Document:

EXHIBIT 10.3

                       NONQUALIFIED STOCK OPTION AGREEMENT

                                CORVU CORPORATION
                           2005 EQUITY INCENTIVE PLAN

            THIS AGREEMENT, made effective as of this ____ day of ________,
2005, by and between CorVu Corporation, a Minnesota corporation (the "Company"),
and ______________ ("Optionee").

                              W I T N E S S E T H:

      WHEREAS, Optionee on the date hereof is a key employee, officer or
director of or consultant or advisor to the Company or one of its Subsidiaries;
and

      WHEREAS, the Company wishes to grant a nonqualified stock option to
Optionee to purchase shares of the Company's Common Stock pursuant to the
Company's 2005 Equity Incentive Plan (the "Plan"); and

      WHEREAS, the Administrator of the Plan has authorized the grant of an
incentive stock option to Optionee and has determined that, as of the effective
date of this Agreement, the Fair Market Value of the Company's Common Stock is
$0.31 per share;

      NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

      1. GRANT OF OPTION. The Company hereby grants to Optionee on the date set
forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of __________________ (_________)
shares of Common Stock at a per share price of $0.31 on the terms and conditions
set forth herein, and subject to adjustment pursuant to Section 13 of the Plan.
This Option is not intended to be an incentive stock option within the meaning
of Section 422, or any successor provision, of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder.

      2. DURATION AND EXERCISABILITY.

            a. GENERAL. The term during which this Option may be exercised shall
terminate on the close of business on _____________________, except as otherwise
provided in Paragraphs 2(b) through 2(d) below. This Option shall become
exercisable as follows:____________________________________________________.

            Notwithstanding the foregoing, in the event of an acquisition of the
Company through the sale of substantially all of its assets or through a merger,
consolidation, exchange, reorganization, reclassification, extraordinary
dividend, reorganization, divestiture (including a spin-off) or liquidation of
the Company (collectively referred to as a "change of control transaction"),
this Option shall immediately become exercisable to the extent of One Hundred
Percent (100%) of the aggregate number of shares specified in Paragraph 1.

<PAGE>

            Once the Option becomes exercisable to the extent of one hundred
percent (100%) of the aggregate number of shares specified in Paragraph 1,
Optionee may continue to exercise this Option under the terms and conditions of
this Agreement until the termination of the Option as provided herein. If
Optionee does not purchase upon an exercise of this Option the full number of
shares which Optionee is then entitled to purchase, Optionee may purchase upon
any subsequent exercise prior to this Option's termination such previously
unpurchased shares in addition to those Optionee is otherwise entitled to
purchase.

            b. TERMINATION OF RELATIONSHIP (OTHER THAN DISABILITY OR DEATH). If
Optionee's relationship with the Company or any Subsidiary is terminated for any
reason other than disability or death, this Option shall completely terminate on
the earlier of (i) the close of business on the three-month anniversary date of
such termination of relationship, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above. In such period following the termination of
Optionee's relationship, this Option shall be exercisable only to the extent the
Option was exercisable on the vesting date immediately preceding such
termination of relationship, but had not previously been exercised. To the
extent this Option was not exercisable upon such termination of relationship, or
if Optionee does not exercise the Option within the time specified in this
Paragraph 2(b), all rights of Optionee under this Option shall be forfeited.

            c. DISABILITY. If Optionee's relationship with the Company or any
Subsidiary terminates because of disability (as defined in Code Section 22(e),
or any successor provision), this Option shall terminate on the earlier of (i)
the close of business on the twelve-month anniversary date of the such
termination of relationship, and (ii) the expiration date of this Option stated
in Paragraph 2(a) above. In such period following the termination of Optionee's
relationship, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding such termination of
relationship, but had not previously been exercised. To the extent this Option
was not exercisable upon such termination of relationship, or if Optionee does
not exercise the Option within the time specified in this Paragraph 2(c), all
rights of Optionee under this Option shall be forfeited.

            d. DEATH. In the event of Optionee's death, this Option shall
terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the date of Optionee's death, and (ii) the expiration date
of this Option stated in Paragraph 2(a) above. In such period following
Optionee's death, this Option shall be exercisable by the person or persons to
whom Optionee's rights under this Option shall have passed by Optionee's will or
by the laws of descent and distribution only to the extent the Option was
exercisable on the vesting date immediately preceding the date of Optionee's
death. To the extent this Option was not exercisable upon the date of Optionee's
death, or if such person or persons do not exercise this Option within the time
specified in this Paragraph 2(d), all rights under this Option shall be
forfeited.

<PAGE>

      3. MANNER OF EXERCISE.

            a. GENERAL. The Option may be exercised only by Optionee (or other
proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Administrator may
deem advisable, by delivering within the Option Period written notice of
exercise to the Company at its principal office. The notice shall state the
number of shares as to which the Option is being exercised and shall be
accompanied by payment in full of the Option price for all shares designated in
the notice. The exercise of the Option shall be deemed effective upon receipt of
such notice by the Company and upon payment that complies with the terms of the
Plan and this Agreement. The Option may be exercised with respect to any number
or all of the shares as to which it can then be exercised and, if partially
exercised, may be so exercised as to the unexercised shares any number of times
during the Option period as provided herein.

            b. FORM OF PAYMENT. Subject to approval by the Administrator,
payment of the option price by Optionee shall be in the form of cash, personal
check, certified check or previously acquired shares of Common Stock of the
Company, or any combination thereof. Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the Plan. For
purposes of this Agreement, "previously acquired shares of Common Stock" shall
include shares of Common Stock that are already owned by Optionee at the time of
exercise.

            c. STOCK TRANSFER RECORDS. As soon as practicable after the
effective exercise of all or any part of the Option, Optionee shall be recorded
on the stock transfer books of the Company as the owner of the shares purchased,
and the Company shall deliver to Optionee one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.

      4. MISCELLANEOUS.

            a. EMPLOYMENT; RIGHTS AS SHAREHOLDER. This Agreement shall not
confer on Optionee any right with respect to continuance of employment by or
other relationship with the Company or any of its Subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
or other relationship. Optionee shall have no rights as a shareholder with
respect to shares subject to this Option until such shares have been issued to
Optionee upon exercise of this Option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 13 of the Plan.

            b. SECURITIES LAW COMPLIANCE. The exercise of all or any parts of
this Option shall only be effective at such time as counsel to the Company shall
have determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Optionee may be required by the Company, as a condition of the effectiveness of
any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Optionee's own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

<PAGE>

            c. MERGERS, RECAPITALIZATIONS, STOCK SPLITS, ETC. Pursuant and
subject to Section 13 of the Plan, certain changes in the number or character of
the Common Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Optionee's rights with
respect to any unexercised portion of the Option (i.e., Optionee shall have such
"anti-dilution" rights under the Option with respect to such events, but shall
not have "preemptive" rights).

            d. SHARES RESERVED. The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.

            e. WITHHOLDING TAXES. In order to permit the Company 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 that, if necessary, all
applicable federal or state payroll, income or other taxes are withheld from any
amounts payable by the Company to 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 Administrator or such administrative rules it may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company's Common Stock or by
electing to have the Company withhold shares of Common Stock otherwise issuable
to Optionee. Such shares shall have a Fair Market Value equal to the minimum
required tax withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are applicable to
the supplemental income resulting from the exercise of this Option. In no event
may the Company withhold shares having a Fair Market Value in excess of such
statutory minimum required tax withholding.

            f. NONTRANSFERABILITY. During the lifetime of Optionee, the accrued
Option shall be exercisable only by Optionee or by the Optionee's guardian or
other legal representative, and shall not be assignable or transferable by
Optionee, in whole or in part, other than by will or by the laws of descent and
distribution.

            g. 2005 EQUITY INCENTIVE PLAN. The Option evidenced by this
Agreement is granted pursuant to the Plan, a copy of which Plan has been made
available to Optionee and is hereby incorporated into this Agreement. This
Agreement is subject to and in all respects limited and conditioned as provided
in the Plan. All defined terms of the Plan shall have the same meaning when used
in this Agreement. The Plan governs this Option and, in the event of any
questions as to the construction of this Agreement or in the event of a conflict
between the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.

            h. LOCKUP PERIOD LIMITATION. Optionee agrees that in the event 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 underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Optionee hereby agrees that for a period not to exceed 180 days from the
prospectus, Optionee will not sell or contract to sell or grant an option to buy
or otherwise dispose of this option or any of the underlying shares of Common
Stock without the prior written consent of the underwriter(s) or its
representative(s).

<PAGE>

            i. BLUE SKY LIMITATION. 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 this Option and the date on which this Option must be
exercised, provided that the Company gives Optionee 15 days' prior written
notice of such acceleration, and (ii) to cancel any portion of this Option or
any other option granted to Optionee pursuant to the Plan which is not exercised
prior to or contemporaneously with such public offering. 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.

            j. ACCOUNTING COMPLIANCE. Optionee agrees that, if a merger,
reorganization, liquidation or other "transaction" as defined in Section 13 of
the Plan occurs and Optionee is an "affiliate" of the Company or any Subsidiary
(as defined in applicable legal and accounting principles) at the time of such
transaction, Optionee will comply with all requirements of Rule 145 of the
Securities Act of 1933, as amended, and the requirements of such other legal or
accounting principles, and will execute any documents necessary to ensure such
compliance.

            k. STOCK LEGEND. The Administrator may require that the certificates
for any shares of Common Stock purchased by Optionee (or, in the case of death,
Optionee's successors) shall bear an appropriate legend to reflect the
restrictions of Paragraph 4(b) and Paragraphs 4(h) through 4(j) of this
Agreement.

            l. SCOPE OF AGREEMENT. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and Optionee and any
successor or successors of Optionee permitted by Paragraph 2 or Paragraph 4(f)
above.

            m. ARBITRATION. 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 in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, 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 10 years. If
the parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will 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 dispute. 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 fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys' fees. Unless otherwise agreed
by the parties, the place of any arbitration proceedings shall be Hennepin
County, Minnesota.

<PAGE>

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

                                         CORVU CORPORATION

                                         By:
                                            ------------------------------------
                                            Its:
                                                --------------------------------

                                         ---------------------------------------
                                         OptioneeExhibit
        10.1

    

     

    

      MICROHELIX,
        INC.

      SERIES
        B PREFERRED

      STOCK
        PURCHASE AGREEMENT

      (November
        2005)

      

      This
        SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement")
        is made by and between MICROHELIX, INC., an Oregon corporation (the
        "Company"),
        and the purchaser of the Company's securities hereunder that has executed
        this
        Agreement ("Investor").
        The date of this Agreement is set forth on the Investor's signature page
        hereto.

      

      The
        parties hereby agree as follows:

      

      1. Authorization
        of Series B Preferred Stock; Purchase and Sale of Series B Preferred
        Stock.

       

      1.1 Authorization
        of Series B Preferred Stock.
        The
        Company has adopted and filed with the Secretary of State of the State of
        Oregon
        the Certificate of Designation, as amended, setting forth the rights, privileges
        and preferences of the Series B Preferred Stock (the "Amendment").
        The
        Company has authorized the issuance and sale of up to 2,750,000 shares of
        Series
        B Preferred Stock, no par value (the "Series
        B Preferred Stock"),
        of
        which up to 500,000 shares are being offered in this offering (the "Offering").
         A
        total
        of 2,250,000 shares of Series B Preferred Stock were previously issued by
        the
        Company on April 8, 2005 and remain outstanding.

       

      1.2 Purchase
        and Sale of the Series B Preferred Stock. 

      

      (a) Subscription.
        Subject
        to the terms and conditions of this Agreement and on the basis of the
        representations and warranties set forth herein, Investor agrees to purchase
        from the Company that number of shares of Series B Preferred Stock
        (collectively, the "Shares")
        set
        forth on Investor's signature page hereto at a purchase price of $1.00 per
        Share. 

      

      (b) Agreement
        Non-Binding on the Company Until Accepted.
        Investor
        understands and agrees that the Company has the right to reject this Agreement,
        in whole or in part, and for any reason whatsoever. To the extent this Agreement
        is rejected by the Company, the consideration for the rejected Shares shall
        be
        refunded to Investor without interest.

      

      1.3 Minimum
        and Maximum Offering.
        There
        is no minimum number of shares of Series B Preferred Stock the Company must
        sell
        in this Offering before it will accept this Agreement. The Company does not
        intend to sell more than 500,000 shares of Series B Preferred Stock during
        this
        Offering. As of November 1, 2005, the Company has sold 310,000 shares of
        Series
        B Preferred Stock during this Offering.

       

      2. Closing;
        Delivery. 

      

      2.1 The
        closing of the purchase and sale of the Shares (the "Closing")
        will
        occur at 9:00 a.m., Pacific Time, on the day this Agreement is Accepted by
        the
        Company, or such later time and date as the Company may advise Investor in
        writing; provided, that in no event may the Closing be postponed later than
        March 31, 2006 without the consent of Investor. The Closing will take place
        at
        the offices of Tonkon Torp LLP, 1600 Pioneer Tower, 888 SW Fifth Avenue,
        Portland, OR 97204. 

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      2.2 At
        or
        promptly following the Closing, the Company will deliver to Investor a
        certificate, registered in Investor's name, representing the number of Shares
        acquired by Investor pursuant to this Agreement,
        in each case against payment of the purchase price of the Shares by wire
        transfer to the following Company account, by certified or cashiers check,
        in
        immediately available funds, payable to "microHelix,
        Inc.", or by conversion of outstanding debt owed to the Investor by the
        Company.

      

      West
        Coast Bank

      Portland
        Branch

      1000
        SW
        Broadway, Suite 1100

      Portland,
        OR 97205

      ABA
        No.:
        1232000088

      Account
        No. 560001281

      Account
        Name: microHelix, Inc.

       

      3. Representations
        and Warranties. In
        order
        to induce Investor to enter into this Agreement and to purchase the Shares
        hereunder, the Company hereby represents and warrants to each
        Investor: 

       

      3.1 Organization
        and Corporate Power. The
        Company is a corporation duly organized and validly existing under the laws
        of
        the State of Oregon. The
        Company has all required corporate power and authority to own its property,
        to
        carry on its business as presently conducted or contemplated to be conducted
        and
        to carry out the transactions contemplated hereby.

       

      3.2 Authorization. This
        Agreement and the Registration Rights Agreement dated as of April 8, 2005
        in
        substantially the form accompanying this Agreement (together, the "Transaction
        Documents")
        have
        been or will prior to Closing be duly executed and delivered by the Company
        and
        will be the legal, valid and binding obligations of the Company, enforceable
        in
        accordance with their respective terms, subject to applicable bankruptcy,
        insolvency, reorganization and moratorium laws and other laws of general
        application affecting enforcement of creditors' rights generally. The execution,
        delivery and performance of each of the Transaction Documents has been or
        prior
        to Closing will be duly authorized by all necessary corporate action of the
        Company.

       

      3.3 Capitalization. The
        entire authorized capital stock of the Company consists of 20,000,000 shares
        of
        Common Stock, no par value, of which 2,116,246 shares were issued and
        outstanding as of November 1, 2005, and 3,500,000 shares of Preferred Stock,
        no
        par value, of which 500,000 shares have been designated Series A Preferred
        Stock
        (no shares of which are issued and outstanding), and of which
        2,750,000 shares
        are designated Series B Preferred Stock, 2,560,000 shares of which are issued
        and outstanding prior to Closing. In
        this
        Offering the Company will issue up to 500,000 shares of Series B Preferred
        Stock. Following this Offering, and assuming that all of the 500,000 shares
        of
        Series B Preferred Stock offered in the Offering are issued, the Company
        will
        have substantially the following capitalization:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

        

    

    
      
        	 	 	 	
                Existing 

              	 	 	 	 	 	
                Post

                Offering 

              	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Common
                  Stock

              	 	 	
                2,116,246

              	 	
                16.9

              	
                %

              	 	 	
                2,116,246

              	 	 	
                14.6

              	
                %

              
	
                 Series
                  B Preferred Stock*

              	 	 	
                9,000,000

              	 	
                71.8

              	
                %

              	 	 	
                11,000,000

              	 	 	
                75.7

              	
                %

              
	
                 Outstanding
                  Public Warrants**

              	 	 	
                812,611

              	 	
                6.5

              	
                %

              	 	 	
                812,611

              	 	 	
                5.6

              	
                %

              
	
                 Other
                  Options & Warrants***

              	 	 	
                595,867

              	 	
                4.8

              	
                %

              	 	 	
                595,867

              	 	 	
                4.1
                  

              	
                %

              
	
                 

              	 	 	12,524,724	 	 	 	 	 	
                14,524,724

              	 	 	 	 

      

    

     

    
      
        

      

    

    
      *
        On an
        as converted basis (4-to-1).

      **
        Exercise price is $21.60 per share.

      ***
        Exercise prices range from $0.25 to $27.18 per share. 

       

      All
        outstanding capital stock is duly authorized, validly issued and fully paid
        and
        non-assessable. When issued in accordance with the terms of this Agreement,
        the
        Shares will be duly authorized, validly issued and outstanding, fully paid
        and
        nonassessable. 

       

      3.4 Subsidiaries. Except
        for Moore Electronics, Inc., an Oregon corporation wholly owned by the Company,
        the Company has no subsidiaries and does not own or control any interest
        in any
        other corporation, association or business organization.

       

      3.5 Intellectual
        Property.
        To
        the
        Company's Knowledge, the Company owns a valid right, title, interest or license
        in and to the intellectual property necessary for the operation of its business,
        which includes, but is not limited to, all copyrights, common law copyrights,
        trade names, trademarks, service marks, trade secrets, technology, know-how,
        processes, or any other intangible property rights ("Intellectual
        Property")
        of the
        Company. There are no claims pending or, to the Company's Knowledge, threatened
        against the Company regarding any claim or infringement of any Intellectual
        Property belonging to any other person, firm or corporation and the Company
        has
        not received any written notice or other indication of any claim of any such
        infringement. The "Company's
        Knowledge"
        means
        the actual knowledge, after reasonable investigation, of Tyram H.
        Pettit.

      

      3.6 Licenses
        and Permits.
        The
        Company possesses all material licenses and permits necessary for the present
        conduct of its business. Each of such licenses and permits is in full force
        and
        effect, and there are no pending or, to the Company's Knowledge, threatened
        claims or proceedings challenging the validity of, or seeking to revoke or
        discontinue, any license or permit of the Company.

      

      3.7 Taxes.
        The
        Company has (a) timely filed all federal, state, local and foreign franchise,
        income, sales, gross receipts and all other tax returns and statements which
        are
        required to be filed by it and which were due prior to the date hereof
        ("Tax
        Returns and Statements"),
        and
        (b) paid within the time and in the manner prescribed by law or established
        reasonable reserves for the payment of all taxes, levies, assessments, fees,
        penalties, interest and other governmental charges accrued or payable for
        all
        periods ending on or prior to the date hereof. The Tax Returns and Statements
        are complete and accurate in all material respects, and no tax assessment
        or
        deficiency which has not been paid or for which an adequate reserve has not
        been
        set aside, has been made or proposed against the Company, nor are any of
        the Tax
        Returns and Statements now being examined or audited nor, to the Company's
        Knowledge, is there a threat that any of the Tax Returns and Statements will
        be
        examined or audited, and no consents waiving or extending any applicable
        statues
        of limitations for the Tax Returns and Statements, or any taxes required
        to be
        paid thereunder, have been filed.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      3.8 Compliance
        with Laws.
        The
        business of the Company has been conducted in material compliance with all
        applicable laws, statutes, ordinances, rules, regulations, orders and other
        requirements of all national governmental authorities, and of all territories,
        states, municipalities and other political subdivisions and agencies thereof,
        having jurisdiction over it, except for violations that individually, or
        in the
        aggregate, would have no material adverse effect on the business, operations
        or
        financial condition of the Company. 

      

      3.9 Reservation
        of Underlying Shares.
        The
        shares of Common Stock issuable on conversion of the Shares have been, or
        will
        be prior to Closing, duly and validly reserved for issuance and, upon conversion
        of the Shares into shares of Common Stock, will be duly and validly issued,
        fully paid and nonassessable.

      

      3.10 Litigation.
        There
        is
        no claim, action, lawsuit, proceeding, complaint, charge or investigation
        pending or, to the Company's Knowledge, threatened against the Company which
        questions the validity of any of the Transaction Documents or the right of
        the
        Company to enter into them or to consummate the transactions contemplated
        hereby
        or thereby, or which might result, either individually or in the aggregate,
        in
        any material adverse change in the business, assets, conditions, operations,
        affairs, or prospects of the Company, financial or otherwise, or any change
        in
        the current equity ownership of the Company, nor to the Company's Knowledge
        is
        there any basis for the foregoing. 

      

      3.11 1934
        Act Reports.
        The
        Company's Common Stock is traded on the Nasdaq OTC Bulletin Board under the
        symbol "MHLX.OB." The Company has filed all reports required to be filed
        by it
        through the date hereof under the Securities Exchange Act of 1934, as amended,
        (collectively, the "1934
        Act Reports").
        The
        Company's 1934 Act Reports are available at www.sec.gov.

      

      3.12 Transaction
        Costs.
        The
        Company does not expect to pay more than eight percent (8%) with respect
        to
        finders or brokers fees in connection with this Offering.

       

      4. Representations
        and Warranties and other Agreements of Investor.

       

      4.1 Representations
        and Warranties. Investor
        hereby represents and warrants to the Company that:

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      (a) Accredited
        Investor.
        Investor is an "accredited investor" as defined in Rule 501(a) of
        Regulation D promulgated under the Securities Act of 1933, as amended
        (the
        "Securities
        Act")
        as
        identified on Investor's attached signature page:

       

      (i)
         An
        individual whose individual net worth, or joint net worth with that person's
        spouse, at the time of the purchase exceeds $1,000,000; 

      

      (ii)
         An
        individual who had an individual income in excess of $200,000 in each of
        the two
        most recent years or joint income with that person's spouse in excess of
        $300,000 in each of those years and who reasonably expects to reach the same
        income level in the current year; 

      

      (iii)
         A
        corporation or partnership, not formed for the specific purpose of acquiring
        the
        Shares, with total assets in excess of $5 million; 

      

      (iv)
         A
        trust,
        with total assets in excess of $5 million, not formed for the specific purpose
        of acquiring the Shares, whose purchase is directed by a sophisticated person
        as
        described in Regulation D; or

      

      (v)
         An
        entity
        in which all of the equity owners are accredited investors as set forth
        above.

      

      As
        used
        in this paragraph, the term "net worth" means the excess of total assets
        over
        total liabilities. For the purpose of determining a person's net worth, the
        principal residence owned by an individual should be valued at fair market
        value, including the cost of improvements, 
        ;net
        of
        current encumbrances. As used in this paragraph, "income" means actual economic
        income, which may differ from adjusted gross income for income tax purposes.
        Accordingly, Investor should consider whether it should add any or all of
        the
        following items to its adjusted gross income for income tax purposes in order
        to
        reflect more accurately its actual economic income: any amounts attributable
        to
        tax-exempt income received, losses claimed as a limited partner in any limited
        partnership, deductions claimed for depletion, contributions to an IRA or
        Keogh
        retirement plan, and alimony payments. 

      

      (b) Authorization;
        Residency.
        Investor has full power and authority to execute, deliver and perform the
        Transaction Documents and to acquire the Shares. The Transaction Documents
        constitute the valid and legally binding obligations of Investor, enforceable
        against Investor in accordance with their respective terms, subject to
        applicable bankruptcy, insolvency, reorganization and moratorium laws and
        other
        laws of general application affecting enforcement of creditors' rights
        generally. Investor is a resident of the jurisdiction set forth under its
        name
        on Investor's signature page hereto.

      

      (c) Purchase
        Entirely for Own Account.
        The Shares to be purchased by Investor and the Common Stock issuable upon
        conversion of the Shares (collectively, the "Securities")
        will be acquired for investment for Investor's own account, not as a nominee
        or
        agent, and not with a view to the resale or distribution of any part thereof,
        and Investor has no present intention of selling, granting any participation
        in
        or otherwise distributing the same. Investor does not have any contract,
        undertaking, agreement or arrangement with any person or entity to sell,
        transfer or grant participation to such person or to any third party with
        respect to any of the Securities.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (d) Reliance
        Upon Investor's Representations.
        Investor understands that the Securities have not been registered under the
        Securities Act on the ground that the sale provided for in this Agreement
        and
        the issuance of securities hereunder is exempt from registration, and that
        the
        Company's reliance on such exemption is predicated on Investor's representations
        set forth herein. Investor realizes that the basis for the exemption may
        not be
        present if, notwithstanding such representations, Investor has in mind merely
        acquiring shares of the Securities for a fixed or determinable period in
        the
        future, or for a market rise, or for sale if the market does not rise. Investor
        has no such intention.

      

      (e) Investment
        Experience.
        Investor is experienced in evaluating and investing in private placement
        transactions of securities of companies in a similar stage of development
        as the
        Company and acknowledges that Investor is able to fend for itself, can bear
        the
        economic risk of Investor's investment and has such knowledge and experience
        in
        financial and business matters that Investor is capable of evaluating the
        merits
        and risks of the investment in the Securities. If Investor is an entity not
        otherwise owned entirely by accredited investors, Investor has not been
        organized for the purpose of acquiring the Securities.

      

      (f) Restricted
        Securities.
        Investor understands that the Securities may not be sold, transferred or
        otherwise disposed of without registration under the Securities Act or an
        exemption therefrom, and that in the absence of an effective registration
        statement covering the Securities or an available exemption from registration
        under the Securities Act, the Securities must be held indefinitely. In
        particular, Investor is aware that the Securities may not be sold pursuant
        to
        Rule 144 promulgated under the Securities Act unless all of the conditions
        of that Rule are met. 

      

      (g) Receipt
        of Information.
        Investor
        has received all the information Investor considers necessary or appropriate
        for
        deciding whether to purchase the Shares, including without limitation the
        Company's 1934 Act Reports. Investor has had an opportunity to ask questions
        and
        receive answers from the Company regarding the terms and conditions of this
        Offering and the business, properties, prospects and financial condition
        of the
        Company and its subsidiary, and to obtain additional information (to the
        extent
        the Company possessed such information or could acquire it without unreasonable
        effort or expense) necessary to verify the accuracy of any information furnished
        to Investor or to which Investor had access.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (h) Acknowledgement
        of Investment Risk.
        Investor
        understands that much of the customer, market and competition information
        contained in information supplied by the Company is based upon the Company's
        knowledge and belief, and may be based on limited independent investigation.
        Investor further understands that the future operating financial information
        provided by the Company is for illustrative purposes only, and based upon
        certain hypothetical assumptions and events over which the Company has only
        partial or no control. In addition, the assumptions made by the Company and
        used
        in its forecasts are inherently arbitrary. The selection of assumptions requires
        the exercise of judgment and is subject to uncertainty due to the effects
        that
        operational, economic, legislative or other changes may have on future events.
        The Company considers it highly unlikely that each of these events will occur
        in
        the manner and at the time anticipated in its financial forecasts. To the
        extent
        that the occurrence or timing of actual events do not match the Company's
        assumptions, the Company's actual operating and financial results will likely
        vary substantially from its current financial projections. INVESTOR UNDERSTANDS
        THE RISKS AND SPECIAL CONSIDERATIONS RELATING TO AN INVESTMENT IN THE COMPANY,
        INCLUDING, WITHOUT LIMITATION, THOSE IDENTIFIED ON ATTACHED EXHIBIT
        A.

       

      (i) Finder's
        Fees. There
        are
        no claims for brokerage commissions or finder's fees or similar compensation
        in
        connection with the transactions contemplated by this Agreement based on
        any
        arrangement or agreement made by or on behalf of Investor, and Investor agrees
        to indemnify and hold the Company and the other investors in this Offering
        harmless against any damages incurred as a result of any such
        claims.

       

      4.2 Legends.
        Investor
        understands that certificates evidencing the Shares may bear substantially
        the
        following legends:

      

      
        	 	
                (a)
                  

              	
                "The
                  shares represented by this certificate have not been registered
                  under the
                  Securities Act of 1933, as amended. The shares may not be sold
                  or offered
                  for sale in the absence of (a) an effective registration statement
                  for the
                  shares under such Act, or (b) satisfactory assurances to the Company
                  that
                  registration under such Act is not required with respect to such
                  sale or
                  offer."

              

      

      

      
        	 	
                (b)

              	
                Any
                  legend required by the laws of any other applicable
                  jurisdiction.

              

      

      

      5. Conditions
        to Investor's Obligations at Closing. The
        obligations of Investor to purchase Shares at Closing are subject to the
        fulfillment on or before Closing of each of the following conditions unless
        waived by such Investor:

       

      5.1 Representations
        and Warranties.
        The
        representations and warranties of the Company contained in Section 2
        will be
        true and correct in all material respects on and as of the date of
        Closing.

       

      5.2 Performance.
        Company
        will have performed and complied in all material respects with all agreements,
        obligations, and conditions contained in this Agreement that are required
        to be
        performed or complied with by it on or before the Closing.

       

      5.3 Agreements.
        The
        Transaction Documents will have been accepted and executed by the
        Company. 

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      6. Use
        of Proceeds. Proceeds
        from the sale of the Shares to all Investors in this Offering will be used
        by
        the Company for general working capital.

      

      7. Miscellaneous.

       

      7.1 Incorporation
        by Reference.
        All
        exhibits appended to this Agreement are incorporated by reference and made
        a
        part of this Agreement.

       

      7.2 Binding
        Effect.
        All
        covenants, agreements, representations, warranties and undertakings in this
        Agreement made by and on behalf of any of the parties hereto will bind and
        inure
        to the benefit of the respective successors and assigns of the parties hereto
        and transferees of the Shares.

       

      7.3 Amendments
        and Waivers.
        Except
        as set forth in this Agreement, changes in or additions to this Agreement
        may be
        made, or compliance with any term, covenant, agreement, condition or provision
        set forth herein may be omitted or waived (either generally or in a particular
        instance and either retroactively or prospectively), upon the written consent
        of
        the Company and the Investor.

       

      7.4 Governing
        Law; Jurisdiction.
        This
        Agreement will be deemed a contract made under the laws of the State of Oregon
        and, together with the rights and obligations of the parties hereunder, will
        be
        construed under and governed by the laws of such State, without giving effect
        to
        principles of conflicts of law. The parties hereto irrevocably submit to
        the
        jurisdiction of any state or federal court sitting in Multnomah County, Oregon,
        in any action or proceeding brought to enforce, or otherwise arising out
        of or
        relating to, this Agreement, and hereby waive any objection to venue in any
        such
        court and any claim that such forum is an inconvenient forum.

       

      7.5 Waiver
        of Jury Trial; Attorney Fees.
        Each
        party hereby irrevocably waives any right it may have, and agrees not to
        request, a jury trial for the adjudication of any dispute hereunder or in
        connection herewith or arising out of this Agreement or any transaction
        contemplated hereby. In the event suit or action is brought by any party
        under
        this Agreement to enforce any of its terms, or in any appeal therefrom, it
        is
        agreed that the prevailing party or parties will be entitled to reasonable
        attorneys fees to be fixed by the arbitrator, trial court, and/or appellate
        court.

      

      7.6 Injunctive
        Relief.
        The
        parties agree that a breach or violation of this Agreement will result in
        immediate and irreparable harm to the non-breaching party in an amount that
        will
        be impossible to ascertain at the time of the breach or violation, and that
        the
        award of monetary damages will not be adequate relief to the non-breaching
        party. The non-breaching party will be entitled to seek equitable or injunctive
        relief, in addition to other remedies to which it may be entitled at law
        or
        equity. In any action for equitable relief, the parties agree to waive any
        requirement for the posting of a bond or security.

      

      7.7 Notices.
        All
        notices, requests, consents and demands will be in writing and may be personally
        delivered (effective upon receipt), mailed, postage prepaid (effective three
        business days after dispatch), sent by facsimile (effective upon receipt
        of the
        facsimile in complete, readable form), or sent via a reputable overnight
        courier
        service (effective the following business day), to:

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  (a)

                	
                  The
                    Company at:

                
	 	 	 
	 	 	
                  microHelix,
                    Inc.

                  19500
                    SW 90th
                    Court

                  Tualatin,
                    OR 97062

                  FAX
                    (503) 692-0878

                
	 	 	
                  Attn:
                    Tyram H. Pettit

                  President

                
	 	 	 
	 	 	 
	 	 	
                  with
                    a copy to:

                
	 	 	 
	 	 	
                  Tonkon
                    Torp LLP

                  888
                    SW Fifth Avenue, Suite 1600

                  Portland,
                    OR 97204

                  FAX
                    (503) 972-3743

                  Attn:
                    Kurt W. Ruttum

                
	 	 	 
	 	
                  (b)

                	
                  Investor
                    at its address set out on its signature page hereto, or such
                    other address
                    as may be furnished in writing to the Company. 

                
	 	 	 
	 	
                  (c)

                	
                  Any
                    other holder of Shares or the underlying Common Stock at such
                    address or
                    facsimile number shown in the Company's records, or, until any
                    such holder
                    so furnishes an address or facsimile number to the Company, then
                    to and at
                    the address of the last holder of such Shares or underlying Common
                    Stock
                    for which the Company has contact information in its
                    records.

                

        

      

       

      7.8 Entire
        Agreement.
        This
        Agreement and the exhibits hereto constitute the entire agreement among the
        Company and Investor with respect to the subject matter hereof. This Agreement
        supersedes all prior agreements between the parties with respect to the Shares
        purchased hereunder and the subject matter hereof.

      

      7.9 Severability.
        Each
        provision of this Agreement will be treated as a separate and independent
        clause, and the unenforceability of any one clause will in no way impair
        the
        enforceability of any of the other clauses. Moreover, if one or more of the
        provisions contained in this Agreement will, for any reason, be held to be
        excessively broad as to scope, activity, or subject so as to be unenforceable
        at
        law, such provision or provisions will be construed by the appropriate judicial
        body by limiting and reducing it or them, so as to be enforceable to the
        maximum
        extent compatible with the applicable law as it will then appear.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      7.10 Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which when
        executed will be deemed to be an original, but all of which taken together
        will
        constitute one and the same agreement. A facsimile transmission of this signed
        Agreement will be legal and binding on all parties hereto. 

      

      7.11 Further
        Cooperation and Assurances.
        Each of
        the parties hereto will execute and deliver any and all additional papers,
        documents and other assurances, and will do any and all acts and things
        reasonably necessary in connection with the performance of their obligations
        hereunder and to carry out the intent of the parties hereto.

      

      

      [Signatures
        on Following Pages]

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      Exhibit
        10.1

       

      IN
        WITNESS WHEREOF, the Company and the Investor have executed this
        Agreement.

      

      
        	 	 	 
	 	MICROHELIX,
                INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Tyram
                H. Pettit, President
	 	 

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      Exhibit
        10.1

       

      MICROHELIX,
        INC.

      

      Series
        B Preferred Stock Investor Signature Page

      

      This
        Series B Preferred Stock Investor Signature Page to the Series B Preferred
        Stock
        Purchase Agreement with microHelix, Inc. (the "Agreement"), is executed and
        delivered by the Investor.

      

      The
        undersigned is hereby designated as an "Investor" under the Agreement, is
        entitled to the rights of an Investor under the Agreement, makes the
        representations and warranties set forth in Section 3
        of the Agreement to the Company, and agrees to be bound by each and all of
        the
        terms of the Agreement as they apply to Investors.

      

      Dated
        as of _____________________.

      

      Number
        of Shares of Series B Preferred Stock: ____________

      Price
        Per Share: $1.00

      Total
        Purchase Price: $______________

      Accredited
        Investor Pursuant to Sect. 4.1 (identify all subsections that
        apply):_______________

      
        	 	 	 	 
	PURCHASER (Individual): 	 	 	PURCHASER (Jointly
                Held/Spouse): 
	 	 	 	 
	 	 	 	 
	
                
Signature	 	 	
                
Signature
	 	 	 	 
	 	 	 	 
	
                
Print
                Name  	 	 	
                
Print
                Name  
	 	 	 	 
	Address: 	 	 	 Address: 
	
                
                  

                  

                  

                      

              	 	 	
                
                  

                  

                  

                      

              
	 	 	 	 

      

      
        	
              	 	 	 
	PURCHASER (Entity): 	 	 	
              
	 	 	 	 
	Entity
                Name: 	 	 	 
	
                
                  

                

              	 	 	 
	By:	 	 	 
	
                
                  
            
                  Signature  

              	 	 	
              
	 	 	 	 
	Its: 	 	 	 
	
                
                  

                    

              	 	 	 
	Address: 	 	 	 
	
                
                  

                  

                  

                      

              	 	 	
                    

              

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      Exhibit
        10.1

       

      EXHIBIT
        A

      

      Risk
        Factors and Special Considerations

       

      An
        investment in the Company involves a high degree of risk. In addition to
        the
        other information contained in this Agreement, you should carefully consider
        the
        following risks before making an investment decision. You could lose all
        or part
        of your investment due to our financial condition or any of these risks.
        The
        risks and uncertainties described below are not the only ones we face.
        Additional risks and uncertainties not presently known to us, or that we
        currently think are immaterial, may also impair our business
        operations.

       

      Our
        on-going business plan is based on assumptions that could prove to be incorrect,
        which could mean that we may be unable to expand as planned and could cause
        us
        to invest in areas that do not result in new sales.

      

      The
        key
        element of the Company's on-going business plan involves the expansion of
        our
        cable assembly capabilities and customer base, in part through our acquisition
        in April 2005 of Moore Electronics, Inc.. This effort intends to capitalize
        on
        what we expect to be new growth in the medical ultrasound equipment market.
        The
        success of our plan depends on numerous assumptions that we cannot be sure
        are
        justified. If any of our key assumptions are incorrect, we could be unable
        to
        expand our business as we currently anticipate and we may make substantial
        investments in product development and/or marketing efforts that do not result
        in new product sales. Our assumptions include the following:

       

      
        
          	 	
                  ·

                	
                  demand
                    for sophisticated “next generation” ultrasound imaging and diagnostic
                    systems will continue to increase;

                
	 	 	 
	 	
                  ·

                	
                  our
                    cable assembly capabilities, including those that that serve
                    ultrasound
                    system OEMs, and our replacement ultrasound probes will efficiently
                    address market needs as they develop;

                
	 	 	 
	 	
                  ·

                	
                  OEMs
                    with whom we have or may develop relationships will be successful
                    in
                    developing their technologies and addressing their markets and
                    will remain
                    agreeable to outsource some or all of these cable assemblies;
                    and

                
	 	 	 
	 	
                  ·

                	
                  other
                    companies will not expand their cable assembly capabilities that
                    offer
                    technological or economic advantages over
                    ours.

                

        

      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      The
        development of products by our OEM customers is usually subject to review
        by the
        U.S. Food and Drug Administration and other regulatory agencies, which means
        that new cable assemblies provided by us that are designed as part of these
        systems may not be sold in commercial quantities for a long time, if
        ever.

      

      Our
        sales
        process involves designing our cable assemblies into both existing and new
        OEM
        devices. The sale of any new system in commercial quantities is generally
        preceded by a pre-production design phase in which we produce various cable
        assembly prototypes based on a collaboration with the customer’s engineering and
        product design staff. The OEM’s imaging systems are subject to regulation and
        licensing, usually by the U.S. Food and Drug Administration ("FDA"), and
        sometimes by comparable foreign regulatory bodies, which increases the cost
        and
        time required for the development, marketing and sale of these systems. We
        expect that the sales cycle for most of our cable assemblies will take 3-12
        months to develop and validate. We are generally paid for prototypes during
        the
        design phase but do not expect such payments to contribute significantly
        to our
        profitability. If either our proposed cable assembly solution or the overall
        imaging system is not approved or is not successfully brought to market in
        a
        timely manner, the failure to do so will have a direct and adverse impact
        on our
        future sales.

      

      A
        large portion of our sales is concentrated with a few customers that could
        make
        fluctuations in revenue and earnings more severe.

      

      Sales
        to
        the Company's largest customer, GE Parallel Design, accounted for 69% and
        63% of
        our total ultrasound sales in 2003 and 2004, respectively. There are a
        relatively limited number of OEMs that make ultrasound-imaging systems. Although
        we provide cable assemblies and/or other services to industry-leading OEMs
        and
        to several specialized competitors, the loss of a significant customer could
        have a material adverse impact on us. While we expect the overall size of
        the
        medical ultrasound market to expand, it remains possible that significant
        penetration of these markets may depend on large volume sales to a limited
        number of potential customers. Concentration in our customer base may make
        fluctuations in revenue and earnings more severe and make business planning
        more
        difficult.

      

      Large
        OEM customers can change their demand on short notice, further adding to
        the
        unpredictability of our quarterly sales and earnings. 

      

      Our
        quarterly results have in the past and may in the future vary significantly
        due
        to the lack of dependable long-term demand forecasts from our larger OEM
        customers. In addition to this risk, many of our OEM customers have the right
        to
        change their demand schedule, either up or down, within a relatively short
        time
        horizon. These changes may result in us incurring additional working capital
        costs and causing increased manufacturing expenses due to these short-term
        fluctuations. In particular, our quarterly operating results have in the
        past
        fluctuated as a result of some of the larger OEM customers changing their
        orders
        within a fiscal quarter. Our expense levels, to a large extent, are based
        on
        shipment expectations in the quarter. If sales levels fall below these
        expectations, operating results are likely to be adversely affected. Although
        we
        have tried to lessen our dependency on a few large customers, this is the
        nature
        of the OEM medical ultrasound industry that we serve and we can provide no
        assurance that we will be able to materially alter this dependency in the
        immediate future, if at all.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      In
        our highly competitive markets, many of our potential competitors have resources
        that we lack, which could impair our relationships with actual or potential
        customers.

      

      Our
        markets are highly competitive. This is particularly true in the area of
        cable
        assemblies sold to OEM customers. Competition is based on technology,
        established relationships, quality of support, location of facilities and
        price.
        Several of our competitors have a longer history of operations and more
        established relationships with actual and potential customers than we have.
        In
        addition, most of our OEM customers choose to concentrate their cable assembly
        business with one or two suppliers and may have certain geographic preferences.
        The combination of these factors may have a direct and adverse impact on
        our
        ability to serve these customers in the future. The Company's principal
        competitive advantages are: (a) low cost manufacturing in Nogales, Mexico;
        (2)
        exceptional quality record; (3) highly responsive to customers with quick
        turn
        capability; and (4) very competitive pricing. Despite these advantages, many
        of
        our competitors and potential competitors have technological and financial
        resources and established business relationships that may afford them a
        competitive advantage.

      

      Intellectual
        Property

      

      Although
        we may apply for patents for some of our products, the patents may not be
        granted or may not provide adequate protection of our intellectual property.
        We
        intend to rely on copyrights, trademarks, trade secret laws and contractual
        obligations with employees and third parties to protect our intellectual
        property. Despite efforts to protect our intellectual property, unauthorized
        parties may attempt to copy aspects of our products or obtain and use
        information that we regard as proprietary. Our efforts to protect our
        intellectual property from third-party discovery and infringement may be
        insufficient and third parties may independently develop technologies similar
        to
        ours, duplicate our products or design around any patents we may obtain.
        In
        addition, third parties may assert that our products and technologies infringe
        their intellectual property.

      

      Growth
        Management

      

      The
        rapid
        execution necessary for us to successfully implement our business plan requires
        an effective planning and management process. We anticipate significant growth
        and will be required to continually improve our financial and management
        controls, reporting systems and procedures on a timely basis, and expand,
        train
        and manage our personnel. There can be no assurance that our systems, procedures
        or controls will be adequate to support our operations or that our management
        will be able to achieve the rapid execution necessary to successfully implement
        our business plan. 

      

      Dependence
        on Key Personnel

      

      Our
        success depends on our ability to identify, attract and retain highly qualified
        personnel and the failure to do so could have a material adverse effect on
        us.

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      Future
        Capital Needs and the Uncertainty of Additional Financing

      

      In
        addition to the funding provided by the proceeds of the sale of Series B
        Preferred Stock under this Offering, to complete and implement our business
        plan
        we may need to raise significant additional funds. There can be no assurance
        that additional financing, if needed, will be available on terms favorable
        to
        us, or at all. 

      

      Offering
        Price and Conversion Ratio

      

      The
        price
        per share and conversion ration of the Series B Preferred Stock was set by
        us.
        Although set in good faith, the price and/or conversion ratio may not bear
        any
        direct relationship to the assets, results of operations or other objective
        criteria of value applicable to us.

      

      Illiquid
        Investment

      

      The
        Securities have not been registered under the Securities Act and are being
        offered in reliance upon an exemption from registration under the Securities
        Act
        and applicable state securities laws. The Securities can only be transferred
        or
        resold in a transaction under or exempt from the Securities Act and applicable
        state securities laws. There is no public market for the offered Series B
        Preferred Stock, and there is no guarantee that any public market for these
        securities will develop. For these reasons Investors may not be able to
        liquidate their investment in the Company in the event of an emergency or
        for
        any other reason. Consequently, the purchase of Series B Preferred Stock,
        and
        the acquisition of Common Stock upon the conversion of Series B Preferred
        Stock,
        should be considered only as a long-term investment.

       

       

      
        
          
          

        

        16

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