SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT (this  "AGREEMENT"),  dated as of
December  13,  2004,  by and among  NANOSCIENCE   TECHNOLOGIES,  INC.,  a Nevada
corporation,  with headquarters located at 45 Rockefeller Plaza, Suite 2000, New
York,  NY 10111 (the  "COMPANY"),  and the Buyers  listed on Schedule I attached
hereto (individually, a "BUYER" or collectively "BUYERS").

                                   WITNESSETH:

         WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("REGULATION  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided  herein,  and the Buyer(s) shall purchase up to One Million  Dollars
($1,000,000) of secured convertible  debentures (the "CONVERTIBLE  DEBENTURES"),
which shall be convertible  into shares of the Company's common stock, par value
$0.001 (the "COMMON  STOCK") (as converted,  the  "CONVERSION  SHARES") of which
Five  Hundred  Thousand  Dollars  ($500,000)  shall be funded on the fifth (5th)
business day  following  the date hereof (the "FIRST  CLOSING") and Five Hundred
Thousand  Dollars  ($500,000)  shall be funded on the fifth (5th)  business  day
following the date the registration  statement (the  "REGISTRATION  Statement"),
filed  pursuant to the Investor  Registration  Rights  Agreement  dated the date
hereof,  with the United States Securities and Exchange  Commission (the "SEC"),
is declared effective by the SEC (the "SECOND CLOSING")  (individually  referred
to as a  "CLOSING"  collectively  referred  to as the  "CLOSINGS"),  for a total
purchase price of up to One Million Dollars ($1,000,000), (the "PURCHASE PRICE")
in the  respective  amounts set forth  opposite each Buyer(s) name on Schedule I
(the "SUBSCRIPTION AMOUNT"); and

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement  substantially in the form attached hereto as EXHIBIT A (the "INVESTOR
REGISTRATION  RIGHTS  AGREEMENT")  pursuant  to which the  Company has agreed to
provide  certain  registration  rights  under  the  1933 Act and the  rules  and
regulations promulgated there under, and applicable state securities laws; and

         WHEREAS,  the  aggregate  proceeds  of  the  sale  of  the  Convertible
Debentures  contemplated hereby shall be held in escrow pursuant to the terms of
an escrow agreement  substantially in the form of the Escrow Agreement  attached
hereto as EXHIBIT B.

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent  Instructions  substantially in the form attached hereto as EXHIBIT C (the
"IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").

<PAGE>

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering a Security Agreement
substantially   in  the  form  attached  hereto  as  EXHIBIT  D  (the  "SECURITY
AGREEMENT")  pursuant  to which the  Company  has agreed to provide  the Buyer a
security interest in Pledged Collateral (as this term is defined in the Security
Agreement  dated the date  hereof) to secure  Company's  obligations  under this
Agreement,   the  Convertible   Debenture,   the  Investor  Registration  Rights
Agreement,  the Irrevocable Transfer Agent Instructions,  the Security Agreement
or any other obligations of the Company to the Buyer; and

         NOW,  THEREFORE,  in  consideration  of the mutual  covenants and other
agreements  contained in this Agreement the Company and the Buyer(s)hereby agree
as follows:

         1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

            (a) PURCHASE OF CONVERTIBLE DEBENTURES.  Subject to the satisfaction
(or waiver) of the terms and  conditions of this  Agreement,  each Buyer agrees,
severally and not jointly,  to purchase at Closing (as defined herein below) and
the Company  agrees to sell and issue to each Buyer,  severally and not jointly,
at  Closing,   Convertible   Debentures  in  amounts   corresponding   with  the
Subscription  Amount set forth  opposite each Buyer's name on Schedule I hereto.
Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount set forth  opposite  his name on Schedule I in same-day  funds or a check
payable to "David Gonzalez, Esq., as Escrow Agent for Nanoscience  Technologies,
Inc.  /Highgate House,  LP", which  Subscription  Amount shall be held in escrow
pursuant  to the terms of the Escrow  Agreement  (as  hereinafter  defined)  and
disbursed in accordance  therewith.  Notwithstanding the foregoing,  a Buyer may
withdraw his  Subscription  Amount and terminate this Agreement as to such Buyer
at any time after the  execution  hereof and prior to  Closing  (as  hereinafter
defined).

            (b) CLOSING DATE.  The First Closing of the purchase and sale of the
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the fifth (5th) business day following the date hereof,  subject to notification
of  satisfaction  of the conditions to the First Closing set forth herein and in
Sections  6 and 7 below  (or such  later  date as is  mutually  agreed to by the
Company and the Buyer(s))  (the "FIRST  CLOSING DATE") and the Second Closing of
the purchase and sale of the  Convertible  Debentures  shall take place at 10:00
a.m.  Eastern  Standard Time on the fifth (5th)  business day following the date
the  Registration  Statement  is  declared  effective  by the  SEC,  subject  to
notification  of  satisfaction of the conditions to the Second Closing set forth
herein and in Sections 6 and 7 below (or such later date as is  mutually  agreed
to by the Company and the Buyer(s)) (the "SECOND  CLOSING  DATE")  (collectively
referred to a the "CLOSING  DATES").  The Closing shall occur on the  respective
Closing  Dates at the offices of Yorkville  Advisors,  LLC,  101 Hudson  Street,
Suite 3700,  Jersey  City,  New Jersey 07302 (or such other place as is mutually
agreed to by the Company and the Buyer(s)).

            (c) ESCROW ARRANGEMENTS;  FORM OF PAYMENT.  Upon execution hereof by
Buyer(s) and pending the  Closings,  the  aggregate  proceeds of the sale of the
Convertible  Debentures  to Buyer(s)  pursuant  hereto  shall be  deposited in a
non-interest  bearing escrow account with David Gonzalez,  Esq., as escrow agent
(the "ESCROW AGENT"),  pursuant to the terms of an escrow agreement  between the
Company,  the  Buyer(s)  and the  Escrow  Agent in the form  attached  hereto as
EXHIBIT B (the "ESCROW AGREEMENT"). Subject to the satisfaction of the terms

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<PAGE>

and conditions of this  Agreement,  on the Closing  Dates,  (i) the Escrow Agent
shall  deliver  to the  Company  in  accordance  with the  terms  of the  Escrow
Agreement such aggregate  proceeds for the  Convertible  Debentures to be issued
and sold to such Buyer(s),  minus the structuring fees and expenses of Yorkville
Advisors  Management,  LLC of Ten Thousand Dollars ($10,000) and the retainer of
Reitler Brown & Rosenblatt LLC of Ten Thousand  Dollars  ($10,000) each of which
shall be paid  directly  from the gross  proceeds  of the First  Closing by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer, Convertible
Debentures  which such  Buyer(s) is purchasing in amounts equal to fifty percent
(50%) of the amount  indicated  opposite  such  Buyer's name on Schedule I, duly
executed on behalf of the Company.

         2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         Each Buyer represents and warrants, severally and not jointly, that:

            (a)  INVESTMENT  PURPOSE.  Each Buyer is acquiring  the  Convertible
Debentures  and,  upon  conversion  of  Convertible  Debentures,  the Buyer will
acquire the Conversion Shares then issuable,  for its own account for investment
only and not with a view towards,  or for resale in connection  with, the public
sale or distribution  thereof,  except pursuant to sales  registered or exempted
under the 1933  Act;  provided,  however,  that by  making  the  representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time in  accordance  with or pursuant  to an  effective  registration  statement
covering such Conversion Shares or an available exemption under the 1933 Act.

            (b)  ACCREDITED  INVESTOR  STATUS.  Each  Buyer  is  an  "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a)(3) of Regulation D.

            (c)  RELIANCE  ON  EXEMPTIONS.   Each  Buyer  understands  that  the
Convertible  Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the  Company  is  relying  in part  upon the truth and
accuracy of, and such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

            (d)  INFORMATION.  Each  Buyer  and its  advisors  (and his or,  its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  and its  advisors,  if any,  have been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain

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<PAGE>

information  from the Company in order to evaluate  the merits and risks of this
investment.  Each Buyer has sought such accounting,  legal and tax advice, as it
has considered necessary to make an informed investment decision with respect to
its acquisition of the Convertible Debentures and the Conversion Shares.

            (e) NO GOVERNMENTAL  REVIEW.  Each Buyer  understands that no United
States federal or state agency or any other  government or  governmental  agency
has  passed on or made any  recommendation  or  endorsement  of the  Convertible
Debentures  or the  Conversion  Shares,  or the fairness or  suitability  of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Convertible Debentures or the Conversion Shares.

            (f)  TRANSFER  OR RESALE.  Each  Buyer  understands  that  except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered under the 1933 Act or any
state  securities  laws,  and may not be offered  for sale,  sold,  assigned  or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance on Rule 144 under the 1933 Act (or a  successor  rule  thereto)  ("RULE
144") may be made only in accordance with the terms of Rule 144 and further,  if
Rule 144 is not applicable, any resale of such securities under circumstances in
which the seller (or the person  through whom the sale is made) may be deemed to
be an  underwriter  (as  that  term is  defined  in the 1933  Act)  may  require
compliance  with  some  other  exemption  under  the 1933 Act or the  rules  and
regulations of the SEC  thereunder;  and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state  securities  laws or to comply  with the terms and  conditions  of any
exemption  thereunder.  The Company  reserves  the right to place stop  transfer
instructions against the shares and certificates for the Conversion Shares.

            (g) LEGENDS.  Each Buyer  understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion Shares
shall bear a restrictive  legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):

                  THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN
                  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
                  APPLICABLE  STATE  SECURITIES  LAWS. THE SECURITIES  HAVE BEEN
                  ACQUIRED  SOLELY FOR  INVESTMENT  PURPOSES AND NOT WITH A VIEW
                  TOWARD  RESALE  AND  MAY  NOT  BE  OFFERED  FOR  SALE,   SOLD,
                  TRANSFERRED  OR  ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE
                  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED,  OR APPLICABLE STATE SECURITIES LAWS,
                  OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
                  REGISTRATION  IS NOT  REQUIRED  UNDER  SAID ACT OR  APPLICABLE
                  STATE SECURITIES LAWS.

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<PAGE>

The legend  set forth  above  shall be removed  and the  Company  shall  issue a
certificate  without  such  legend to the holder of the  Conversion  Shares upon
which it is stamped, if, unless otherwise required by state securities laws, (i)
in  connection  with a sale  transaction,  provided  the  Conversion  Shares are
registered  under the 1933 Act or (ii) in  connection  with a sale  transaction,
after such holder provides the Company with an opinion of counsel, which opinion
shall be in form,  substance  and scope  customary  for  opinions  of counsel in
comparable  transactions,  to the  effect  that a  public  sale,  assignment  or
transfer of the  Conversion  Shares may be made without  registration  under the
1933 Act.

            (h)  AUTHORIZATION,  ENFORCEMENT.  This  Agreement has been duly and
validly  authorized,  executed  and  delivered  on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

            (i)  RECEIPT OF  DOCUMENTS.  Each Buyer and his or its  counsel  has
received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth  herein,  the Security  Agreement,  the Investor
Registration  Rights  Agreement,  the  Escrow  Agreement,  and  the  Irrevocable
transfer  Agent  Instructions;  (ii) all due  diligence  and  other  information
necessary  to verify the  accuracy  and  completeness  of such  representations,
warranties  and  covenants;  (iii) the Company's Form 10-KSB for the fiscal year
ended  December 31, 2003;  (iv) the Company's Form 10-QSB for the fiscal quarter
ended June 30, 2004 and (v) answers to all questions each Buyer submitted to the
Company regarding an investment in the Company; and each Buyer has relied on the
information  contained  therein and has not been furnished any other  documents,
literature, memorandum or prospectus.

            (j) DUE FORMATION OF CORPORATE AND OTHER BUYERS.  If the Buyer(s) is
a  corporation,  trust,  partnership  or other entity that is not an  individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible  Debentures and is not prohibited
from doing so.

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

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company  represents and warrants to each of the Buyers that, except
as set forth in the SEC Documents (as defined herein):

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<PAGE>

            (a) ORGANIZATION AND QUALIFICATION. The Company and its subsidiaries
are corporations  duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated,  and have the requisite
corporate  power to own their  properties  and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a material  adverse  effect on the Company and its
subsidiaries taken as a whole.

            (b) AUTHORIZATION,  ENFORCEMENT,  COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the  requisite  corporate  power and authority to enter into
and perform this Agreement,  the Security Agreement,  the Investor  Registration
Rights  Agreement,   the  Escrow  Agreement,   the  Irrevocable  Transfer  Agent
Instructions,   and  any  related  agreements,  and  to  issue  the  Convertible
Debentures  and the  Conversion  Shares in accordance  with the terms hereof and
thereof,  (ii) the  execution  and  delivery  of this  Agreement,  the  Security
Agreement, the Investor Registration Rights Agreement, the Escrow Agreement, the
Irrevocable  Transfer  Agent  Instructions  (as defined  herein) and any related
agreements  by the  Company  and  the  consummation  by it of  the  transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the Convertible  Debentures and the reservation for issuance and the issuance of
the Conversion  Shares issuable upon conversion or exercise  thereof,  have been
duly  authorized by the Company's  Board of Directors and no further  consent or
authorization  is  required  by the  Company,  its  Board  of  Directors  or its
stockholders,  (iii)  this  Agreement,  the  Security  Agreement,  the  Investor
Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable  Transfer
Agent  Instructions  and any  related  agreements  have been duly  executed  and
delivered by the Company,  (iv) this  Agreement,  the  Security  Agreement,  the
Investor  Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable
Transfer Agent Instructions and any related agreements  constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with  their  terms,  except as such  enforceability  may be  limited  by general
principles  of  equity or  applicable  bankruptcy,  insolvency,  reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors'  rights and remedies.  The  authorized  officer of the
Company  executing  this  Agreement,   the  Security  Agreement,   the  Investor
Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable  Transfer
Agent Instructions and any related agreements knows of no reason why the Company
cannot  file  the   registration   statement  as  required  under  the  Investor
Registration  Rights Agreement or perform any of the Company's other obligations
under such documents.

            (c)  CAPITALIZATION.  As of the date hereof,  the authorized capital
stock of the Company  consists of 100,000,000  shares of Common Stock, par value
$0.001 per share,  of which  10,846,946  shares of Common  Stock were issued and
outstanding.  All of such  outstanding  shares have been validly  issued and are
fully paid and  nonassessable.  Except as  disclosed  in the SEC  Documents  (as
defined in Section  3(f)),  no shares of Common Stock are subject to  preemptive
rights or any other  similar  rights or any liens or  encumbrances  suffered  or
permitted by the Company.  Except as disclosed in the SEC  Documents,  as of the
date of this Agreement, (i) there are no outstanding options,  warrants,  scrip,
rights  to  subscribe  to,  calls or  commitments  of any  character  whatsoever
relating to, or securities  or rights  convertible  into,  any shares of capital
stock of the  Company or any of its  subsidiaries,  or  contracts,  commitments,

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<PAGE>

understandings  or arrangements by which the Company or any of its  subsidiaries
is or may  become  bound to issue  additional  shares  of  capital  stock of the
Company  or any of its  subsidiaries  or  options,  warrants,  scrip,  rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their securities under the 1933 Act (except pursuant to the Registration  Rights
Agreement) and (iv) there are no outstanding  registration  statements and there
are no outstanding  comment letters from the SEC or any other regulatory agency.
There are no  securities  or  instruments  containing  anti-dilution  or similar
provisions that will be triggered by the issuance of the Convertible  Debentures
as described in this Agreement.  The Company has furnished to the Buyer true and
correct copies of the Company's Articles of Incorporation,  as amended and as in
effect on the date hereof (the "ARTICLES OF  INCORPORATION"),  and the Company's
By-laws,  as in effect on the date hereof (the "BY-LAWS"),  and the terms of all
securities  convertible  into or  exercisable  for Common Stock and the material
rights of the holders thereof in respect thereto other than stock options issued
to employees and consultants.

            (d) ISSUANCE OF  SECURITIES.  The  Convertible  Debentures  are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with  respect  to  the  issue  thereof.  The  Conversion  Shares  issuable  upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

            (e) NO  CONFLICTS.  Except as  disclosed in the SEC  Documents,  the
execution,  delivery and performance of this Agreement,  the Security Agreement,
the  Investors  Registration  Rights  Agreement,  the Escrow  Agreement  and the
Irrevocable  Transfer Agent  Instructions by the Company and the consummation by
the  Company of the  transactions  contemplated  hereby will not (i) result in a
violation of the Certifictae of  Incorporation,  any certificate of designations
of any  outstanding  series of preferred  stock of the Company or the By-laws or
(ii)  conflict  with or  constitute  a default (or an event which with notice or
lapse of time or both  would  become a  default)  under,  or give to others  any
rights  of  termination,   amendment,   acceleration  or  cancellation  of,  any
agreement,  indenture  or  instrument  to  which  the  Company  or  any  of  its
subsidiaries is a party, or result in a violation of any law, rule,  regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations  and the  rules  and  regulations  of The  National  Association  of
Securities  Dealers  Inc.'s  OTC  Bulletin  Board on which the  Common  Stock is
quoted)  applicable  to the Company or any of its  subsidiaries  or by which any
property  or  asset  of the  Company  or any of its  subsidiaries  is  bound  or
affected. Except as disclosed in the SEC Documents,  neither the Company nor its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation   or  By-laws  or  their   organizational   charter  or   by-laws,
respectively,  or any  material  contract,  agreement,  mortgage,  indebtedness,
indenture,  instrument,  judgment,  decree  or  order  or any  statute,  rule or
regulation  applicable to the Company or its  subsidiaries.  The business of the
Company and its subsidiaries is not being conducted,  and shall not be conducted
in violation of any material law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the 1933 Act and any applicable  state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with,

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<PAGE>

any court or governmental agency in order for it to execute,  deliver or perform
any  of  its  obligations  under  or  contemplated  by  this  Agreement  or  the
Registration  Rights  Agreement in accordance  with the terms hereof or thereof.
Except as disclosed in the SEC Documents, all consents, authorizations,  orders,
filings and  registrations  which the Company is required to obtain  pursuant to
the  preceding  sentence  have been obtained or effected on or prior to the date
hereof.   The  Company  and  its  subsidiaries  are  unaware  of  any  facts  or
circumstance, which might give rise to any of the foregoing.

            (f) SEC DOCUMENTS:  FINANCIAL STATEMENTS.  Since September 30, 2004,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents  required  to be  filed by it with  the SEC  under  of the  Securities
Exchange Act of 1934,  as amended (the "1934 ACT") (all of the  foregoing  filed
prior to the date  hereof or  amended  after the date  hereof  and all  exhibits
included  therein and financial  statements and schedules  thereto and documents
incorporated by reference  therein,  being  hereinafter  referred to as the "SEC
DOCUMENTS").  The Company has delivered to the Buyers or their  representatives,
or made  available  through the SEC's website at  http://www.sec.gov.,  true and
complete  copies  of the  SEC  Documents.  As of  their  respective  dates,  the
financial  statements  of the  Company  disclosed  in  the  SEC  Documents  (the
"FINANCIAL  STATEMENTS")  complied  as to form  in all  material  respects  with
applicable  accounting  requirements  and the published rules and regulations of
the SEC with respect  thereto.  Such financial  statements have been prepared in
accordance with generally accepted accounting principles,  consistently applied,
during the periods  involved  (except (i) as may be otherwise  indicated in such
Financial  Statements  or the notes  thereto,  or (ii) in the case of  unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or  summary  statements)  and,  fairly  present  in all  material  respects  the
financial position of the Company as of the dates thereof and the results of its
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited   statements,   to  normal  year-end  audit  adjustments).   No  other
information  provided  by or on behalf of the  Company to the Buyer which is not
included  in the  SEC  Documents,  including,  without  limitation,  information
referred to in this Agreement,  contains any untrue statement of a material fact
or omits to state any material  fact  necessary in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.

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

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

                                       8
<PAGE>

            (i)  ACKNOWLEDGMENT  REGARDING  BUYER'S  PURCHASE OF THE CONVERTIBLE
DEBENTURES.  The Company  acknowledges  and agrees  that the  Buyer(s) is acting
solely  in the  capacity  of an arm's  length  purchaser  with  respect  to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

            (j) NO GENERAL  SOLICITATION.  Neither the  Company,  nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation  D under  the 1933 Act) in  connection  with the offer or sale of the
Convertible Debentures or the Conversion Shares.

            (k) NO  INTEGRATED  OFFERING.  Neither the  Company,  nor any of its
affiliates,  nor any  person  acting on its or their  behalf  has,  directly  or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
Convertible Debentures or the Conversion Shares under the 1933 Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the 1933 Act.

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

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

            (n) ENVIRONMENTAL  LAWS. The Company and its subsidiaries are (i) in
compliance with any and all applicable  foreign,  federal,  state and local laws
and  regulations

                                       9
<PAGE>

relating to the  protection  of human  health and  safety,  the  environment  or
hazardous  or  toxic   substances   or  wastes,   pollutants   or   contaminants
("ENVIRONMENTAL  LAWS"),  (ii) have  received  all  permits,  licenses  or other
approvals required of them under applicable  Environmental Laws to conduct their
respective  businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.

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

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

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

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

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

                                       10
<PAGE>

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

            (u) CERTAIN TRANSACTIONS.  Except as set forth in the SEC Documents,
and except for arm's  length  transactions  pursuant to which the Company  makes
payments in the ordinary  course of business upon terms no less  favorable  than
the Company  could  obtain from third  parties and other than the grant of stock
options  disclosed in the SEC  Documents,  none of the officers,  directors,  or
employees  of the  Company  is  presently  a party to any  transaction  with the
Company  (other  than  for  services  as  employees,  officers  and  directors),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property to or from,  or  otherwise  requiring  payments to or from any officer,
director or such employee or, to the knowledge of the Company,  any corporation,
partnership,  trust or other entity in which any officer,  director, or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner.

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

         4. COVENANTS.

            (a) BEST  EFFORTS.  Each party shall use its best efforts  timely to
satisfy each of the  conditions  to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

            (b) FORM D. The Company  agrees to file a Form D with respect to the
Conversion  Shares as required under  Regulation D and to provide a copy thereof
to each Buyer promptly after such filing.  The Company shall,  on or before each
Closing  Date,  take such action as the Company  shall  reasonably  determine is
necessary  to qualify the  Conversion  Shares,  or obtain an  exemption  for the
Conversion  Shares  for  sale to the  Buyers  at the  Closing  pursuant  to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

            (c) REPORTING STATUS.  Until the earlier of (i) the date as of which
the Buyer(s) may sell all of the Conversion Shares without restriction  pursuant
to Rule 144(k)  promulgated under the 1933 Act (or successor  thereto),  or (ii)
the date on which (A) the Buyer(s) shall have sold all the Conversion Shares and
(B)  none of the  Convertible  Debentures  are  outstanding  (the

                                       11
<PAGE>

"REGISTRATION  PERIOD"),  the Company  shall file in a timely manner all reports
required to be filed with the SEC  pursuant to the 1934 Act and the  regulations
of the SEC  thereunder,  and the Company  shall not  terminate  its status as an
issuer  required to file reports  under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination.

            (d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of  the  Convertible  Debentures  for  general  corporate  and  working  capital
purposes.

            (e)  RESERVATION  OF  SHARES.  The  Company  shall  take all  action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient  to effect  the  conversion  of all of the  Conversion  Shares of the
Company shall call and hold a special meeting of the  shareholders  within forty
five (45) days of such occurrence, for the sole purpose of increasing the number
of  shares  authorized.   The  Company's   management  shall  recommend  to  the
shareholders to vote in favor of increasing the number of shares of Common Stock
authorized.  Management shall also vote all of its shares in favor of increasing
the number of authorized shares of Common Stock.

            (f) LISTINGS OR  QUOTATION.  The Company shall  promptly  secure the
listing or  quotation of the  Conversion  Shares upon each  national  securities
exchange,  automated quotation system or The National  Association of Securities
Dealers Inc.'s  Over-The-Counter  Bulletin Board  ("OTCBB") or other market,  if
any,  upon which  shares of Common  Stock are then listed or quoted  (subject to
official notice of issuance) and shall use its best efforts to maintain, so long
as any other  shares of Common  Stock  shall be so listed,  such  listing of all
Conversion  Shares from time to time issuable under the terms of this Agreement.
The Company shall maintain the Common Stock's authorization for quotation on the
OTCBB.

            (g) FEES AND  EXPENSES.  Each of the Company and the Buyer(s)  shall
pay all  costs  and  expenses  incurred  by such  party in  connection  with the
negotiation,   investigation,   preparation,  execution  and  delivery  of  this
Agreement, the Escrow Agreement, the Investor Registration Rights Agreement, the
Security Agreement and the Irrevocable Transfer Agent Instructions. The Buyer(s)
shall be entitled to a ten percent (10%) discount on the Purchase Price.

            (h) The costs and expenses of the Buyer(s) and the  structuring  fee
of Yorkville Advisors Management,  LLC of Ten Thousand Dollars ($10,000) and the
retainer of Reitler Brown & Rosenblatt LLC shall be paid directly from the gross
proceeds of the First Closing.

            (i)  CORPORATE  EXISTENCE.   So  long  as  any  of  the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate  any  merger,  reorganization,  restructuring,  reverse  stock  split
consolidation,  sale of all or substantially  all of the Company's assets or any
similar  transaction  or  related   transactions  (each  such  transaction,   an
"ORGANIZATIONAL  CHANGE") unless,  prior to the  consummation an  Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make

                                       12
<PAGE>

appropriate  provision  with respect to such  holders'  rights and  interests to
insure that the provisions of this Section 4(h) will thereafter be applicable to
the Convertible Debentures.

            (j)  TRANSACTIONS  WITH  AFFILIATES.  So  long  as  any  Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "RELATED PARTY"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement  on an arms-length  basis on terms no less favorable
than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement transaction,  commitment,  or arrangement which
is approved by a majority of the  disinterested  directors of the  Company,  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "AFFILIATE" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "CONTROL" or "CONTROLS"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

            (k) TRANSFER  AGENT.  The Company  covenants and agrees that, in the
event that the Company's agency  relationship  with the transfer agent should be
terminated  for any  reason  prior to a date  which is two (2)  years  after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

            (l)  RESTRICTION  ON ISSUANCE OF THE CAPITAL  STOCK.  So long as any
Convertible Debentures are outstanding, the Company shall not, without the prior
written  consent  of the  Buyer(s),  issue or sell  shares  of  Common  Stock or
Preferred Stock (i) without  consideration or for a consideration per share less
than the Bid  Price of the  Common  Stock  determined  immediately  prior to its
issuance,  (ii) issue any  warrant,  option,  right,  contract,  call,  or other
security  instrument  granting the holder  thereof,  the right to acquire Common
Stock without consideration or for a consideration less than such Common Stock's
Bid Price value determined immediately prior to it's issuance,  (iii) enter into
any security  instrument  granting the holder a security interest in any and all
assets of the  Company,  or (iv) file any  registration  statement  on Form S-8;
except that (i) the Company may, without the consent of the Buyer(s),  provided,
however,  fifteen (15) days prior written notice is given to the Buyer(s), issue
or sell shares of Common Stock or warrants,  options or other rights to purchase
in the  aggregate  up to one million  (1,000,000)  shares of Common Stock to its
executive  officer,  directors and employees pursuant to a Board approved option
plan or as  otherwise  may be approved by the Board of  Directors of

                                       13
<PAGE>

the Company and (ii) commencing on the date hereof and  terminating  thirty (30)
days following the date hereof,  the Company shall be permitted to issue or sell
any Common Stock or Preferred  Stock without  restriction or limitation up to an
aggregate amount of Three Million Dollars ($3,000,000),  provided, however, that
the Company provides the Buyers with at least ten (10) days prior written notice
of such  issuance  (the  "DEFERRAL  PERIOD").  Upon  request,  the Company shall
provide  the  Buyers  with  any and all  information  or  documentation  without
limitation  evidencing such issuance during the Deferral  Period.  Following the
declaration of  effectiveness  by the Securities and Exchange  Commission of the
registration  statement  filed  pursuant  to the  Investor  Registration  Rights
Agreement of even date herewith, the Company shall be permitted to issue or sell
any Common Stock or Preferred  Stock without  restriction or limitation in order
to raise amounts not raised during the Deferral Period up to an aggregate amount
of Three Million Dollars ($3,000,000),  provided the Company provides the Buyers
with at least ten (10) days prior written  notice of such  issuance.  The Buyers
shall  be  entitled  to  any  and  all  information  and  documentation  without
limitation.

         5. TRANSFER AGENT INSTRUCTIONS.

         The Company shall issue the Irrevocable  Transfer Agent Instructions to
its transfer agent irrevocably appointing David Gonzalez,  Esq. as its agent for
purpose of having certificates issued, registered in the name of the Buyer(s) or
its respective  nominee(s),  for the Conversion Shares representing such amounts
of Convertible  Debentures as specified from time to time by the Buyer(s) to the
Company  upon  conversion  of the  Convertible  Debentures,  for  interest  owed
pursuant to the Convertible  Debenture,  and for any and all Liquidated  Damages
(as  this  term is  defined  in the  Investor  Registration  Rights  Agreement).
Yorkville  Advisors  Management,  LLC shall be paid a cash fee of Fifty  Dollars
($50) for every  occasion they act pursuant to the  Irrevocable  Transfer  Agent
Instructions.  The  Company  shall not change its  transfer  agent  without  the
express  written  consent  of the  Buyer(s),  which  shall  not be  unreasonably
withheld by the Buyer(s).  Prior to registration of the Conversion  Shares under
the 1933 Act, all such certificates  shall bear the restrictive legend specified
in Section 2(g) of this  Agreement.  The Company  warrants  that no  instruction
other than the  Irrevocable  Transfer  Agent  Instructions  referred  to in this
Section 5, and stop transfer  instructions to give effect to Section 2(g) hereof
(in the case of the Conversion Shares prior to registration of such shares under
the 1933 Act) will be given by the  Company to its  transfer  agent and that the
Conversion  Shares  shall  otherwise  be  freely  transferable  on the books and
records of the Company as and to the extent  provided in this  Agreement and the
Investor  Registration Rights Agreement.  Nothing in this Section 5 shall affect
in any way the Buyer's  obligations  and agreement to comply with all applicable
securities laws upon resale of Conversion  Shares.  If the Buyer(s) provides the
Company with an opinion of counsel,  in form, scope and substance  customary for
opinions of counsel in comparable  transactions to the effect that  registration
of a resale by the  Buyer(s)  of any of the  Conversion  Shares is not  required
under the 1933 Act, the Company  shall within two (2) business days instruct its
transfer  agent  to  issue  one or more  certificates  in such  name and in such
denominations as specified by the Buyer. The Company  acknowledges that a breach
by it of its obligations  hereunder will cause  irreparable harm to the Buyer by
vitiating  the  intent  and  purpose  of the  transaction  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations  under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened  breach by the Company of the  provisions of this Section
5, that the  Buyer(s)  shall be  entitled,  in addition  to all other  available
remedies,  to an  injunction

                                       14
<PAGE>

restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

         6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The  obligation  of  the  Company  hereunder  to  issue  and  sell  the
Convertible  Debentures  to the  Buyer(s)  at the  Closings  is  subject  to the
satisfaction,  at or  before  the  Closing  Dates,  of  each  of  the  following
conditions,  provided that these  conditions  are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:

            (a) Each Buyer shall have  executed  this  Agreement,  the  Security
Agreement,  the Escrow Agreement and the Investor  Registration Rights Agreement
and the Irrevocable  Transfer Agent  Instructions  and delivered the same to the
Company.

            (b) The  Buyer(s)  shall  have  delivered  to the  Escrow  Agent the
Purchase  Price for  Convertible  Debentures in respective  amounts as set forth
next to each Buyer as  outlined  on  Schedule  I attached  hereto and the Escrow
Agent shall have  delivered  the net proceeds to the Company by wire transfer of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

            (c) The representations and warranties of the Buyer(s) shall be true
and  correct  in all  material  respects  as of the date when made and as of the
Closing  Dates as  though  made at that time  (except  for  representations  and
warranties  that  speak as of a  specific  date),  and the  Buyer(s)  shall have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

            (d) The  Company  shall have  filed a form UCC-1 with  regard to the
Pledged  Property and Pledged  Collateral as detailed in the Security  Agreement
dated the date  hereof and  provided  proof of such filing to the  Buyer(s).

         7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

         The  obligation of the Buyer(s)  hereunder to purchase the  Convertible
Debentures  at the  Closing  is subject  to the  satisfaction,  at or before the
Closing Date, of each of the following conditions:

            (a) The Company  shall have executed  this  Agreement,  the Security
Agreement,  the Convertible  Debenture,  the Escrow  Agreement,  the Irrevocable
Transfer  Instructions  and the  Investor  Registration  Rights  Agreement,  and
delivered the same to the Buyer(s).

            (b) The Common Stock shall be authorized for quotation on the OTCBB,
trading in the Common Stock shall not have been suspended for any reason.

            (c) The  representations and warranties of the Company shall be true
and  correct in all  material  respects  (except to the extent  that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such

                                       15
<PAGE>

representations  and  warranties  shall  be true  and  correct  without  further
qualification)  as of the date when made and as of the  Closing  Dates as though
made at that time (except for  representations and warranties that speak as of a
specific date) and the Company shall have  performed,  satisfied and complied in
all material respects with the covenants,  agreements and conditions required by
this Agreement to be performed,  satisfied or complied with by the Company at or
prior to the Closing  Dates.  If  requested  by the Buyer,  the Buyer shall have
received a  certificate,  executed by the President of the Company,  dated as of
the relevant Closing Dates, to the foregoing effect and as to such other matters
as may be reasonably  requested by the Buyer  including,  without  limitation an
update as of such  Closing  Dates  regarding  the  representation  contained  in
Section 3(c) above.

            (d) The Company  shall have  executed and  delivered to the Buyer(s)
the  Convertible  Debentures in the  respective  amounts set forth opposite each
Buyer(s) name on Schedule I attached hereto.

            (e) The Buyer(s)  shall have received an opinion of counsel from the
Company's counsel in a form satisfactory to the Buyer(s).

            (f) The Company shall have provided to the Buyer(s) a certificate of
good standing from the secretary of state from the state in which the company is
incorporated.

            (g) As of the Closing  Date,  the Company shall have reserved out of
its  authorized and unissued  Common Stock,  solely for the purpose of effecting
the conversion of the Convertible  Debentures,  shares of Common Stock to effect
the conversion of all of the Conversion Shares then outstanding.

            (h)  The  Irrevocable  Transfer  Agent  Instructions,  in  form  and
substance   satisfactory  to  the  Buyer,  shall  have  been  delivered  to  and
acknowledged in writing by the Company's transfer agent.

            (i) The Company shall have provided to the Buyer an acknowledgement,
to the satisfaction of the Buyer, from HJ & Associates, LLC as to its ability to
provide all  consents  required  in order to file a  registration  statement  in
connection with this transaction.

            (j) The Company shall have filed a form UCC-1 or such other forms as
may be  required to perfect the  Buyer's  interest in the Pledged  Property  and
Pledged  Collateral as detailed in the Security  Agreement dated the date hereof
and provided proof of such filing to the Buyer(s).

         8. INDEMNIFICATION.

            (a) In consideration  of the Buyer's  execution and delivery of this
Agreement and acquiring the  Convertible  Debentures and the  Conversion  Shares
hereunder,  and in addition to all of the Company's other obligations under this
Agreement,  the Company shall defend,  protect,  indemnify and hold harmless the
Buyer(s) and each other holder of the Convertible  Debentures and the Conversion
Shares, and all of their officers,  directors,  employees and agents (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement) (collectively, the "BUYER INDEMNITEES") from and
against

                                       16
<PAGE>

any and all actions,  causes of action, suits, claims, losses, costs, penalties,
fees,   liabilities   and  damages,   and  expenses  in   connection   therewith
(irrespective  of whether any such Buyer Indemnitee is a party to the action for
which indemnification  hereunder is sought), and including reasonable attorneys'
fees and disbursements  (the "INDEMNIFIED  LIABILITIES"),  incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company  in  this  Agreement,   the  Convertible   Debentures  or  the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby or thereby,  (b) any breach of any  covenant,  agreement or
obligation  of  the  Company  contained  in  this  Agreement,  or  the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby,  or (c) any  cause of  action,  suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution,  delivery,  performance or enforcement of this Agreement or any other
instrument,  document  or  agreement  executed  pursuant  hereto  by  any of the
Indemnities,  any  transaction  financed  or to be financed in whole or in part,
directly or  indirectly,  with the proceeds of the  issuance of the  Convertible
Debentures  or the status of the Buyer or holder of the  Convertible  Debentures
the Conversion Shares, as a Buyer of Convertible  Debentures in the Company.  To
the extent that the foregoing  undertaking  by the Company may be  unenforceable
for any reason,  the Company shall make the maximum  contribution to the payment
and  satisfaction of each of the Indemnified  Liabilities,  which is permissible
under applicable law.

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

         9. GOVERNING LAW: MISCELLANEOUS.

            (a)  GOVERNING  LAW.  This  Agreement   shall  be  governed  by  and
interpreted in accordance with the laws of the State of Nevada without regard to
the  principles of conflict of laws.  The parties  further agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New

                                       17
<PAGE>

Jersey,  sitting in Hudson County and the United States  District  Court for the
District of New Jersey sitting in Newark, New Jersey for the adjudication of any
civil action asserted pursuant to this Paragraph.

            (b)  COUNTERPARTS.  This  Agreement  may be  executed in two or more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

            (c) HEADINGS.  The headings of this Agreement are for convenience of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

            (d)  SEVERABILITY.  If any  provision  of this  Agreement  shall  be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

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

            (f) NOTICES. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) day  after  deposit  with a  nationally  recognized
overnight  delivery  service,  in each case  properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:


                                       18
<PAGE>

If to the Company, to:              Nanoscience Technologies, Inc.
                                    45 Rockefeller Plaza - Suite 2000
                                    New York, NY 10111
                                    Attention:  David Rector
                                    Telephone:  (212) 332-3443
                                    Facsimile:  (212) 332-3401

With a copy to:                     Reitler Brown & Rosenblatt LLC
                                    800 Third Avenue, 21st Floor
                                    New York, NY 10022
                                    Attention:  Robert S. Brown, Esq.
                                    Telephone:  (212) 209-3050
                                    Facsimile:  (212) 371-5500

If to the Transfer Agent, to:       Continental Stock Transfer & Trust Company
                                    17 Battery Place, 8th Floor
                                    New York, NY 10004
                                    Telephone:  (212) 509-4000
                                    Facsimile:  (212) 509-5150

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

         If to the Buyer(s),  to its address and facsimile number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

            (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor any Buyer shall  assign this  Agreement or any rights or
obligations  hereunder  without  the prior  written  consent of the other  party
hereto.

            (h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            (i)  SURVIVAL.  Unless this  Agreement is  terminated  under Section
9(l),  the  representations  and  warranties  of the  Company  and the  Buyer(s)
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9, and the indemnification  provisions set forth in Section 8,
shall  survive the Closing for a period of two (2) years  following  the date on
which the  Convertible  Debentures  are converted in full. The Buyer(s) shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants hereunder.

                                       19
<PAGE>

            (j) PUBLICITY.  The Company and the Buyer(s) shall have the right to
approve,  before  issuance any press release or any other public  statement with
respect to the  transactions  contemplated  hereby made by any party;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Buyer(s),  to issue any press release or other public disclosure with respect to
such  transactions  required  under  applicable  securities  or  other  laws  or
regulations  (the Company  shall use its best efforts to consult the Buyer(s) in
connection with any such press release or other public  disclosure  prior to its
release  and  Buyer(s)  shall  be  provided  with a copy  thereof  upon  release
thereof).

            (k) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed,  all such further acts and things,  and shall execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

            (l)  TERMINATION.  In the  event  that the  Closing  shall  not have
occurred with respect to the Buyers on or before five (5) business days from the
date  hereof  due to the  Company's  or  the  Buyer's  failure  to  satisfy  the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party;  provided,  however,  that if this  Agreement is  terminated by the
Company  pursuant to this Section 9(l),  the Company  shall remain  obligated to
reimburse  the  Buyer(s)  for  the  fees  and  expenses  of  Yorkville  Advisors
Management, LLC described in Section 4(g) above.

            (m) NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the  language  chosen by the  parties  to express  their  mutual
intent, and no rules of strict construction will be applied against any party.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]


                                       20
<PAGE>

         IN WITNESS  WHEREOF,  the  Buyers  and the  Company  have  caused  this
Securities  Purchase  Agreement to be duly executed as of the date first written
above.

                                          COMPANY:
                                          NANOSCIENCE TECHNOLOGIES, INC.

                                          By: /s/ David Rector
                                              ----------------------------------
                                          Name:  David Rector
                                          Title: President & CEO


                                       21

<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                                              ADDRESS/FACSIMILE              AMOUNT OF
            NAME                              SIGNATURE                        NUMBER OF BUYER              SUBSCRIPTION
------------------------------      ------------------------------    ---------------------------------    --------------
<S>                                 <C>                               <C>                                      <C>
Highgate House, LP                  By:   Yorkville Advisors, LLC     101 Hudson Street - Suite 3700           $ 500,000
                                    Its:  General Partner             Jersey City, NJ  07303
                                                                      Facsimile:    (201) 985-8266

                                    By: /s/ Mark Angelo
                                        ---------------------
                                    Name: Mark A. Angelo
                                    Its:  Portfolio Manager

Montgomery Equity Partners, LP      By:   Yorkville Advisors, LLC     101 Hudson Street - Suite 3700           $ 500,000
                                    Its:  General Partner             Jersey City, NJ  07303
                                                                      Facsimile:   (201) 985-8266

                                    By: /s/ Mark Angelo
                                        ---------------------
                                    Name: Mark A. Angelo


With a copy to:                     David Gonzalez, Esq.                 101 Hudson Street - Suite 3700
                                                                         Jersey City, NJ 07302
                                                                         Facsimile:  (201) 985-8266
</TABLE>