document or instrument delivered pursuant to, in connection with,
or simultaneously with, this Note or a breach of this Note or any such document
or instrument In any such action or proceeding, the Maker waives personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 10 of this Note Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Maker shall
appear or answer such summons, complaint, or other process Should the Maker so
served fail to appear or answer within such 30-day period or such extended
period, as the case may be, the Maker shall be deemed in default and judgment
may be entered by the Holder against the Maker as demanded in any summons,
complaint, or other process so served
  9  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  10  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand
delivery
  5
  NYY25530M
 143
  
  (receipt
acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof
  11  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  12  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  13  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  14  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  NYA255301.1
 144
 IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
  ENDAVO
MEDIA AND COMMUNICATONS, INC
 
 
 
 
 
  /Paul
      Hamm President
  NYA255301.1
 145
  
  IRREVOCABLE
STOCK OR BOND POWER
 
 
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖   If
stock, complete this portion:
 
  shares
of
the                                                       stock
of
 
  represented
by certificate(s) Number(s)_
  In the
name of the undersigned on the books of said company.
 
 
  If
Bonds, complete this portion:
 
  bonds of  IMHI (fka Endavo
Media)
 in
 
 
  the principal amount of $
20,500Number(s) December 23,
2005
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 
 
  SOVCAP EQUITY PARTNERS,
LTD
 Date
                
                
                
                Date
      11/4/07
   Signature
BY:    BARRY W. HERMAN PRESIDENT
  
 146
 ENDAVO MEDIA AND COMMUNICATIONS,
INC PROMISSORY NOTE
   $20,000
 August
19, 2005
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd, Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of TWENTY THOUSAND DOLLARS ($20,000), together with interest, as
specified herein
  1  Payments. The Maker
agrees to pay the principal of this Note and any accrued inter est thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Interest. Interest on
this Note shall accrue at the rate of six percent (6%) per annum on the unpaid
principal balance from the date hereof until the principal sum has been
paid
 in full
Without limiting any of the rights of the holder of this Note under Section 4 of
this Note, if any payment of principal or premium thereon is not made when the
same shall become due and payable hereunder, a premium shall accrue on the
principal amount due at a rate per annum equal to twenty-four percent (24%) per
annum from the due date (upon demand) Notwithstanding anything to the contrary
contained herein, no payments that are considered interest shall accrue or be
payable at a rate in excess of the maximum amount permitted by law
 
  3.       Events of Default If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waived
  147
  
  4  No Waiver. Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  5  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  6  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  7  Governing Law; Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Utah, without giving effect to conflict
of laws The Maker hereby irrevocably consents to the jurisdiction of the courts
of the State of Utah and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note, any document or instrument delivered pursuant to, in connection with, or
simultaneously with, this Note or a breach of this Note or any such document or
instrument In any such action or proceeding, the Maker waives personal service
of any summons, complaint, or other process and agrees that service thereof may
be made in accordance with Section 10 of this Note Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or
  to appeal
or answer within such 30-day period or such extended period, as the case may be,
the Maker shall be deemed in default and judgment may be entered by the Holder
against the Maker as demanded in any summons, complaint, or other process so
served
  8  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and
  its
successors and assigns, including subsequent holders hereof
  9  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand
delivery
 (receipt
acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof
  NY\255301.1
 148
  
  10  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  11  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  12  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  13  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  NY\255301.1
 149
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
  ENDAVO
MEDIA AND COMMUNICATONS, INC
  
  [CORPORATE
SEAL]
  NY\255301..1
 150
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖    If
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s) Number(s)_
 
  In
the name of the undersigned on the books of said company.
 
 
  If
Bonds, complete this portion:
  .bonds
of  IMHI (fka Endavo Media)
 
 
  in
the principal amount of $ 20,000 Number(s) August 19, 2005
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
  SOVCAP EQUITY PARTNERS, LTD,Signature
  
 
  Date
 Date
11/4/07
  151
 ENDAVO
MEDIA AND COMMUNICATIONS. INC PROMISSORY NOTE
  $3,000
 January
6, 2006
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS. INC, a Delaware
corporation with offices at SOWest Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD, a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd, Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of THREE THOUSAND DOLLARS ($3,000), together with interest, as
specified herein
  1  Demand Payments. The
Maker agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Mandatory Payments.
The Maker agrees to make mandatory payments to the Holder in the event the Maker
receives the earlier of net revenues or equity or debt financing as follows 1)
the Maker shall make Mandatory Payments in an amount equaling ten percent (10%)
of gross profits (net revenue after cost of sales) received by the Company
during each fiscal quarter, as reported by the Company, or 2) the Maker shall
make Mandator/ Payments in amount equaling five percent (5%)of any equity or debt financing received by the company Payments shall be
made to the Holder within ten (10) days of the date the Maker is able to produce
financial statements, no later than the date upon which the Maker files
financial statements with the Securities and Exchange Commission (SEC), or of
the date the Maker closes a financing Mandatory payments made shall be applied
to reduce the outstanding principal amount of this Note, along with accrued
interest, until the Note is paid in full by the Maker, whether paid by Mandatory
or Demand Payments
  3  Interest, interest on
this Note shall accrue at the rate of twelve percent (12%) per annum on the
unpaid principal balance from the date hereof until the principal sum has been
paid in full Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand) Notwithstanding anything
to the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  4  Events of Default. If
any of the following conditions or events shall occur and be continuing: (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit
   of
creditors, (d) the Maker shall commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, or adjustment of debts, (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings for relief under the Federal Bankruptcy Code
or any other law relating to bankruptcy, insolvency or adjustment of debts,
which are not dismissed within sixty (60) days after such institution, or (g)
the Maker shall take any action for the purposes of effecting any of the
foregoing, then, and in any such event, the Holder may at any time (unless all
defaults shall theretofore have been remedied) at its option, declare this Note
to be due and payable, whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without presentment,
demand, protest or notice, all of which are hereby waived
  5  No Waiver; Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  6  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
 
  7.      Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for' which given.
  8  Governing Law. Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws The Maker hereby irrevocably consents to the jurisdiction of
the courts of the State of Delaware and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Note, any document or instrument delivered pursuant to, in connection with,
or simultaneously with, this Note or a breach of this Note or any such document
or instrument In any such action or proceeding, the Maker waives personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 10 of this Note Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Maker shall
appear or answer such summons, complaint, or other process Should the Maker so
served fail to appear or answer within such 30-day period or such extended
period, as the case may be, the Maker shall be deemed in default and judgment
may be entered by the Holder against the Maker as demanded in any summons,
complaint, or other process so served
  9  Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  Signature
 BY:
      BARRY W. HERMAN PRESIDENT
 152
 
  10  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof
  11  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  12  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  13  Set-off.
Counterclaim. In the event the holder hereof seeks to enforce its rights under
this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder
  14  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
  ENDAVO
MEDIA AND COMMUNICATONS< INC
 
 
 
 
  By
 Paul D
Hamm President
  NY\255301..1
 153
  ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY
NOTE
  $3,000
 January
18, 2006
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd , Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of THREE THOUSAND DOLLARS ($3,000), together with interest, as
specified herein
  1  Demand Payments. The
Maker agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Mandatory Payments.
The Maker agrees to make mandatory payments to the Holder in the event the Maker
receives the earlier of net revenues or financing as follows: 1) the Maker shall
make Mandatory Payments in an amount equaling ten percent (10%) of gross profits
(net revenue after cost of sales) received by the Company during each fiscal
quarter, as reported by the Company, or 2) the Maker shall make Mandatory
Payments in amount equaling five percent (5%) of any equity or debt financing
received by the company Payments shall be made to the Holder within ten (10)
days of the date the Maker is able to produce financial statements, no later
than the date upon which the Maker files financial statements with the
Securities and Exchange Commission (SEC), or of the date the Maker closes a
financing Mandatory payments made shall be applied to reduce the outstanding
principal amount of this Note, along with accrued interest, until the Note is
paid in full by the Maker, whether paid by Mandatory or Demand
Payments
  3  Interest. Interest on
this Note shall accrue at the rate of twelve percent (12%) per annum on the
unpaid principal balance from the date hereof until the principal sum has been
paid in full Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand) Notwithstanding anything
to the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  4  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit
  1
  NY\25530L1
 154
  
  of
creditors, (d) the Maker shall commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, or adjustment of debts, (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings for relief under the Federal Bankruptcy Code
or any other law relating to bankruptcy, insolvency or adjustment of debts,
which are not dismissed within sixty (60) days after such institution, or (g)
the Maker shall take any action for the purposes of effecting any of the
foregoing, then, and in any such event, the Holder may at any time (unless all
defaults shall theretofore have been remedied) at its option, declare this Note
to be due and payable, whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without presentment,
demand, protest or notice, all of which are hereby waived
  5  No Waiver, Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  6  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
 
  7,       Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of tins Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
 
  8       Governing Law. Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of
the courts of the State of Delaware and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Note, any document or instrument delivered pursuant to, in connection with,
or simultaneously with, this Note or a breach of this Note or any such document
or instrument In any such action or proceeding, the Maker waives personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 10 of this Note Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Maker shall
appear or answer such summons, complaint, or other process Should the Maker so
served fail to appear or answer within such 30-day period or such extended
period, as the case may be, the Maker shall be deemed in default and judgment
may be entered by the Holder against the Maker as demanded in any summons,
complaint, or other process so served
 
  9.       Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof
  2
 NY\255301..1
 155
  
  10  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof
  11  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  12  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  13  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any
nature
 or
description against the holder
  14  Headings The headings
in this Note are solely for the convenience of reference anu Snailbe given no effect in
the construction or interpretation of this Note.
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
 
  ENDAVO
MEDIA AND COMMUNICATOR, INC.
  3
 NYV255301
1
 156
 ENDAVO
      MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE
  
  $5,000
 February
3, 2006
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"),
at its office at c/o Lion Corporate Securities Ltd, Cumberland House #27,
Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at
such other place as may be designated by the holder hereof in writing, the
principal sum of FIVE THOUSAND DOLLARS ($5,000), together with interest, as
specified herein
  1  Demand Payments. The
Maker agrees to nay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Mandatory Payments.
The Maker agrees to make mandatory payments to the Holder in the event the Maker
receives the earlier of net revenues or financing as follows; 1) the Maker shall
make Mandatory Payments in an amount equaling ten percent (10%) of gross profits
(net revenue after cost of sales) received by the Company during each fiscal
quarter, as reported by the Company, or 2) the Maker shall make Mandatory
Payments in amount equaling five percent (5%) of any equity or debt financing
received by the company Payments shall be made to the Holder within ten (10)
days of the date the Maker is able to produce financial statements, no later
than the date upon which the Maker files financial statements with the
Securities and Exchange Commission (SEC), or of the date the Maker closes a
financing Mandatory payments made shall be applied to reduce the outstanding
principal amount of this Note, along with accrued interest, until the Note is
paid in full by the Maker, whether paid by Mandatory or Demand
Payments
  3  Interest. Interest on
this Note shall accrue at the rate of twelve percent (12%) per annum on the
unpaid principal balance from the date hereof until the principal sum has been
paid in full Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand) Notwithstanding anything
to the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  4  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit
  1
  NYV255301.
 157
  
  of
creditors, (d) the Maker shall commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, or adjustment of debts, (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings for' relief under the Federal Bankruptcy Code
or any other law relating to bankruptcy, insolvency or adjustment of debts,
which are not dismissed within sixty (60) days after such institution, or (g)
the Maker shall take any action for the purposes of effecting any of the
foregoing, then, and in any such event, the Holder may at any time (unless all
defaults shall theretofore have been remedied) at its option, declare this Note
to be due and payable, whereupon this Note shall forthwith mature and become due
and payable, together with interest accrued thereon, without presentment,
demand, protest or notice, all of which are hereby waived
  5  No Waiver; Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as
a
 waiver
thereof; nor shall any single or partial exercise by the holder of this Note of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  6  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated.
  7  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
 
  8.       Governing Law. Jurisdiction
and Seivice of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws The Maker hereby irrevocably consents to the jurisdiction of
the courts of the State of Delaware and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Note, any document or instrument delivered pursuant to, in connection with,
or simultaneously with, this Note or a breach of this Note or any such document
or instrument In any such action or proceeding, the Maker waives personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 10 of this Note Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Maker shall
appear or answer such summons, complaint, or other process Should the Maker so
served fail to appear or answer within such 30-day period or such extended
period, as the case may be, the Maker shall be deemed in default and judgment
may be entered by the Holder against the Maker as demanded in any summons,
complaint, or other process so served
 
  9       Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders
hereof.
  NY\255301..1
 158
  
  10  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9 except
that such change shall not be effective until actual receipt
thereof
  11  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  12  Waiver of Notice. The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  13  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  14  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  NY\255301.1
 159
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
 
  ENDAVO
MEDIA AND COMMUNICATOR, INC.
  A
 NY\25530U
 160
 ENDAVO
MEDIA AND COMMUNICATIONS, INC. PROMISSORY
NOTE
  
  $50,000
 February
24, 2006
 
 
  FOR VALUE
RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware
corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328
(the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY
PARTNERS LTD , a Bahamas Limited Partnership, or its registered assigns (the
"Holder"), at such place as may be designated by the holder hereof in writing,
the principal sum of FIFTY THOUSAND DOLLARS ($50,000), together with interest,
as specified herein
  1  Demand Payments. The
Maker' agrees to pay the principal of this Note and any accrued interest thereon
immediately upon demand from the Holder requesting payment, which demand may be
made at any time after 45 days from the issue date of this Note The Maker shall
have the right to prepay this Note in whole at any time or in part from time to
time upon ten (10) business days notice. All payments by the Maker on account of
principal, premium, interest or fees hereunder shall be made in money of the
United States of America that at the time of payment is legal tender, by wire
transfer of immediately available funds
  2  Interest. Interest on
this Note shall accrue at the rate of twelve percent (12%) per annum on the
unpaid principal balance from the date hereof until the principal sum has been
paid in full Without limiting any of the rights of the holder of this Note under
Section 4 of this Note, if any payment of principal or premium thereon is not
made when the same shall become due and payable hereunder, a premium shall
accrue on the principal amount due at a rate per annum equal to twenty-four
percent (24%) per annum from the due date (upon demand) Notwithstanding anything
to the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  3  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of or interest on this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its
inability to pay its debts as such debts become due, (c) the Maker shall make a
general assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waived
  4  No Waiver, Rights and
Remedies Cumulative. No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as
a
  1
  NY\255301,1
 161
  
  waiver
thereof; nor shall any single or partial exercise by the holder of this Note of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  5  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  6  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  7  Governing Law; Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws The Maker hereby irrevocably consents to the jurisdiction of
the courts of the State of Delaware and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Note, any document or instrument delivered pursuant to, in connection with,
or simultaneously with, this Note or a breach of this Note or any such document
or instrument In any such action or proceeding, the Maker waives personal
service of any summons, complaint, or other process and agrees that service
thereof may be made in accordance with Section 10 of this Note Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Maker shall
appear or answer such summons, complaint, or other process Should the Maker so
served fail to appear or answer within such 30-day period or such extended
period, as the case may be, the Maker shall be deemed in default and judgment
may be entered by the Holder against the Maker as demanded in any summons,
complaint, or other process so served
  8  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  9  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confnmation report) if delivered on a business day during normal business hours
where such notice is to be
   day
during normal business hours where such notice is to be received, or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever first shall occur, to the address set forth above or to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 9 except that such change shall not be effective
until actual receipt thereof.
  10  Severability. The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or
  
  2
 NY\255301..1
 162
  
  unenforceability
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Note in any jurisdiction
  11  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  12  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  13  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  3
 NY\255301.1
 163
  
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 
 
  ENDAVO
MEDIA AND COMMUNICATIONS, INC.
  164
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
  ♦:♦
If stock, complete this portion:
 
  shares
of
the                                                  stock
of
 
  represented
by certificate^) Number(s)_
  In
the name of the undersigned on the books of said company. ❖ If Bonds, complete
this portion:
 bonds of IMHI (fka Endavo
Media)
 
  in
the principal amount of $ 50,000Numbers)    February
24, 2006
 
  inclusive
standing in the name of the undersigned on books of said company. The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 nature
      1 \ Date lire v
      Date
 
   165
   
 INTEGRATED MEDIA
HOLDINGS, INC.PROMISSORY NOTE
 August 1,
2006
 $32,500
00
 
  FOR VALUE
RECEIVED, the undersigned, INTEGRATED MEDIA HOLDINGS, INC., a Delaware
corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328
(the "Maker"), unconditionally promises to pay to the order of SovCap Equity
Partners, LTD , a Bahamas Limited Partnership (the "Holder"), at such place as
may he designated by the Holder hereof in writing, the principal sum of THIRTY
TWO THOUSAND, FIVE HUNDRED DOLLARS ($32,500 00), without interest, except as
specified herein
  1  Payments.
The Maker agrees to pay the principal of this Note within ten (10) days
following demand from the Holder requesting payment, which demand may be made at
any time after the 60th day
following the issue date of this Note The Maker shall have the right to prepay
this Note in whole at any time or in part from time to time Any payments,
including prepayments, of principal of this Note, whether upon demand, at the
option of the Company, upon default or otherwise shall include a repayment
premium equal to the product of (a) the Repayment Percentage (as defined below)
and (b) the number of thirty (30) day periods (rounded up to the next whole
number) (each 30-day period referred to as a "Monthly Period") that this Note
has been outstanding (computed from the date of issuance of this Note to the
date of payment) but in no event higher than the maximum amount permitted by law
For purposes of this Note, the Repayment Percentage shall mean one and one-half
percent (1.5%) of the outstanding principal amount of this Note All payments by
the Maker on account of principal, premium, interest or fees hereunder shall be
made in money of the United States of America that at the time of payment is
legal tender, by wire transfer of immediately available funds
  2  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  3  Use of
Proceeds.  The Company agrees use the proceeds from the sale
and issuance of the Bridge Notes only for payment of following
expenses
 
  a   WV
Fiber LLC Asset Purchase and related costs b   Working
capital
  4  Conversion.
 
  (a)     At
any time after the date that is ninety (90) days following the issue date of
this Note and from time to time, the Holder may convert all or any portion of
this Note, together with the Repayment Percentage, and accrued and unpaid
interest and fees due on this Note (the "Conversion Amount") into shares of
common stock of the Maker (the "Common Stock")
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium).
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price Fractional shares will not be issued
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder For purposes of this Note,
the "Conversion Price" shall mean $0 25
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date "
  166
 (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company
  (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 10% of the product of (A) the number of shares
of Common Stock not issued to Holder and to which Holder is entitled multiplied
by (B) the Closing Bid Price of the Common Stock on the business day following
the date of receipt by the Maker or the Transfer Agent of the Conversion Notice
The foregoing notwithstanding, Holder at its option may withdraw a Conversion
Notice, and remain a Holder of this Note, if Holder has otherwise complied with
this Section 4
  (h)           If
any adjustment to the Conversion Price to be made pursuant to clause
(j)
  of this
Section 4 becomes effective immediately after a record date for an event as
therein
  described,
and conversion occurs prior to such event but after the record date, the Maker
may
  defer
issuing, delivering, or paying to Holder any additional shares of Common Stock
or check
  for any
cash remainder required by reason of such adjustment until the occurrence of
such event,
  provided
that the Maker delivers to Holder a due bill or other appropriate instrument
evidencing
  the
Holders' right to receive such additional shares or check upon the occurrence of
the event
  giving
rise to the adjustment
 
  (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time All shares of Common Stock issued upon conversion of this Note shall
be
  fully
paid and nonassessable The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be
 
  167
 (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows.
  (i)  If the
Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased
  (ii)  Prior to
the consummation of any Organic Change (as defined below), the Maker will make
appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place. In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable. The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this
Agreement, "Organic Change" means any
  recapitalization,
reorganization, reclassification, consolidation, merger, or sale of all or
substantially all of the Maker's assets to another Person (as defined below), or
other similar transaction which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities, or assets with respect to or in exchange for Common Stock,
and "Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof
 
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission
 
  5       Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable, (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due, (c) the Maker shall make a general
assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution, or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver
 
  6.        NEGATIVE
COVENANTS The provisions of this Section 6 shall remain in effect so long as any
of the Bridge Notes shall remain outstanding
  (a)  Restrictions
on Transactions with Affiliates The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business The Company will not increase the salary of any executive officer, or
the remuneration of any director
  168
 (b)  Restrictions
on Investments. Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition, certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of
  deposit
or eurodollar certificates of deposit being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement), commercial paper of any Person that is not a
subsidiary or an Affiliate of the Company, maturing within one hundred eighty
days after the date of acquisition, bank loan participations, and money market
instruments having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
money market instruments being used to secure the Company's reimbursement
obligations under letters of credit (provided that nothing contained herein
shall be construed to permit letters of credit not otherwise permitted under
this Agreement), in all cases of such credit quality as a prudent business
person would invest in As used in this Section, "Excess Cash{XE "Excess
Cash"}" shall mean that portion of the proceeds of the Bridge Notes that has not
been invested as described in Section 3 hereof
  (c)  Change in
Business, Operations The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in Business{ XE
"Change in Business"}") The business of the Company and its subsidiaries shall
not be conducted in violation of any law, ordinance, or regulation of any
governmental entity
  (d)  Exceptions
With Consent of Purchasers The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder
 
  7  No Waiver, Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  8  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  9  Amendments. No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  10  Governing Law, Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws The Maker hereby irrevocably consents to the jurisdiction of
the courts of the
  State of
Delaware and of any federal court located in such State in connection with any
action or proceeding arising out of or relating to this Note, any document or
instrument delivered pursuant to, in connection with, or simultaneously with,
this Note or a breach of this Note or any such document or instrument In any
such action or proceeding, the Maker waives personal service of any summons,
complaint, or other process and agrees that service thereof may be made in
accordance with Section 11 of this Note Within 30 days after such service, or
such other time as may be mutually agreed upon in writing by the attorneys for
the parties to such action or proceeding, the Maker shall appear or answer such
summons, complaint, or other process Should the Maker so served fail to appear
or answer within such 30-day period or such extended period, as the case may be,
the Maker shall be deemed in default and judgment may be entered by the Holder
against the Maker as demanded in any summons, complaint, or other process so
served
  11  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  169
 12  Notice Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received, or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual receipt
thereof
  13  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  14  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
  15  Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
  16  Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
 
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 [CORPORATE
SEAL]
  170
   Reference
is made to terms and conditions of the Note in the principal amount of $[]
registered
 in the
name of {NAME OF HOLDER} (the "Note"). In accordance with and pursuant to the
terms of the
 Note, the
undersigned hereby elects to convert
$                                                                                                in
principal amount of the Note into
 shares of
Common Stock, $.001 par value per share (the "Common Stock"), of the Company, by
tendering the original Note specified below as of the date specified
below
 
  Date of
Conversion:
  Principal
Amount of Note to be converted Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please
confirm the following information:
 
  Conversion
Price
 
  Number of
shares of Common Stock to be issued:
 
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address:
 
  Issue
to:
 
 
  Facsimile
Number
 
  Authorization
 
  By
 Title:
  Dated
 
  If
electronic book entry transfer, complete the following
 Account
Number:
 Transaction
Code
Number
  171
 
  COMPANY
ACKNOWLEDGEMENT TO
 CONVERSION
NOTICE
 
 
  ACKNOWLEDGED
AND AGREED INTEGRATED MEDIA HOLDINGS, INC.
 
 
 
  By
 Name
Title:
 
  Date
  172
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
  ❖  If
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s)
Number(s)
 
  In
the name of the undersigned on the books of said company.
  ❖  If
Bonds, complete this portion:
  bonds of IMHI
 
 
 
  in
the principal amount of $
32,500                                                                           Number(s)
August 1, 2006
 
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
 
 
 
  Date
 
 
  Date
11/4/07
  173
  
  INTEGRATED MEDIA
HOLDINGS, INC.PROMISSORY NOTE
 $12,000.
00
 November
14, 2006
 
 
  FOR VALUE
RECEIVED, the undersigned, INTEGRATED MEDIA HOLDINGS, INC., a Delaware
corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328
(the "Maker"), unconditionally promises to pay to the order of SovCap Equity
Partners, LTD , a Bahamas Limited Partnership (the "Holder"), at such place as
may be designated by the Holder hereof in writing, the principal sum of TWELVE
THOUSAND DOLLARS ($12,000 00), without interest, except as specified
herein
  1  Payments. The Maker
agrees to pay the principal of this Note within ten (10) days following demand
from the Holder requesting payment, which demand may be made at any time after
the issue date of this Note The Maker shall have the right to prepay this Note
in whole at any time or in part from time to time Any payments, including
prepayments, of principal of this Note, whether upon demand, at the option of
the Company, upon default or otherwise shall include a repayment premium equal
to the product of (a) the Repayment Percentage (as defined below) and (b) the
number of thirty (30) day periods (rounded up to the next whole number) (each
30-day period referred to as a "Monthly Period") that this Note has been
outstanding (computed from the date of issuance of this Note to the date of
payment) but in no event higher than the maximum amount permitted by law. For
purposes of this Note, the Repayment Percentage shall mean one and one-half
percent (L.5%) of the outstanding principal amount of this Note All payments by
the Maker on account of principal, premium, interest or fees hereunder shall be
made in money of the United States of America that at the time of payment is
legal tender, by wire transfer of immediately available funds
  2  Interest. Without
limiting any of the rights of the holder of this Note under Section 4 of this
Note, if any payment of principal or premium thereon is not made when the same
shall become due and payable hereunder, interest shall accrue thereon at a rate
per annum equal to twelve percent (12%) per annum. Notwithstanding anything to
the contrary contained herein, no payments that are considered interest shall
accrue or be payable at a rate in excess of the maximum amount permitted by
law
  3  Use of Proceeds. The
Company agrees use the proceeds from the sale and issuance of the Bridge Notes
only for payment of following expenses:
 
  a   WV
Fiber LLC Asset Purchase and related costs b   Working
capital
  4  Conversion
 
  (a)     At
any time after the date that is ninety (90) days following the issue date of
this Note and from time to time, the Holder may convert all or any portion of
this Note, together with the Repayment Percentage, and accrued and unpaid
interest and fees due on this Note (the "Conversion Amount") into shares of
common stock of the Maker (the "Common Stock")
  (b)  If the
Holder elects to convert less than the full principal amount of this Note, the
Maker shall issue a Note in substantially the same form as this Note, except
that the principal amount shall be reduced by the principal amount so converted
(exclusive of the redemption premium)
  (c)  The
number of shares of Common Stock issuable upon conversion of this Note is equal
to the quotient of the Conversion Amount of that portion of the Note being
converted divided by the Conversion Price Fractional shares will not be issued
In lieu of any fraction of a share, the Maker shall deliver its check for the
dollar amount of the less than full share remainder For purposes of this Note,
the "Conversion Price" shall mean $0 25
  (d)  To
convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof
shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59
P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to
the Maker or its designated transfer agent for its Common Stock (the "Transfer
Agent"), and (B) surrender to a common carrier for delivery to the Maker or the
Transfer Agent as soon as practicable following such date, this Note (or an
indemnification undertaking with respect to such shares in the case of the loss,
theft, or destruction of this Note) and the originally executed Conversion
Notice The date the Maker receives the Conversion Note and this Note is
hereinafter the "Conversion Date "
  (e)  Upon
receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to Holder Upon receipt by the Maker or the Transfer Agent of the Note to
be converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Maker or the Transfer Agent (as applicable)
shall, within five (5) business days following the date of receipt, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of
Holder or its designee, for the number of shares of Common Stock to which Holder
shall be entitled or (B) credit the aggregate number of shares of Common Stock
to which such Holder shall be entitled to the Holder's or its designee's balance
account at The Depository Trust Company
  174
 (f)  The
Person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the "Record Holder"
or Holder of such shares of Common Stock on the Conversion Date
  (g)  If the
Maker shall fail to issue to Holder within five (5) business days following the
date of receipt by the Maker or the Transfer Agent of this Note to be converted
pursuant to a Conversion Notice, a certificate for the number of shares of
Common Stock to which each Holder is entitled upon Holder's conversion of this
Note, in addition to all other available remedies which such Holder may pursue
hereunder, the Maker shall pay additional damages to Holder on each day after
the fifth (5th) business day following the date of receipt by the Maker or the
Transfer Agent an amount equal to 1 0% of the product of (A) the number of
shares of Common Stock not issued to Holder and to which Holder is entitled
multiplied by (B) the Closing Bid Price of the Common Stock on the business day
following the date of receipt by the Maker or the Transfer Agent of the
Conversion Notice The foregoing notwithstanding, Holder at its option may
withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has
otherwise complied with this Section 4
  (h)           If
any adjustment to the Conversion Price to be made pursuant to clause
(j)
  of this
Section 4 becomes effective immediately after a record date for an event as
therein
  described,
and conversion occurs prior to such event but after the record date, the Maker
may
  defer
issuing, delivering, or paying to Holder any additional shares of Common Stock
or check
  for any
cash remainder required by reason of such adjustment until the occurrence of
such event,
  provided
that the Maker delivers to Holder a due bill or other appropriate instrument
evidencing
  the
Holders' right to receive such additional shares or check upon the occurrence of
the event
  giving
rise to the adjustment
 
  (i)           Until
such time as this Note has been fully redeemed, the Maker shall
  reserve
out of its authorized but unissued Common Stock enough shares of Common Stock
to
  permit
the conversion of the entire Redemption Price and all accrued and unpaid
interest due on
  this Note
at any time All shares of Common Stock issued upon conversion of this Note shall
be
  fully
paid and nonassessable. The Maker covenants that if any shares of Common
Stock,
  required
to be reserved for purposes of conversion of this Note hereunder, require
registration
  with or
approval of any governmental authority under any federal or state law or listing
upon any
  national
securities exchange before such shares may be issued upon conversion, the Maker
shall
  in good
faith, as expeditiously as possible, endeavor to cause such shares to be duly
registered,
  approved
or listed, as the case may be
 
  (j)      The
Conversion Price shall be subject to adjustment from time to time
as
  follows
  175
 (i)  If the
Maker at any time subdivides (by any stock split, stock dividend,
recapitalization, or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the
Maker at any time combines (by combination, reverse stock split, or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased
  (ii)  Prior to
the consummation of any Organic Change (as defined below), the Maker will make
appropriate provision (in form and substance satisfactory to the Holder to
insure that Holder will thereafter have the right to acquire and receive in lieu
of, or in addition to, (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of this
Holder's Note, such shares of stock, securities, or assets as may be issued or
payable with respect to, or in exchange for, the number of shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of
this Note had such Organic Change not taken place In any such case, the Maker
will make appropriate provision (in form and substance satisfactory to Holder
with respect to such Holder's rights and interests to insure that the provisions
of this clause (j) will thereafter be applicable The Maker will not effect any
such consolidation, merger, or sale, unless prior to the consummation thereof
the successor entity (if other than the Maker) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this
Agreement, "Organic Change" means any
  recapitalization,
reorganization, reclassification, consolidation, merger, or sale of all or
substantially all of the Maker's assets to another Person (as defined below), or
other similar transaction which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities, or assets with respect to or in exchange for Common Stock,
and "Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof
 
  (k)     The
Holder shall be entitled to piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note by the Holder The
Company agrees to include such shares on the first available registration,
including forms S-l, SB-2 or S-3, filed by the Company with Securities and
Exchange Commission
  5  Events of Default If
any of the following conditions or events shall occur and be continuing (a) the
Maker shall default in the payment of principal of this Note when the same
becomes due and payable, (b) the Maker shall admit in writing its inability to
pay its debts as such debts become due, (c) the Maker shall make a general
assignment for the benefit of creditors, (d) the Maker shall commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); (e) the Maker shall file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there
shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for
relief under the Federal Bankruptcy Code or any other law relating to
bankruptcy, insolvency or adjustment of debts, which are not dismissed within
sixty (60) days after such institution; or (g) the Maker shall take any action
for the purposes of effecting any of the foregoing, then, and in any such event,
the Holder may at any time (unless all defaults shall theretofore have been
remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payauie, together with interest
accrued thereon, without presentment, demand, protest or notice, all of which
are hereby waiver.
  6  NEGATIVE
COVENANTS The provisions of this Section 6 shall remain in effect so long as any
of the Bridge Notes shall remain outstanding
 
  (a)  Restrictions
on Transactions with Affiliates The Company will not make any loans or advances
to any of its officers, shareholders, or Affiliates, other than expense advances
made by the Company to its officers and employees in the ordinary course of
business The Company will not increase the salary of any executive officer, or
the remuneration of any director
  (b)  Restrictions
on Investments Other than as permitted by this Agreement, the Company will not
purchase or acquire or invest in, or agree to purchase or acquire or invest in
the business, property, or assets of, or any securities of, any other company or
business, provided however,that the Company may enter into contracts relating to the expansion of
its business and may invest its Excess Cash as defined below in: securities
issued or directly and fully guaranteed or insured by the United States
government or any agency thereof having maturities of not more than one year
from the date of acquisition, certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
certificates of
  deposit
or eurodollar certificates of deposit being used to secure the Company's
reimbursement obligations under letters of credit (provided that nothing
contained herein shall be construed to permit letters of credit not otherwise
permitted under this Agreement), commercial paper of any Person that is not a
subsidiary or an Affiliate of the Company, maturing within one hundred eighty
days after the date of acquisition, bank loan participations, and money market
instruments having maturities of not more than one hundred eighty days from the
date of acquisition, or one year from the date of acquisition in the case of
money market instruments being used to secure the Company's reimbursement
obligations under letters of credit (provided that nothing contained herein
shall be construed to permit letters of credit not otherwise permitted under
this Agreement), in all cases of such credit quality as a prudent business
person would invest in As used in this Section, "Excess Cash" shall mean that
portion of the proceeds of the Bridge Notes that has not been invested as
described in Section 3 hereof
  (c)  Change in
Business, Operations The Company will not cause or effect any change in or
addition to the primary business of the Company that has not been approved by
Purchaser, such that more than 20% of the consolidated net earnings of the
Company are derived from a business other than the business in which the Company
was engaged on the date hereof as reflected in the applicable last SEC Document
filed prior to the First Closing ("Change in Business") The business of the
Company and its subsidiaries shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity
  (d)  Exceptions
With Consent of Purchasers The Company may seek an exception to any prohibited
action under this Section by first,giving written notice to Purchaser of Bridge Note under this Agreement,
along with copies of all documentation requested by any Purchaser relating to
such requested exception, and second,in
the sole discretion of Purchaser, satisfactorily responding to any Purchaser
inquiries about the requested action The Company may undertake any such
requested action otherwise prohibited by this Section 6 only after receiving the
advance written consent of Purchaser hereunder
 
 176
  7  No Waiver; Rights and
Remedies Cumulative No failure on the part of the holder of this Note to
exercise, and no delay in exercising any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the holder of this
Note of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Maker and the Holder
  8  Costs and Expenses
The Maker shall reimburse the holder of this Note for all costs and expenses
incurred by it, and shall pay the reasonable fees and disbursements of counsel
to the holder of this Note, in connection with the enforcement of the holder's
rights hereunder, whether or not legal proceedings are initiated
  9  Amendments No
amendment, modification or waiver of any provision of this Note nor consent to
any departure by the Maker therefrom shall be effective unless the same shall be
in writing and signed by the holder of this Note and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given
  10  Governing Law. Jurisdiction
and Service of Process This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of
the courts of the
  State of
Delaware and of any federal court located in such State in connection with any
action or proceeding arising out of or relating to this Note, any document or
instrument delivered pursuant to, in connection with, or simultaneously with,
this Note or a breach of this Note or any such document or instrument In any
such action or proceeding, the Maker waives personal service of any summons,
complaint, or other process and agrees that service thereof may be made in
accordance with Section 11 of this Note Within 30 days after such service, or
such other time as may be mutually agreed upon in writing by the attorneys for
the parties to such action or proceeding, the Maker shall appear or answer such
summons, complaint, or other process Should the Maker so served fail to appear
or answer within such 30-day period or such extended period, as the case may be,
the Maker shall be deemed in default and judgment may be entered by the Holder
against the Maker as demanded in any summons, complaint, or other process so
served
  11  Successors and
Assigns This Note shall be binding upon the Maker and its successors and
permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof
  12  Notice. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission
confirmation report) if delivered on a business day during normal business hours
where such notice is to be received, or the first business day following such
delivery if delivered other than on a business day during normal business hours
where such notice is to be received; or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever first shall occur, to
the address set forth above or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 10 except
that such change shall not be effective until actual
 i-u         c
 igi/cijji
u1cicu1
  13  Severability The
provisions of this Note are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Note in any
jurisdiction
  14  Waiver of Notice The
Maker hereby waives presentment, demand for payment, protest, notice of protest
and all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note
 
  1.5      Set-off Counterclaim
In the event the holder hereof seeks to enforce its rights under this Note, the
Maker waives the right to interpose any set-off or counterclaim of any nature or
description against the holder
 
  16      Headings The headings
in this Note are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Note
 
  [signature
on next page]
  IN
WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date
first above written
 
 Name:
      Paul D. Hamm Title President
 
  [CORPORATE
SEAL]
   177
 
  EXHIBIT
A
 CONVERSION
NOTICE
 
  Reference
is made to terms and conditions of the Note in the principal amount of
$12,000.00 registered in the name of SovCap Equity Partners, Ltd (the "Note") In
accordance with and pursuant to the terms of
 the Note,
the undersigned hereby elects to convert
$                                                                                                in
principal amount of the Note into
 shares of
Common Stock, $ 001 par value per share (the "Common Stock"), of the Company, by
tendering the original Note specified below as of the date specified
below.
 
  Date of
Conversion
  Principal
Amount of Note to be converted: Redemption Premium Accrued Interest and/or
Fees
  Total
Amount of Note to be Converted
 
  Please
confirm the following information:
 
  Conversion
Price
 
  Number of
shares of Common Stock to be issued:
 
  Please
issue the Common Stock into which the Note is being converted in the following
name and to the following address
 
  Issue
to
 
 
  Facsimile
Number
 
  Authorization
 
  By
 Title
  Dated
 
  If
electronic book entry transfer, complete the following
 Account
Number:
 Transaction
Code
Number:
  178
 
  COMPANY
ACKNOWLEDGEMENT TO
 CONVERSION
NOTICE
 
 
  ACKNOWLEDGED
AND AGREED INTEGRATED MEDIA HOLDINGS, INC.
 
 
 
 
  By
 Name
Title
  179
 IRREVOCABLE
STOCK OR BOND POWER
  
  For
Value received, the undersigned does (do) hereby sell, assign, and transfer
to:
 
 
 
 
  ❖    if
stock, complete this portion:
 
  shares of
the                                                       stock
of
 
  represented
by certificate(s) Number(s)_
 
  In
the name of the undersigned on the books of said company.
 
 
  If
Bonds, complete this portion:
  bonds
of IMHI (fka, Endavo Media)
 
 
  in
the principal amount of $   11,000Number(s)
January 18, 2006; February 3, 2006; January 6, 2006.
 
 
 
  inclusive
standing in the name of the undersigned on books of said company.
 
  The
undersigned does (do) hereby irrevocably constitute and appoint
 
 
 
 
  attorney
to transfer the said stock or bond(s), as the case may be, on the books of said
company, with full power of substitution in the premises.
  
  Signature
 BY:
      BARRY W. HERMAN PRESIDENT
 180