EXHIBIT 10.55

                        INCENTIVE STOCK OPTION AGREEMENT

      THIS AGREEMENT, made this 2nd day of July, 2004, by and between GELSTAT
CORPORATION, a Minnesota corporation (the "Company"), and NICHOLAS BLUHM
("Optionee").

      1. Grant of Option.

      Pursuant to its 2003 Incentive Plan (the "Plan"), the Company grants to
Optionee, the right and option (the "Option") to purchase all or any part of an
aggregate of four hundred thousand (400,000) shares of the Company's Common
Stock, par value $0.01 per share (the "Stock"), at the price of $5.05 per share
(the "Option Price") on the terms and conditions set forth in this Agreement.
The Option is intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent the Option does not qualify as an incentive stock option under the
Code, it shall be nonqualified.

      2. Duration and Exercisability.

      (a) Subject to the other Sections of this Agreement, the Option shall be
exercisable on and after the dates set forth below with respect to the number of
shares of Stock indicated.

                  Date                        No. of Shares (Cumulative)
                  ----                        --------------------------
            January 1, 2005                               20,000
             April 1, 2005                                40,000
              July 1, 2005                               120,000
            October 1, 2005                              140,000
            January 1, 2006                              160,000
             April 1, 2006                               180,000
              July 1, 2006                               260,000
            October 1, 2006                              280,000
            January 1, 2007                              300,000
             April 1, 2007                               320,000
              July 1, 2006                               400,000

      (b) The Option shall arise on the date of this Agreement and shall in all
events terminate on July 1, 2009 (the "Option Period").

      (c) During Optionee's lifetime, the Option shall be exercisable only by
Optionee and shall not be assignable or transferable by Optionee, other than by
will or the laws of descent and distribution.

      3. Effect of Termination of Employment. The Company and Optionee are
parties to a certain Employment Agreement dated July 1, 2004 (the "Employment
Agreement"). Capitalized terms used without definition in this Section 3 shall
have the meanings accorded to them by the Employment Agreement.

      (a) If Optionee's employment by the Company is Terminated for Good Cause
or Optionee voluntarily resigns Optionee's employment by the Company, then
Optionee shall have thirty (30) calendar days to exercise the Option with
respect to the shares of Stock that are exercisable under Section 2 on or before
the date of Termination. If Optionee is Terminated for Good Cause, then with
respect to such number of shares of Stock as would otherwise subject to the
Option but which are not exercisable under Section 2, then, subject to Section
3(e), the Option shall immediately cease to be exercisable.

      (b) If Optionee's employment by the Company is Terminated Without Good
Cause or Optionee's employment by the Company is Terminated by Resignation for
Good Reason, then Optionee shall have three hundred sixty-five (365) calendar
days to exercise the Option with respect to the number of shares of Stock that
are exercisable under Section 2 on or before the date of Termination.


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      (c) If Optionee's employment by the Company is Terminated Without Good
Cause but then Optionee executes and does not rescind a full and final release
of claims agreement in favor of the Company (the form of which will be provided
by the Company),then Optionee shall have three hundred sixty-five (365) calendar
days to exercise the Option with respect to such additional number of shares of
Stock as would have become exercisable had Optionee continued to be employed by
the Company for a period of twenty-four months immediately after the date of
Termination. If Optionee's employment by the Company is Terminated Without Good
Cause, with respect to such number of shares of Stock as would otherwise be
subject to the Option but which are not exercisable under Section 2 or as
described in the immediately preceding sentence, then, subject to Section 3(e),
the Option shall immediately cease to be exercisable.

      (d) If Optionee's employment by the Company is Terminated by Resignation
for Good Reason but then Optionee executes and does not rescind a full and final
release of claims agreement in favor of the Company (the form of which will be
provided by the Company),then Optionee shall have three hundred sixty-five (365)
calendar days to exercise the Option with respect to such additional number of
shares of Stock as would have become exercisable had Optionee continued to be
employed by the Company through July 1, 2007. Optionee's employment by the
Company is Terminated by Resignation for Good Reason, with respect to such
number of shares of Stock as would otherwise be subject to the Option but which
are not exercisable under Section 2 or as described in the immediately preceding
sentence, then, subject to Section 3(e), the Option shall immediately cease to
be exercisable.

      (e) If Optionee's employment is terminated on either June 30, 2005 or June
30, 2006, by Failure To Renew, then Optionee shall have three hundred sixty-five
(365) calendar days to exercise the Option with respect to the shares of Stock
that are exercisable under Section 2 on or before the date of Termination.

      (f) Except in the case of Termination by Failure to Renew as provided for
by paragraph (e) above, if Optionee's employment by the Company is Terminated,
then Optionee shall have thirty (30) calendar days to exercise the Option with
respect to at least one hundred thousand (100,000) shares of Stock whether or
not the Option is otherwise exercisable with respect to such number of shares of
Stock under Section 2.

      4. Manner of Exercise.

      (a) The Option may be exercised only by Optionee or other proper party
delivering within the Option Period written notice of exercise to the Company at
its principal office plus Optionee's original copy of this Agreement. The notice
shall state the number of shares as to which the Option is being exercised and
be accompanied by payment in full of the Option Price for all shares of Stock
designated in the notice. The number of shares of Stock issued to Optionee
pursuant to Optionee's exercises of the Option shall be noted on Optionee's
original copy of this Agreement prior to its return to Optionee.

      (b) Optionee may pay the Option Price in cash, by check (bank check,
certified check or personal check), or by money order or as otherwise provided
in the Plan.

      5. Miscellaneous.

      (a) The Option is issued pursuant to the Company's 2003 Incentive Plan and
is subject to its terms which are incorporated by reference. The Plan is
available for inspection during business hours at the principal office of the
Company.

      (b) This Agreement shall not confer on Optionee any right with respect to
continued employment by the Company or any of its subsidiaries, nor shall it
interfere in any way with the right of the Company to terminate such employment
at any time. Optionee shall have none of the rights of a shareholder with
respect to shares of Stock subject to the Option until such shares shall have
been issued to Optionee upon exercise of the Option.

      (c) The exercise of all or any parts of the Option shall only be effective
at such time that the sale of Stock pursuant to such exercise shall not violate
any state or federal securities laws.


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      (d) If there shall be any change in the Stock of the Company through
merger, consolidation, reorganization, recapitalization, dividend in the form of
Stock (of whatever amount), stock split or other change in the corporate
structure of the Company, and all or any portion of the Option shall then be
unexercised and not yet expired, then equitable adjustments in the outstanding
Option shall be made by the Company in order to prevent dilution or enlargement
of Option rights. Such adjustments shall include, where appropriate, changes in
the number of shares of Stock and the Option Price per share subject to the
outstanding Option. This Section is intended to ensure equitable adjustments to
the Option to reflect changes in the authorized and/or outstanding capital stock
of the Company which affect all shareholders and which arise from reorganization
of the capital structure of the Company. No adjustments shall be made for
issuance of capital stock by the Company for value.

      (e) The Company shall at all times during the Option Period reserve and
keep available such number of shares of Stock as shall be sufficient to satisfy
the requirements of the Option.

      (f) If Optionee shall dispose of any of the Stock acquired by Optionee
pursuant to the exercise of the Option within two (2) years from the date the
Option was granted or within one (1) year after the transfer of any such shares
to Optionee upon exercise of the Option, then, in order to provide the Company
with the opportunity to claim the benefit of any income tax deduction which may
be available to it under the circumstances, Optionee shall promptly notify the
Company of the dates of acquisition and disposition of such shares, the number
of shares so disposed of, and the consideration, if any, received for such
shares. In order to comply with all applicable federal or state income tax laws
or regulations, the Company may take such action as it deems appropriate to
insure (i) notice to the Company of any disposition of the Stock of the Company
within time periods described above and (ii) that, if necessary, all applicable
federal or state payroll, withholding, income or other taxes are withheld or
collected from Optionee. If the Company is unable to withhold such federal and
state taxes, for whatever reason, Optionee hereby agrees to pay to the Company
an amount equal to the amount the Company would otherwise be required to
withhold under federal or state law. Optionee may, subject to the approval and
discretion of the Board of Directors of the Company, elect to have all or a
portion of such tax withholding obligations satisfied by delivering shares of
the Company's Stock having a fair market value determined on the date of
exercise equal to such obligations.

      (g) Optionee agrees that if (i) the Company advises Optionee that it plans
an underwritten public offering of its common stock in compliance with the
Securities Act of 1933, as amended, and that the underwriters have requested
that certain shareholders, including Optionee, refrain from selling, entering
into any contract to sell, or granting any option to buy or otherwise dispose of
part or all of their common stock or common stock purchase rights, then (ii) for
a period not to exceed one hundred eighty (180) days from the prospectus,
Optionee shall not sell or contract to sell, or grant an option to buy or
otherwise dispose of the Option or any of the underlying Stock without the prior
written consent of the underwriters. This Section shall not prohibit any
exercise of the Option.

      (h) Notwithstanding anything in this Agreement to the contrary, in the
event the Company makes any public offering of its securities and determines in
its sole discretion that it is necessary to reduce the number of issued but
unexercised stock purchase rights so as to comply with any state securities or
Blue Sky law limitations with respect thereto, the Board of Directors of the
Company shall have the right (i) to accelerate the exercisability of the Option
and the date on which the Option must be exercised, provided that the Company
gives Optionee fifteen (15) days' prior written notice of such acceleration, and
(ii) to cancel any portion of the Option or any other option granted to Optionee
pursuant to the Option which is not exercised prior to or contemporaneously with
such public offering. To the extent the Option is cancelled pursuant to this
Section, the Company shall grant Optionee stock appreciation right or other
equivalent compensation which provides the same benefits as the Option so
cancelled. Notice shall be deemed given when delivered personally or when
deposited in the United States mail, first class postage prepaid and addressed
to Optionee at the address of Optionee on file with the Company.

      (i) The Company may require as a condition precedent to exercisability of
the Option, Optionee's execution of an agreement ("Buy-Sell Agreement") whereby
the Company may repurchase the Stock acquired pursuant to the Option in certain
circumstances. If the Company has not made demand for execution of a Buy-Sell
Agreement within six months after execution of this Agreement, this condition
shall be irrevocably waived.


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      (j) The stock certificates for any Stock acquired pursuant to the Option
shall bear an appropriate legend to reflect the restrictions imposed by this
Agreement.

      (k) Any dispute arising out of or relating to this Agreement or the
alleged breach of it, or the making of this Agreement, including claims of fraud
and inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy. If such dispute
cannot be resolved, such dispute shall be settled by binding arbitration.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator shall be a retired state or federal
judge or an attorney who has practiced securities or business litigation for at
least ten (10) years. If the parties cannot agree on an arbitrator within twenty
(20) days, any party may request that the chief judge of the District Court of
Hennepin County, Minnesota, select an arbitrator. Arbitration shall be conducted
pursuant to the provisions of this Agreement and the commercial arbitration
rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement. Limited civil discovery
shall be permitted for the production of documents and taking of depositions.
Unresolved discovery disputes may be brought to the attention of the arbitrator
who may dispose of such disputes. The arbitrator shall have the authority to
award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive or exemplary damages shall not be awarded. The
arbitrator may award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees, including the arbitrator's fee,
administrative fees, travel expenses, out-of-pocket expenses and reasonable
attorney's fees. Unless otherwise agreed by the parties, the place of any
arbitration proceedings shall be Hennepin County, Minnesota.

      IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.

                                        GELSTAT CORPORATION

                                        By:  /s/ Stephen C. Roberts
                                             ------------------------
                                        Its Chairman and Chief Executive Officer

                                        /s/ Nicholas Bluhm
                                        ---------------------
                                        NICHOLAS BLUHM