Document:

THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      U.S.
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
      APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT
      PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
      AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
      IS NOT REQUIRED. 

     

    Warrant
      No. __________ 

     

    WARRANT
      TO PURCHASE SHARES OF COMMON STOCK 

     

    OF

    

    TECHNOCONCEPTS,
      INC. 

     

    THIS
      CERTIFIES that, for value received, [_________] is entitled to purchase from
      TECHNOCONCEPTS, INC., a Colorado corporation (the “Corporation”),
      subject to the terms and conditions hereof, [_____________] shares (the
“Warrant
      Shares”)
      of
      common stock, no par value (the “Common
      Stock”).
      This
      warrant, together with all warrants hereafter issued in exchange or substitution
      for this warrant, is referred to as the “Warrant”
and
      the
      holder of this Warrant is referred to as the “Holder.”
The
      number of Warrant Shares is subject to adjustment as hereinafter provided.
      Notwithstanding anything to the contrary contained herein, this Warrant shall
      expire at 5:00 pm Eastern Time on the __________________, 2011 [date that is
      five (5) calendar years from [the Final Closing]] (the “Termination
      Date”).
      

     

    1.
      Exercise
      of Warrants.
      

     

    (a)
      The
      Holder may, at any time prior to the Termination Date, exercise this Warrant
      in
      whole or in part at an exercise price per share equal to [$1.90
      / $2.75] per
      share, subject to adjustment as provided herein (the “Exercise
      Price”),
      by
      the surrender of this Warrant (properly endorsed) at the principal office of
      the
      Corporation, or at such other agency or office of the Corporation in the United
      States of America as the Corporation may designate by notice in writing to
      the
      Holder at the address of such Holder appearing on the books of the Corporation,
      and by payment to the Corporation of the Exercise Price in lawful money of
      the
      United States by check or wire transfer for each share of Common Stock being
      purchased. Upon any partial exercise of this Warrant, there shall be executed
      and issued to the Holder a new Warrant in respect of the shares of Common Stock
      as to which this Warrant shall not have been exercised. In the event of the
      exercise of the rights represented by this Warrant, a certificate or
      certificates for the Warrant Shares so purchased, as applicable, registered
      in
      the name of the Holder, shall be delivered to the Holder within three (3)
      business days (the “Delivery Date”) after the Corporation has received the
      Holder’s Warrant Exercise Form and payment of the Exercise Price, or, at the
      request of the Holder (provided that a registration statement under the
      Securities Act of 1933, as amended (the “Securities Act”) providing for the
      resale of the Warrant Shares is then in effect), issued and delivered to the
      Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit
      Withdrawal Agent Commission System (“DWAC”), and the Holder hereof shall be
      deemed for all purposes to be the holder of the Warrant Shares so purchased
      as
      of the date of such exercise. 

     

    (b)
      If,
      but only if, at any time after one year from the date of grant of this Warrant
      there is no effective registration statement registering the resale of the
      Common Stock underlying this Warrant by the Holder, this Warrant may also be
      exercised at such time by means of a “cashless exercise” in which, at any time
      prior to the Termination Date, the Holder of this Warrant may, at its option,
      exchange this Warrant, in whole or in part (a “Warrant
      Exchange”),
      into
      Warrant Shares by surrendering this Warrant at the principal office of the
      Corporation, accompanied by a notice stating such Holder’s intent to effect such
      exchange, the number of Warrant Shares to be exchanged and the date on which
      the
      Holder requests that such Warrant Exchange occur (the “Notice
      of Exchange”).
      

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    The
      Warrant Exchange shall be effective on the date the Holder’s Warrant Exercise
      Form is transmitted to the Corporation or any agent of the Holder that is
      irrevocably instructed to process the Warrant Exchange on the Holder’s behalf
      (the “Exchange
      Date”).
      Certificates for the Warrant Shares issuable upon such Warrant Exchange and,
      if
      applicable, a new Warrant of like tenor evidencing the balance of the Warrant
      Shares remaining subject to this Warrant, shall be issued as of the Exchange
      Date and delivered to the Holder within three (3) business days following the
      Exchange Date. In connection with any Warrant Exchange, this Warrant shall
      represent the right to subscribe for and acquire the number of Warrant Shares
      as
      determined according to the following formula: 

     

    X
      =
Y(A-B)
      

                
      A

     

    
      
        	
                Where:
                  

              	
                X
                  =

              	
                the
                  number of Warrant Shares that shall be issued to the Holder, rounded
                  to
                  the next highest integer; 

              
	 	 	 
	 	
                Y
                  =

              	
                the
                  number of Warrant Shares for which this Warrant is being exercised
                  (which
                  shall include both the number of Warrant Shares issued to the Holder
                  and
                  the number of Warrant Shares subject to the portion of the Warrant
                  being
                  exchanged in payment of the Warrant Price);

              
	 	 	 
	 	
                A
                  =

              	
                the
                  Closing Bid Price of the Common Stock on the trading day immediately
                  preceding the Exchange Date; and

              
	 	 	 
	 	
                B
                  =

              	
                the
                  Warrant Price then in effect.

              

      

    

     

    As
      used
      herein, “Closing
      Bid Price”,
      shall
      mean the closing bid price of the Common Stock as reported by Bloomberg
      Financial L.P. on the date in question (based on a trading day from 9:30 a.m.
      ET
      to 4:02 p.m. Eastern Time) (and, if no closing bid price is reported, the
      closing price as so reported, and if neither the closing bid price nor the
      closing price is so reported, the last reported price of the Common Stock as
      determined by an independent evaluator mutually agreed to by the Holder and
      the
      Corporation). 

     

    2.
      Reservation
      of Warrant Shares.
      The
      Corporation agrees that, prior to the expiration of this Warrant, it will at
      all
      times have authorized and in reserve, and will keep available, solely for
      issuance or delivery upon the exercise of this Warrant, the number of Warrant
      Shares as from time to time shall be issuable by the Corporation upon the
      exercise of this Warrant. 

     

    3.
      No
      Stockholder Rights.
      This
      Warrant shall not entitle the holder hereof to any voting rights or other rights
      as a stockholder of the Corporation. 

     

    4.
      Transferability of Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws, this
      Warrant and all rights hereunder are transferable, in whole or in part, at
      the
      office or agency of the Corporation by the Holder in person or by duly
      authorized attorney, upon surrender of this Warrant together with the Assignment
      Form annexed hereto properly endorsed for transfer. Any registration rights
      to
      which this Warrant may then be subject shall be transferred together with the
      Warrant to the subsequent purchaser. 

     

    5.
      Certain
      Adjustments.
      With
      respect to any rights that Holder has to exercise this Warrant and convert
      into
      shares of Common Stock, Holder shall be entitled to the following adjustments:
      

    

    (a)
      Merger
      or Consolidation.
      If at
      any time there shall be a merger or a consolidation of the Corporation with
      or
      into another corporation when the Corporation is not the surviving corporation,
      then, as part of such merger or consolidation, lawful provision shall be made
      so
      that the holder hereof shall thereafter be entitled to receive upon exercise
      of
      this Warrant, during the period specified herein and upon payment of the
      aggregate Exercise Price then in effect, the number of shares of stock or other
      securities or property (including cash) of the successor corporation resulting
      from such merger or consolidation, to which the holder hereof as the holder
      of
      the stock deliverable upon exercise of this Warrant would have been entitled
      in
      such merger or consolidation if this Warrant had been exercised immediately
      before such merger or consolidation. In any such case, appropriate adjustment
      shall be made in the application of the provisions of this Warrant with respect
      to the rights and interests of the holder hereof as the holder of this Warrant
      after the merger or consolidation. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)
      Reclassification,
      Recapitalization, etc.
      If the
      Corporation at any time shall, by subdivision, combination or reclassification
      of securities, recapitalization, automatic conversion, or other similar event
      affecting the number or character of outstanding shares of Common Stock, or
      otherwise, change any of the securities as to which purchase rights under this
      Warrant exist into the same or a different number of securities of any other
      class or classes, this Warrant shall thereafter represent the right to acquire
      such number and kind of securities as would have been issuable as the result
      of
      such change with respect to the securities that were subject to the purchase
      rights under this Warrant immediately prior to such subdivision, combination,
      reclassification or other change. 

     

    (c)
      Split
      or Combination of Common Stock and Stock Dividend.
      In case
      the Corporation shall at any time subdivide, recapitalize, split forward or
      change its outstanding shares of Common Stock into a greater number of shares
      or
      declare a dividend upon its Common Stock payable solely in shares of Common
      Stock, the Exercise Price shall be proportionately reduced and the number of
      Warrant Shares proportionately increased. Conversely, in case the outstanding
      shares of Common Stock of the Corporation shall be combined or reverse split
      into a smaller number of shares, the Exercise Price shall be proportionately
      increased and the number of Warrant Shares proportionately reduced.

     

    (d)
      Issuances
      of Additional Shares of Stock.
      If at
      any time prior to the exercise of this Warrant, the Corporation shall offer,
      sell, grant any option to purchase or offer, sell or grant any right to reprice
      its securities, or otherwise dispose of or issue (or announce any offer, sale,
      grant or any option to purchase or other disposition), Additional Shares of
      Common Stock (as hereinafter defined) without consideration or for a
      consideration per share less than the Exercise Price in effect immediately
      prior
      to such issuance or sale, then forthwith upon the occurrence of any such
      issuance (the "Dilutive
      Issuance")
      the
      Exercise Price shall be reduced to equal the effective conversion, exchange
      or
      purchase price for such Additional Shares of Common Stock (including any reset
      provisions thereof) at issue. The Corporation shall notify the Holder in
      writing, no later than three trading days following the issuance of any Common
      Stock or Common Stock Equivalents subject to this section, indicating therein
      the applicable issuance price, or applicable reset price, exchange price,
      conversion price and other pricing terms (such notice the “Dilutive
      Issuance Notice”).
      For
      clarification, whether or not the Corporation provides a Dilutive Issuance
      Notice, upon the occurrence of any Dilutive Issuance, after the date of such
      Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares
      based upon the Adjusted Exercise Price regardless of whether the Holder
      accurately refers to Adjusted Exercise Price in the Notice of Exercise

    

    As
      used
      herein, “Additional
      Shares of Common Stock”
shall
      mean all shares of Common Stock or any securities of the Corporation which
      would
      entitle the holder thereof to acquire at any time Common Stock (including
      without limitation, any debt, preferred stock, rights, options, warrants or
      other instrument that is at any time convertible into or exchangeable for,
      or
      otherwise entitles the holder thereof to receive, Common Stock), whether by
      operation of purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or rights
      per share which is issued in connection with such issuance, at an effective
      price per share which is less than the Exercise Price then in effect. If the
      Corporation issues any securities convertible or exchangeable into Common Stock,
      the maximum number of shares of Common Stock issuable thereunder shall be deemed
      to be Additional Shares of Common Stock issued as of the time of such issue,
      if
      the consideration per share of such Additional Shares of Common Stock (as
      hereinafter determined) is less than the Exercise Price then in effect.
      Additional Shares of Common Stock, however, shall not include the issuance
      of
      (i) shares of Common Stock or options to employees, officers or directors of
      the
      Corporation pursuant to any stock or option plan duly adopted by a majority
      of
      the non-employee members of the Board of Directors of the Corporation or a
      majority of the members of a committee of non-employee directors established
      for
      such purpose (ii) securities upon the exercise of or conversion of any
      securities issued hereunder or other securities sold as part of the same
      offering , convertible securities, options or warrants issued and outstanding
      on
      the date of this Agreement, provided that such securities have not been amended
      since the date of this Agreement to increase the number of such securities,
      (iii) issuances to Triumph Small Cap Fund, Inc. of up to 1,340,000 shares of
      Common Stock at $1.50 per share, 670,000 warrants exercisable for Common Stock
      at $1.90 per share, and 670,000 warrants exercisable for Common Stock at $2.75
      per share and additional warrants exercisable for 1,340,000 shares of Common
      Stock at $2.00 per share, 670,000 shares of Common Stock at $2.50 per share
      and
      670,000 shares of Common Stock at $3.50 per share and (iv) securities issued
      pursuant to acquisitions or strategic transactions, provided any such issuance
      shall only be to an entity which is, itself or through its subsidiaries, an
      operating company in a business synergistic with the business of the Corporation
      and in which the Corporation receives benefits in addition to the investment
      of
      funds, but shall not include a transaction in which the Corporation is issuing
      securities primarily for the purpose of raising capital or to an entity whose
      primary business is investing in securities. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (e)
      Fractional
      Shares.
      No
      fractional Warrant Shares shall be issued upon exercise of this Warrant as
      a
      result of any of the adjustments set forth in this Section 5. Instead, the
      number of Warrant Shares issuable upon exercise of this Warrant shall be rounded
      to the nearest whole number. 

     

    6.Conversion
      Limitations.
      The
      Corporation shall not effect any exercise of this Warrant, and a Holder shall
      not have the right to convert any portion of this Warrant, to the extent that
      after giving effect to the exercise set forth on the applicable Warrant Exercise
      Form, such Holder (together with such Holder’s Affiliates, and any other person
      or entity acting as a group together with such Holder or any of such Holder’s
      Affiliates) would beneficially own in excess of the Beneficial Ownership
      Limitation (as defined below). For purposes of the foregoing sentence, the
      number of shares of Common Stock beneficially owned by such Holder and its
      Affiliates shall include the number of shares of Common Stock issuable upon
      exercise of this Warrant with respect to which such determination is being
      made,
      but shall exclude the number of shares of Common Stock which are issuable upon
      (A) exercise of the remaining, unexercised Warrant Shares beneficially owned
      by
      such Holder or any of its Affiliates and (B) exercise or conversion of the
      unexercised or unconverted portion of any other securities of the Corporation
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein (including, without limitation, any debentures or other
      warrants to purchase shares of Common Stock) beneficially owned by such Holder
      or any of its Affiliates. Except as set forth in the preceding sentence, for
      purposes of this Section 6, beneficial ownership shall be calculated in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. To the extent that the limitation contained in this
      Section 6 applies, the determination of whether this Warrant is exercisable
      (in
      relation to other securities owned by such Holder together with any Affiliates)
      and of which Warrant Shares of this Warrant are exercisable shall be in the
      sole
      discretion of such Holder, and the submission of a Warrant Exercise Form shall
      be deemed to be such Holder’s determination of whether this Warrant may be
      exercised (in relation to other securities owned by such Holder together with
      any Affiliates) and which Warrant Shares of this Warrant are exercisable, in
      each case subject to such aggregate percentage limitations. To ensure compliance
      with this restriction, each Holder will be deemed to represent to the
      Corporation each time it delivers a Warrant Exercise Form that such form has
      not
      violated the restrictions set forth in this paragraph and the Corporation shall
      have no obligation to verify or confirm the accuracy of such determination.
      In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. For purposes of this Section 6, in
      determining the number of outstanding shares of Common Stock, a Holder may
      rely
      on the number of outstanding shares of Common Stock as stated in the most recent
      of the following: (A) the Corporation’s most recent Form 10-Q or Form 10-K, as
      the case may be; (B) a public announcement by the Corporation; or (C) a notice
      by the Corporation or the Corporation’s transfer agent. Upon the written or oral
      request of a Holder, the Corporation shall within two Trading Days confirm
      orally and in writing to such Holder the number of shares of Common Stock then
      outstanding. In any case, the number of outstanding shares of Common Stock
      shall
      be determined after giving effect to the conversion or exercise of securities
      of
      the Corporation, including this Warrant, by such Holder or its Affiliates since
      the date as of which such number of outstanding shares of Common Stock was
      reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to the
      issuance of shares of Common Stock issuable upon exercise of this Warrant held
      by the Holder. The Beneficial Ownership Limitation provisions of this Section
      6
      may be waived by such Holder, at the election of such Holder, upon not less
      than
      61 days’ prior notice to the Corporation, to change the Beneficial Ownership
      Limitation to 9.99% of the number of shares of Common Stock outstanding
      immediately after giving effect to the issuance of shares of Common Stock upon
      conversion of this Warrant held by the Holder, and the provisions of this
      Section 6 shall continue to apply. Upon such a change by a Holder of the
      Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
      limitation, the Beneficial Ownership Limitation may not be further waived by
      such Holder. The provisions of this paragraph shall be construed and implemented
      in a manner otherwise than in strict conformity with the terms of this Section
      6
      to correct this paragraph (or any portion hereof) which may be defective or
      inconsistent with the intended Beneficial Ownership Limitation herein contained
      or to make changes or supplements necessary or desirable to properly give effect
      to such limitation. The limitations contained in this paragraph shall apply
      to a
      successor holder of this Warrant. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    7.
      Legend
      and Stop Transfer Orders.
      Unless
      the Warrant Shares have been registered under the Securities Act, and then
      in
      that case subject to the Holders’ compliance with the prospectus delivery
      requirements of Section 5 of the Securities Act, upon exercise of any part
      of
      the Warrant, the Corporation shall instruct its transfer agent to enter stop
      transfer orders with respect to such Warrant Shares, and all certificates or
      instruments representing the Warrant Shares shall bear on the face thereof
      substantially the following legend: 

    

    THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      U.S.
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
      APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT
      PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
      AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH
      REGISTRATION IS NOT REQUIRED. 

     

    8.
      Call. The Corporation shall have the right, upon notice to the Holder
      (“Call Notice”), to “call” all or any portion of this Warrant (a “Call”)
      provided that (i) the Warrant Shares have been registered for resale pursuant
      to
      the Securities Act, and are freely tradable without restriction for at least
      the
      30-day period preceding such notice, (ii) the Closing Price for the Common
      Stock
      has been at least
      [$8.00 / $10.00]
      (subject
      to adjustment to reflect stock splits, stock dividends, recapitalizations and
      the like) for each trading day in the 20-trading day period immediately
      preceding the date of the Call Notice, and (iii) the average daily trading
      volume for the Common Stock has been at least 100,000 for the 20-trading day
      period immediately preceding the date of the Call Notice. The Call Notice shall
      state what portion of the Warrant is being Called and on what date the Call
      shall take effect, which date shall be at least 30 calendar days after the
      Call
      Notice is sent to Holder (the “Call Date”). The Corporation covenants to honor
      all exercises of this Warrant up until 5:00pm (Eastern Time) on the Call Date,
      and any such exercises will be applied against the portion of the Warrant being
      Called. The Call Notice shall be void (i) if on the Call Date, the Warrant
      Shares are no longer freely tradable without restriction or (ii) with respect
      to
      any Warrant Shares which would cause a breach of the conversion limitations
      in
      Section 6. After 5:01pm (Eastern Time) on the Call Date, any unexercised portion
      of the Warrant being Called shall be cancelled without any consideration due
      to
      the Holder. 

     

    9.
      Miscellaneous.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York. All the covenants and provisions of this Warrant by or for
      the benefit of the Corporation shall bind and inure to the benefit of its
      successors and assigns hereunder. Nothing in this Warrant shall be construed
      to
      give to any person or corporation other than the Corporation and the holder
      of
      this Warrant any legal or equitable right, remedy or claim under this Warrant.
      This Warrant shall be for the sole and exclusive benefit of the Corporation
      and
      the holder of this Warrant. The section headings herein are for convenience
      only
      and are not part of this Warrant and shall not affect the interpretation hereof.
      Upon receipt of evidence satisfactory to the Corporation of the loss, theft,
      destruction or mutilation of this Warrant, and of indemnity reasonably
      satisfactory to the Corporation, if lost, stolen or destroyed, and upon
      surrender and cancellation of this Warrant, if mutilated, the Corporation shall
      execute and deliver to the Holder a new Warrant of like date, tenor and
      denomination. 

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
      its
      duly authorized officers under its seal, this _____ day of ___________________,
      2007. 

     

    
      	 	 	 
	 	
              TECHNOCONCEPTS,
                INC. 

            
	 	 
	 	By: 
	 	
              
                

              

              
                Name:

              

            
	
            	Title:

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    WARRANT
      EXERCISE FORM

     

    To
      Be Executed by the Holder in Order to Exercise Warrant 

    

      
        	
                To:
                  

              	
                TechnoConcepts,
                  Inc. 

              	
                Dated
                  ___________________

              
	 	
                Van
                  Nuys, CA 91411 

              	 
	 	
                6060
                  Sepulveda Blvd, Suite 202

              	 

      

    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant No.
      ______, hereby irrevocably elects to purchase (check
      applicable box):
      

     

    
      	 	
              o

            	
              ____________
                shares of the Common Stock of TechnoConcepts, Inc. covered by such
                Warrant; or 

            

    

     

    
      	 	
              
                o

              

            	
              the
                maximum number of shares of Common Stock covered by such Warrant
                pursuant
                to the cashless exercise procedure set forth in subsection 1(b) (if
                applicable). 

            

    

     

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant. Such payment takes the form
      of
(check
      applicable box or boxes):
      

     

    
      	 	
              
                o

              

            	
              $__________
                in lawful money of the United States; and/or

            

    

     

    
      	 	
              
                o

              

            	
              if
                the provisions of subsection 1(b) of this Warrant are in effect,
                the
                cancellation of such portion of the attached Warrant as is exercisable
                for
                a total of _________ Warrant Shares (using a Fair Market Value of
                $_______
                per share for purposes of this calculation); and/or
                

            

    

     

    
      	 	
              
                o

              

            	
              if
                the provisions of subsection 1(b) of this Warrant are in effect,
                the
                cancellation of such number of Warrant Shares as is necessary, in
                accordance with the formula set forth in subsection 1(b), to exercise
                this
                Warrant with respect to the maximum number of Warrant Shares purchasable
                pursuant to the cashless exercise procedure set forth in subsection
                1(b).
                

            

    

     

    The
      undersigned hereby requests that certificates for the Warrant Shares purchased
      hereby be issued in the name of: 

     

    
      	 	 	 	 
	
              

            	 	 	
            
	 	 	 	 
	
              

              (please
                print or type name and address)

            	 	 	
            
	 	 	 	 
	
              

              (please
                insert social security or other identifying number)

            	 	 	 
	 	 	 	 
	
              and
                be delivered as follows: 

            	 	 	 
	 	 	 	 
	
              
 	 	 	 
	
              
                

              

              (please
                print or type name and address)

            	 	 	 
	 	 	 	 
	
              
                

              

              (please
                insert social security or other identifying number)

            	 	 	 

    

     

    and
      if
      such number of shares of Common Stock shall not be all the shares evidenced
      by
      this Warrant Certificate, that a new Warrant for the balance of such shares
      be
      registered in the name of, and delivered to, Holder. 

     

    
      	 	 	 
	 	
              

              Signature
                of Holder 

            
	 	
            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT
      FORM 

     

    (To
      assign the foregoing warrant, execute 

    this
      form. Do not use this form to exercise the warrant.) 

     

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to 

     

    ______________________________________________________________________________________________
      whose address is 

    __________________________________________________________________________________________________________________________________________

    __________________________________________________________________________________________________________________________________________

     

    
      Dated:
        _____________________, _______ 

       

    

    
      	
              Holder's
                Signature: 

            	 
	
              Holder's
                Address: 

            	
              __________________________________________

            
	 	
              __________________________________________
                

            
	 	
              __________________________________________

            

    

    

    Signature
      Guaranteed: ___________________________________________ 

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust corporation. Officers
      of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing Warrant.

     

    
      
        
        

      

      
        7SUBSCRIPTION
      AGREEMENT

    
       

      This
        Subscription Agreement is made by and between TechnoConcepts, Inc., a Colorado
        corporation headquartered at 6060 Sepulveda Blvd, Suite 202, Van Nuys, CA
        91411
        (the “Company”)
        and
        the undersigned prospective investor (the “Investor”)
        who is
        subscribing hereby (the “Subscription”)
        for
        securities in the Company’s private placement (the “Offering”).
        The
        exclusive placement agent for the Offering is Westminster Securities Corporation
        (the “Placement
        Agent”).
        The
        Company is issuing investment units at the rate of $30,000 per unit, consisting
        of (a) $30,000 of 8% secured convertible debentures (the “Debentures”),
        each
        convertible into 20,000 shares (“Shares”)
        of the
        Company’s common stock, no par value (“Common
        Stock”)
        at the
        rate of $1.50 per Share, (b) 10,000 detachable warrants to purchase one share
        each of Common Stock at an exercise price of $1.90 per share, expiring five
        years from their date of issuance and (c) 10,000 detachable warrants to purchase
        one share each of Common Stock at an exercise price of $2.75. The warrants
        described in subparts (b) and (c) of the preceding sentence shall be
        collectively referred to as the “Warrants”.
        Investors purchasing 67 Units ($2,010,000) or more shall be issued additional
        warrants (the “Additional
        Warrants”)
        at the
        rate of 40,000 Additional Warrants per Unit purchased, which Additional Warrants
        shall be identical in form to the Warrants, except that (a) 50% of such
        Additional Warrants shall have an exercise price of $2.00 per share, shall
        not
        have a cashless exercise feature, and shall expire eighteen (18) months from
        the
        Final Closing (defined below), (b) 25% of such Additional Warrants shall
        have an
        exercise price of $2.50 per share, and (c) 25% of such Additional Warrants
        shall
        have an exercise price of $3.50 per share. The shares of Common Stock issuable
        upon exercise of the Warrants shall be referred to as the “Warrant
        Shares”,
        and
        the shares of Common Stock issuable upon exercise of the Additional Warrants
        shall be referred to as the “Additional
        Warrant Shares”.
        The
        Debentures and the Warrants shall be collectively referred to as the
“Units”.
        The
        Shares, Warrant Shares and Additional Warrant Shares shall be collectively
        referred to as the “Underlying
        Shares”.
        

       

      The
        Company may issue up to $4,000,000 of Units (the “Maximum
        Offering”)
        in
        this Offering, The Company may also sell up to an additional $2,000,000 in
        Units, representing an over-allotment allowance in the event the Offering
        is
        oversubscribed. The Investor understands that the Units and the Additional
        Warrants are being issued pursuant to the exemption from registration
        requirements of the Securities Act of 1933, as amended (the “Securities
        Act”
or
        the
“Act”),
        in a
        private placement pursuant to an exemption from registration under Regulation
        D
        promulgated under Section 4(2) and Rule 506 of the Act. As such, the Units
        and
        the Underlying Shares are “restricted securities”. 

       

      The
        Units
        are being offered on a “best efforts, all or none” basis by the Company through
        the Placement Agent with respect to the initial $2,000,000 of Units (the
        “Minimum
        Offering”),
        during an offering period commencing on January 19, 2007 (the “Commencement
        Date”) and continuing until January 31, 2007. If the Minimum Offering is not
        reached, the Offering will terminate and all funds will be returned without
        interest or deduction. In the event the Minimum Offering is reached, the
        Offering will continue until the earlier of (i) the close of business (5:00
        p.m.
        EDT) on February 28, 2007, (ii) termination by mutual agreement of the Company
        and the Placement Agent, or (iii) completion of the sale of the Maximum
        Offering, including any over-allotment sales (“Final Closing”). Any subscription
        documents or funds received after the Final Closing will be returned.

       

      All
        proceeds received from subscribers for the Units offered hereby will be
        deposited by the Placement Agent in a special non-interest bearing escrow
        account (the “Escrow
        Account”)
        with
        Signature Bank and will be released to the Company against delivery by the
        Company to the Placement Agent of certificates representing the Debentures
        and
        the Warrants comprising the Units and, if applicable, the Additional Warrants
        (each a “Closing”
and
        each such date, “Closing
        Date”,
        with
        the first such Closing being deemed the “Initial
        Closing”).

       

      1.
        Subscription.
        

       

      Subject
        to the terms and conditions hereinafter set forth in this Subscription
        Agreement, the Investor hereby subscribes to purchase Units as set forth
        in the
        Investor Signature Page attached hereto. 

       

      The
        Units
        shall be paid for by (i) the delivery of such amount in cash by wire transfer
        or
        check payable to the order of “Signature Bank as Escrow Agent for
        TechnoConcepts, Inc.”, which is being delivered contemporaneously herewith or
        (ii) the exchange of the principal amount of existing Series A Secured
        Subordinated Promissory Notes. 

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      Closings
        will be held, at the discretion of the Company and the Placement Agent, at
        reasonable intervals during the Offering period, but in no event later than
        the
        Final Closing, provided no Closing may be held until (i)
        the
        Minimum Offering has been sold and cash proceeds in cleared funds on deposit
        in
        the Escrow Account equal or exceed the Minimum Offering and (ii) no more
        than
        $1,000,000 in principal amount of Indebtedness (hereinafter defined) (not
        including interest, fees or liquidated damages thereon) ranks senior in priority
        to the Debentures as of such Closing Date. 

       

      2.
        Conditions to Subscription.
        

       

      The
        Subscription is made subject to the following conditions: (i) that the Company
        shall have the right to accept or reject this Subscription, in whole or in
        part,
        for any reason whatsoever; and (ii) that the Investor agrees to comply with
        the
        terms of this Subscription Agreement. 

       

      Acceptance
        of this Subscription shall be deemed given by the countersigning of this
        Subscription Agreement on behalf of the Company and inclusion of this
        Subscription Agreement in a Closing. 

       

      3.
        Representations
        and Warranties of the Investor.
        

       

      The
        Investor, in order to induce the Company to accept this Subscription, hereby
        warrants and represents as follows: 

       

      (a)
        Organization; Authority.
        The
        Investor, if not an individual, is an entity duly organized, validly existing
        and in good standing under the laws of the jurisdiction of its organization
        with
        the requisite power and authority to enter into and to consummate the
        transactions contemplated by this Subscription Agreement and otherwise to
        carry
        out its obligations hereunder. The Investor was not formed for the purpose
        of
        purchasing Units pursuant to this Subscription Agreement. The purchase by
        Investor of the Units hereunder has been duly authorized by all necessary
        action
        on the part of Investor. This Subscription Agreement has been duly executed
        by
        Investor, and when delivered by Investor in accordance with the terms hereof,
        will constitute the valid and legally binding obligation of Investor,
        enforceable against it in accordance with its terms, except (i) as limited
        by
        general equitable principles and applicable bankruptcy, insolvency,
        reorganization, moratorium and other laws of general application affecting
        enforcement of creditors’ rights generally, (ii) as limited by laws relating to
        the availability of specific performance, injunctive relief or other equitable
        remedies and (iii) insofar as indemnification and contribution provisions
        may be
        limited by applicable law. Investor agrees that the Investor’s subscription
        shall be irrevocable by Investor, and that, except as required by applicable
        law, Investor shall not be otherwise entitled to cancel, terminate or revoke
        this Subscription Agreement or any of Investor’s obligations hereunder.

       

      (b)
        Investor
        Representation.
        Investor understands that the Units and Underlying Shares each are “restricted
        securities” and have not been registered under the Securities Act or any
        applicable state securities law. The Investor hereby agrees that the Company
        may
        insert the following or similar legend on the certificates evidencing the
        Units
        and Underlying Shares, in compliance with federal and state securities laws:
        

       

      “These
        securities have not been registered with the Securities and Exchange Commission
        or the Securities Commission of any state in reliance upon an exemption from
        registration under the Securities Act of 1933, as amended (the “Securities Act”)
        or any applicable securities laws of any state. They may not be sold, offered
        for sale, or hypothecated in the absence of a registration statement in effect
        with respect to the securities under the Securities Act or an opinion of
        counsel
        reasonably satisfactory to the Company that such registration is not required
        pursuant to a valid exemption therefrom under the Securities Act.” 

       

      (c)
        No
        Distribution.
        Investor is acquiring the Units as principal for its own account, in the
        ordinary course of its business, and not with a view to or for distributing
        or
        reselling such Units or any part thereof. Investor has no present intention
        of
        distributing any of such Units or Underlying Shares and has no agreement
        or
        understanding, directly or indirectly, with any other individual, corporation,
        partnership, trust, incorporated or unincorporated association, joint venture,
        limited liability company, joint stock company, government (or an agency
        or
        subdivision thereof) or other entity of any kind (each, a “Person”)
        regarding the distribution of such Units or Underlying Shares (this
        representation and warranty not limiting such Investor’s right
        to
        sell the Debentures, Shares, Additional Warrants or Underlying Shares pursuant
        to a Registration Statement or otherwise in compliance with applicable federal
        and state securities laws). 

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (d)
        Investor Status.
        Investor is, and on each date on which it converts any Debentures and exercises
        any Warrants or Additional Warrants it will be an “Accredited Investor” as
        defined in Rule 501(a) under the Securities Act. In general, an “Accredited
        Investor” is deemed to be an institution with assets in excess of $5,000,000 or
        individuals with net worth in excess of $1,000,000 or annual income exceeding
        $200,000 or $300,000 jointly with their spouse. In connection with a
        subscription hereunder, Investor will complete, execute and return the Statement
        of Accredited Investor attached hereto as Exhibit A certifying such status.
        

       

      (e)
        Experience of Investor.
        Investor, either alone or together with its representatives, has such knowledge,
        sophistication and experience in business and financial matters so as to
        be
        capable of evaluating the merits and risks of the prospective investment
        in the
        Units, and has so evaluated the merits and risks of such investment. The
        Investor has not authorized any Person to act as his Purchaser Representative
        (as that term is defined in Regulation D of the General Rules and Regulations
        under the Act) in connection with this transaction. Investor understands
        that it
        must bear the economic risk of this investment in the Units indefinitely,
        and is
        able to bear such risk and is able to afford a complete loss of such investment.
        

       

      (f)
        General
        Solicitation.
        Investor is not purchasing the Units as a result of any advertisement, article,
        notice or other communication regarding the Units published in any newspaper,
        magazine or similar media or broadcast over television or radio or presented
        at
        any seminar or any other general solicitation or general advertisement

       

      (g)
        Access to Information. The Investor has reviewed the Company’s Confidential
        Offering Memorandum dated January 19, 2007 (the “Offering
        Memorandum”)
        which
        contains summary information regarding the Offering, risk factors relating
        to
        the Offering, and the forms of Debenture, Warrants, Security Agreement and
        Subsidiary Guaranty. The Investor has reviewed the SEC Reports (as defined
        in
        Section 4(h) below) and neither the Company nor the Placement Agent has made
        any
        other representations or warranties to the Investor with respect to the Company
        except as contained herein, in the Offering Memorandum or in the SEC Reports.
        The Investor has been afforded the opportunity to ask questions of, and receive
        answers from, the officers and/or directors of the Company concerning the
        terms
        and conditions of the Offering and to obtain any additional information,
        to the
        extent that the Company possesses such information or can acquire it without
        unreasonable effort or expense, necessary to verify the accuracy of the
        information furnished; and has availed himself of such opportunity to the
        extent
        he considers appropriate in order to permit him to evaluate the merits and
        risks
        of an investment in the Securities. It is understood that all documents,
        records
        and books pertaining to this investment have been made available for inspection
        by the Investor during reasonable business hours at its principal place of
        business. Notwithstanding the foregoing, it is understood that the Investor
        is
        purchasing the Securities without being furnished any prospectus setting
        forth
        all of the information that would be required to be furnished under the
        Securities Act and this Offering has not been passed upon or the merits thereof
        endorsed or approved by any state or federal authorities. 

       

      (h)
        Subscriptions
        by Placement Agent.
        The
        Investor hereby acknowledges that the Placement Agent, its affiliates and/or
        its
        beneficial owners may subscribe for Units. 

       

      (i)
        No
        Conflicts.
        The
        execution, delivery and performance by Investor of this Subscription Agreement
        and the consummation by Investor of the transactions contemplated hereby
        will
        not (i) result in a violation of the organizational documents of Investor,
        (ii)
        if an entity, 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 Investor is a party or (iii)
        result
        in a violation of any law, rule, regulation, order, judgment or decree
        (including federal and state securities laws) applicable to Investor, except
        in
        the case of clauses (ii) and (iii) above, for such that are not material
        and do
        not otherwise affect the ability of Investor to consummate the transactions
        contemplated hereby. 

       

      (j)
        Prohibited Transactions.
        During
        the last thirty (30) days prior to the date hereof, Investor has not, directly
        or indirectly, effected or agreed to effect any short sale, whether or not
        against the box, established
        any “put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act)
        with respect to the Common Stock, granted any other right (including, without
        limitation, any put or call option) with respect to the Common Stock or with
        respect to any security that includes, relates to or derived any significant
        part of its value from the Common Stock or otherwise sought to hedge its
        position in the Securities (each, a “Prohibited Transaction”). Prior to the
        earliest to occur of (i) the abandonment of the Offering, (ii) the effective
        date of the Registration Statement or (iii) one hundred and twenty (120)
        days
        from the Final Closing, Investor shall not engage, directly or indirectly,
        in a
        Prohibited Transaction. Investor acknowledges that the representations,
        warranties and covenants contained in this Section 3(j) are being made for
        the
        benefit of the Investors as well as the Company and that each of the other
        Investors shall have an independent right to assert any claims against such
        Investor arising out of any breach or violation of the provisions of this
        Section 3(j). 

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      (k)
        No
        Legal, Tax or Investment Advice.
        Investor understands that nothing in this Subscription Agreement or any other
        materials presented by or on behalf of the Company to the Investor in connection
        with the purchase of the Units constitutes legal, tax or investment advice.
        Investor has consulted such legal, tax and investment advisors as it, in
        its
        sole discretion, has deemed necessary or appropriate in connection with its
        purchase of the Units. Investor understands that the Placement Agent has
        acted
        solely as the agent of the Company in this placement of the Units and that
        the
        Placement Agent makes no representation or warranty with regard to the merits
        of
        this transaction or as to the accuracy of any information Investor may have
        received in connection therewith. Investor acknowledges that it has not relied
        on any information or advice furnished by or on behalf of the Placement Agent.
        

       

      (l)
        Confidentiality.
        Investor will hold in confidence all information concerning this Subscription
        Agreement and the placement of the Units hereunder until the earlier of such
        time as (a) the Company has made a public announcement concerning the
        Subscription Agreement and the placement of the Units hereunder and (b) this
        Subscription Agreement is terminated. 

      

      The
        Investor certifies that each of the foregoing representations and warranties
        set
        forth in subsection (a) through (l) inclusive of this Section 3 are true
        as of
        the date hereof, any applicable Closing Date and shall survive such dates.
        

       

      4.
        Representations
        and Warranties of the Company. 

       

      The
        Company hereby makes the following representations and warranties to the
        Investor. Exceptions to the below, if any, shall be set forth in a disclosure
        schedule, attached hereto, each such disclosure schedule numbered in accordance
        with the section and paragraph number below to which it relates. 

       

      (a)
        Subsidiaries.
        The
        Company has the following subsidiaries (collectively, “Subsidiaries”):
        Asante Networks, Inc. (85% owned by the Company), Techno Jinshilin Ltd. (100%
        owned by the Company), Techno Hong Kong Ltd. (100% owned by the Company)
        and
        TechnoConcepts, Inc. (Nevada) (100% owned by the Company). All capital stock
        owned by the Company directly or through one or more Subsidiaries in each
        such
        Subsidiary is validly issued and is fully paid, non-assessable and free of
        preemptive and similar rights. 

       

      (b)
        Organization and Qualification. Each of the Company and its Subsidiaries
        is an
        entity duly incorporated or otherwise organized, validly existing and in
        good
        standing under the laws of the jurisdiction of its incorporation or organization
        (as applicable), with the requisite power and authority to own and use its
        properties and assets and to carry on its business as currently conducted.
        Neither the Company nor any Subsidiary is in material violation or default
        of
        any of the provisions of its certificate or articles of incorporation, bylaws
        or
        other organizational or charter documents. Each of the Company and the
        Subsidiaries is duly qualified to conduct business and is in good standing
        as a
        foreign corporation or other entity in each jurisdiction in which the nature
        of
        the business conducted or property owned by it makes such qualification
        necessary, except where the failure to be so qualified or in good standing,
        as
        the case may be, could not have or reasonably be expected to result in (i)
        a
        material adverse effect on the legality, validity or enforceability of this
        Subscription Agreement, (ii) a material adverse effect on the results of
        operations, assets, business or financial condition of the Company and the
        Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
        Company’s ability to perform in any material respect on a timely basis its
        obligations under this Subscription Agreement (any of (i), (ii) or (iii),
        a
“Material
        Adverse Effect”)
        and
        no action,
        claim, suit, investigation or proceeding (including, without limitation,
        an
        investigation or partial proceeding, such as a deposition), whether commenced
        or
        threatened (“Proceeding”)
        has
        been instituted in any such jurisdiction revoking, limiting or curtailing
        or
        seeking to revoke, limit or curtail such power and authority or qualification
        except for any action, claim, suit, investigation or proceeding which would
        not
        have a Material Adverse Effect. 

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (c)
        Authorization;
        Enforcement.
        The
        Company has the requisite corporate power and authority to enter into and
        to
        consummate the Offering and otherwise to carry out its obligations hereunder.
        The execution and delivery of this Subscription Agreement by the Company
        and the
        consummation by it of the transactions contemplated hereby have been duly
        authorized by all necessary action on the part of the Company and no further
        consent or action is required by the Company, its Subsidiaries, its board
        of
        directors or its stockholders in connection therewith other than in connection
        with the Required Approvals (as defined below). This Subscription Agreement,
        when executed and delivered in accordance with the terms hereof, will constitute
        the valid and binding obligation of the Company enforceable against the Company
        in accordance with its terms, except (i) as limited by general equitable
        principles and applicable bankruptcy, insolvency, reorganization, moratorium
        and
        other laws of general application affecting enforcement of creditors’ rights
        generally (ii) as limited by laws relating to the availability of specific
        performance, injunctive relief or other equitable remedies and (iii) insofar
        as
        indemnification and contribution provisions may be limited by applicable
        law.

       

      (d)
        No
        Conflicts.
        The
        execution, delivery and performance of this Subscription Agreement by the
        Company and the consummation by the Company of the Offering do not and will
        not:
        (i) conflict with or violate any provision of the Company’s or any Subsidiary’s
        certificate or articles of incorporation, bylaws or other organizational
        or
        charter documents, or (ii) subject to obtaining the Required Approvals (as
        defined below), conflict with, or constitute a default (or an event that
        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 (with
        or
        without notice, lapse of time or both) of any agreement, credit facility,
        debt
        or other instrument (evidencing a Company or Subsidiaries’ debt or otherwise) or
        other understanding to which the Company or any Subsidiary is a party or
        by
        which any property or asset of the Company or any Subsidiary is bound or
        affected, or (iii) result in a violation of any law, rule, regulation, order,
        judgment, injunction, decree or other restriction of any court or governmental
        authority as currently in effect to which the Company or any Subsidiary is
        subject (including federal and state securities laws and regulations), or
        by
        which any property or asset of the Company or any Subsidiary is bound or
        affected; except in the case of each of clauses (ii) and (iii), would not
        result
        in a Material Adverse Effect. 

       

      (e)
        Filings,
        Consents and Approvals.
        Except
        as set forth in Schedule 4(g), neither the Company nor any Subsidiary is
        required to obtain any consent, waiver, authorization or order of, give any
        notice to, or make any filing or registration with, any court or other federal,
        state, local or other governmental authority or other Person in connection
        with
        the execution, delivery and performance by the Company of this Subscription
        Agreement, other than: (i) the filing with the Securities and Exchange
        Commission (“Commission”)
        of the
        Registration Statement, (ii) the filing with the Commission of a Form D pursuant
        to Commission Regulation D, (iii) the filing of applicable UCC forms and
        other
        documentation necessary to secure collateral for the Debentures, and (iv)
        applicable Blue Sky filings (collectively, the “Required
        Approvals”)
        

       

      (f)
        Issuance
        of the Securities.
        The
        Units, the Additional Warrants and the Underlying Shares, are duly authorized
        and, when issued and paid for in accordance with this Subscription Agreement,
        will be duly and validly issued, fully paid and nonassessable, free and clear
        of
        all liens, and not subject to any preemptive rights. The Company has reserved
        from its duly authorized capital stock a number of shares of Common Stock
        required for issuance of the Underlying Shares. The Debentures are secured
        pursuant to a Security Agreement, and a Subsidiary Guarantee with respect
        to the
        Security Agreement. 

       

      (g)
        Capitalization.
        The
        number of shares and type of all authorized, issued and outstanding capital
        stock of the Company is as set forth in Schedule 4(g) attached hereto. No
        Person
        has any right of first refusal, preemptive right, right of participation,
        or any
        similar right to participate in the Offering. Except as disclosed in Schedule
        4(g), there are no outstanding options, warrants, script rights to subscribe
        to,
        calls or commitments of any character whatsoever relating to, or securities,
        rights or obligations convertible into or exchangeable
        for, or giving any Person or entity any right to subscribe for or acquire,
        any
        shares of Common Stock, or contracts, commitments, understandings or
        arrangements by which the Company or any Subsidiary is or may become bound
        to
        issue additional shares of Common Stock, or securities or rights convertible
        or
        exchangeable into shares of Common Stock. Except as set forth in Schedule
        4(g),
        the issuance and sale of the Units will not obligate the Company to issue
        shares
        of Common Stock or other securities to any Person (other than pursuant to
        this
        Offering) and will not result in a right of any holder of Company securities
        to
        adjust the exercise, conversion, exchange or reset price under such securities.
        All of the outstanding shares of capital stock of the Company are validly
        issued, fully paid and nonassessable, have been issued in compliance with
        all
        federal and state securities laws, and none of such outstanding shares was
        issued in violation of any preemptive rights or similar rights to subscribe
        for
        or purchase securities. No further approval or authorization of any stockholder,
        the Board of Directors of the Company or others is required for the issuance
        and
        sale of the Units and the Underlying Shares. There are no stockholders
        agreements, voting agreements or other similar agreements with respect to
        the
        Company’s capital stock to which the Company is a party or, to the knowledge of
        the Company, between or among any of the Company’s stockholders. 

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      (h)
        SEC
        Reports; Financial Statements.
        The
        Company has filed all reports required to be filed by it under the Securities
        Act and the Securities Exchange Act of 1934, as amended (“Exchange Act”),
        including pursuant to Section 13(a) or 15(d) thereof, for the two years
        preceding the date hereof (or such shorter period as the Company was required
        by
        law to file such material) (the foregoing materials being collectively referred
        to herein as the “SEC Reports”) in accordance with the time requirements
        of the Securities Act and the Exchange Act. As of their respective dates,
        the
        SEC Reports complied in all material respects with the requirements of the
        Securities Act and the Exchange Act and the rules and regulations of the
        Commission promulgated thereunder, and none of the SEC Reports, when filed,
        contained any untrue statement of a material fact or omitted to state a material
        fact required to be stated therein or necessary in order to make the statements
        therein, in light of the circumstances under which they were made, not
        misleading. The Company has advised Investor that a correct and complete
        copy of
        each of the SEC Reports (together with all exhibits and schedules thereto
        and as
        amended to date) is available at http://www.sec.gov, a website maintained
        by the Commission where Investor may view the SEC Reports. The financial
        statements of the Company included in the SEC Reports comply in all material
        respects with applicable accounting requirements and the rules and regulations
        of the Commission with respect thereto as in effect at the time of filing.
        Such
        financial statements have been prepared in all material respects in accordance
        with United States generally accepted accounting principles applied on a
        consistent basis during the periods involved (“GAAP”), except as may be
        otherwise specified in such financial statements or the notes thereto, and
        fairly present in all material respects the financial position of the Company
        and its consolidated Subsidiaries as of and for the dates thereof and the
        results of operations and cash flows for the periods then ended. 

       

      (i)
        Material Changes.
        Since
        the date of the latest audited financial statements included in the SEC Reports:
        (i) there has been no event, occurrence or development that has had a Material
        Adverse Effect, (ii)
        the
        Company has not incurred any material liabilities (contingent or otherwise)
        other than (A) trade payables and accrued expenses incurred in the ordinary
        course of business consistent with past practice and (B)
        liabilities not required to be reflected in the Company’s financial statements
        pursuant to GAAP or required to be disclosed in filings made with the
        Commission, (iii) the Company has not altered its method of accounting or
        the
        identity of its auditors, except as disclosed in the SEC Reports, (iv) the
        Company has not declared or made any dividend or distribution of cash or
        other
        property to its stockholders except in the ordinary course of business
        consistent with prior practice, or purchased, redeemed or made any agreements
        to
        purchase or redeem any shares of its capital stock except consistent with
        prior
        practice or pursuant to existing Company stock option or similar plans, and
        (v)
        the Company has not issued any equity securities to any officer, director
        or
        Affiliate, except pursuant to existing Company stock option or similar plans
        or
        as disclosed in the SEC Reports. 

       

      (j)
        Litigation.
        There
        is no action, suit, inquiry, notice of violation, proceeding or investigation
        pending or, to the knowledge of the Company, threatened against or affecting
        the
        Company, any Subsidiary, or any of its properties before or by any court,
        arbitrator, governmental or administrative agency or regulatory authority
        (federal, state, county, local or foreign) (collectively, an “Action”)
        which:
        (i) adversely affects or challenges the legality, validity or enforceability
        of
        this Subscription Agreement or the Units or (ii) could, if there were an
        unfavorable decision, individually or in the aggregate, have or reasonably
        be
        expected to result in a Material Adverse Effect. Neither the Company nor
        any
        Subsidiary, nor any director or officer thereof, is or
        has
        been the subject of any Action involving a claim of violation of or liability
        under federal or state securities laws or a claim of a breach of fiduciary
        duty.
        There has not been, and to the knowledge of the Company, there is not pending
        or
        contemplated, any investigation by the Commission involving the Company or
        any
        current or former director or officer of the Company. The Commission has
        not
        issued any stop order or other order suspending the effectiveness of any
        registration statement filed by the Company or any Subsidiary under the Exchange
        Act or the Securities Act. 

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      (k)
        Labor
        Relations.
        No
        material labor dispute exists or, to the knowledge of the Company, is imminent
        with respect to any of the employees of the Company or any Subsidiary which
        could reasonably be expected to result in a Material Adverse Effect.

       

      (l)
        Compliance. Neither the Company nor any Subsidiary (i) is in default under
        or in
        violation of (and no event has occurred that has not been waived that, with
        notice or lapse of time or both, would result in a default by the Company
        or any
        Subsidiary under), nor has the Company or any Subsidiary received notice
        of a
        claim that it is in default under or that it is in violation of, any indenture,
        loan or credit agreement or any other agreement or instrument to which it
        is a
        party or by which it or any of its properties is bound (whether or not such
        default or violation has been waived), (ii) is in violation of any order
        of any
        court, arbitrator or governmental body, or (iii) is or has been in violation
        of
        any statute, rule or regulation of any governmental authority, including
        without
        limitation all foreign, federal, state and local laws applicable to its business
        except in each case as would not have a Material Adverse Effect. 

       

      (m)
        Regulatory Permits.
        The
        Company and the Subsidiaries possess all certificates, authorizations and
        permits issued by the appropriate federal, state, local or foreign regulatory
        authorities necessary to conduct their business as currently conducted, except
        where the failure to possess such permits would not, individually or in the
        aggregate, have or reasonably be expected to result in a Material Adverse
        Effect
        (“Material
        Permits”),
        and
        neither the Company nor any Subsidiary has received any notice of proceedings
        relating to the revocation or modification of any Material Permit. 

       

      (n)
        Title
        to Assets.
        The
        Company and the Subsidiaries have good and marketable title in all real and
        personal property owned by them that is material to the business of the Company
        and the Subsidiaries, in each case free and clear of any material liens,
        encumbrances or other restrictions. Any real property and facilities held
        under
        lease by the Company and the Subsidiaries are held by it under valid, subsisting
        and enforceable leases of which the Company and the Subsidiaries are in material
        compliance. 

       

      (o)
        Patents and Trademarks. The Company and the Subsidiaries have, or have
        rights to use, all patents, patent applications, trademarks, trademark
        applications, service marks, trade names, copyrights, licenses and other
        similar
        rights necessary or material for use in connection with their respective
        businesses as currently conducted and which the failure to so have could
        have a
        Material Adverse Effect (collectively, the “Intellectual
        Property Rights”).
        Neither the Company nor any Subsidiary has received any written notice that
        the
        Intellectual Property Rights used by the Company or any Subsidiary violates
        or
        infringes upon the rights of any Person. To the knowledge of the Company,
        all
        such Intellectual Property Rights are enforceable and there is no existing
        infringement by another Person of any of the Intellectual Property Rights
        of
        others. 

       

      (p)
        Insurance.
        The
        Company and the Subsidiaries are insured by insurers of recognized financial
        responsibility against such losses and risks and in such amounts as are prudent
        and customary in the businesses in which the Company and the Subsidiaries
        are
        engaged, including directors and officers insurance. To the best of Company’s
        knowledge, such insurance contracts and policies are accurate and complete.
        The
        Company has no 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
        without a significant increase in cost. 

       

      (q)
        Transactions
        with Affiliates and Employees.
        None of
        the officers or directors of the Company and, to the knowledge of the Company,
        none of the employees of the Company is presently a party to any transaction
        with the Company or any Subsidiary (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
        entity in which any officer, director,
        or any such employee has a substantial interest or is an officer, director,
        trustee or partner, in each case in excess of $60,000 other than (i) for
        payment
        of salary or consulting fees for services rendered, (ii) reimbursement for
        expenses incurred on behalf of the Company and (iii) for other employee
        benefits, including stock option agreements under any stock option plan of
        the
        Company. 

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      (r)
        Internal
        Accounting Controls.
        Each of
        the Company and the Subsidiaries is in material compliance with all provisions
        of the Sarbanes Oxley Act of 2002 which are presently applicable to it. Each
        of
        the Company and the Subsidiaries maintains 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 GAAP and to maintain asset accountability,
        (iii)
        access to assets is permitted only in accordance with management’s general or
        specific authorization, and (iv) the recorded accountability for assets is
        compared with the existing assets at reasonable intervals and appropriate
        action
        is taken with respect to any differences The Company has established disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
        15d-15(e)) for the Company and designed such disclosure controls and procedures
        to ensure that material information relating to the Company, including its
        Subsidiaries, is made known to the certifying officers by others within those
        entities. The Company’s certifying officers have evaluated the effectiveness of
        the Company’s controls and procedures as of September 30, 2006 (such date, the
“Evaluation Date”). The Company presented in its Annual Report on Form
        10-KSB for the year ended September 30, 2006 the conclusions of the certifying
        officers about the effectiveness of the disclosure controls and procedures
        based
        on their evaluations as of the Evaluation Date. Since the Evaluation Date,
        there
        have been no changes in the Company’s internal controls (within the meaning of
        Item 308 of Regulation S-B under the Exchange Act) that has materially affected,
        or is reasonably likely to materially affect, the Company’s internal control
        over financial reporting, except as disclosed in the SEC Reports. 

       

      (s)
        Private
        Placement.
        Assuming the accuracy of the Investor representations and warranties set
        forth
        in Section 3, no registration under the Securities Act is required for the
        offer
        and sale of the Units and the Additional Warrants by the Company to the
        Investors as contemplated hereby. 

       

      (t)
        Application
        of Takeover Protections.
        The
        Company and its Board of Directors have taken all necessary action, if any,
        in
        order to render inapplicable any control share acquisition, business
        combination, poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under the Company’s Certificate of
        Incorporation (or similar charter documents) or the laws of its state of
        incorporation that is or could become applicable to the Investors as a result
        of
        the Investors and the Company fulfilling their obligations or exercising
        their
        rights under this Subscription Agreement, including without limitation as
        a
        result of the Company’s issuance of the Units and the Investor’s ownership of
        the Units and Underlying Shares. 

       

      (u)
        Disclosure.
        The
        Company confirms that neither it nor any other Person acting on its behalf
        has
        provided the Investor or its agents or counsel with any information that
        constitutes or might constitute material, nonpublic information. The Company
        understands and confirms that the Investor will rely on the foregoing
        representations and covenants in effecting transactions in securities of
        the
        Company. All written statements provided to the Investor regarding the Company,
        its business and the transactions contemplated hereby, furnished by or on
        behalf
        of the Company with respect to the representations and warranties made herein
        are true and correct, in all material respects, with respect to such
        representations and warranties and do not contain any untrue statement of
        a
        material fact or omit to state any material fact necessary in order to make
        the
        statements made therein, in light of the circumstances under which they were
        made, not misleading. The Company acknowledges and agrees that the Investor
        makes or has made no representations or warranties with respect to the
        transactions contemplated hereby other than those specifically set forth
        in this
        Subscription Agreement. 

       

      (v)
        No
        Integrated Offering.
        Assuming the accuracy of the Investor’s representations and warranties set forth
        in this Subscription Agreement, 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 cause this Offering to be integrated with
        prior
        offerings by the Company for purposes of Rule 502 of the Securities Act or
        any
        applicable shareholder approval provisions. 

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      (w)
        Solvency.
        Based
        on the financial condition of the Company as of each Closing Date after giving
        effect to the receipt by the Company of the proceeds from the sale of the
        Units
        hereunder, (i) the Company’s fair saleable value of its assets exceeds the
        amount that will be required to be paid on or in respect of the Company’s
        existing debts and other liabilities (including known contingent liabilities)
        as
        they mature; (ii)
        the
        Company’s assets do not constitute unreasonably small capital to carry on its
        business for the current fiscal year as now conducted and as proposed to
        be
        conducted including its capital needs taking into account the particular
        capital
        requirements of the business conducted by the Company, and projected capital
        requirements and capital availability thereof; and (iii) the current cash
        flow
        of the Company, together with the proceeds the Company would receive, were
        it to
        liquidate all of its assets, after taking into account all anticipated uses
        of
        the cash, would be sufficient to pay all amounts on or in respect of its
        debt
        when such amounts are required to be paid. The Company does not intend to
        incur
        debts beyond its ability to pay such debts as they mature (taking into account
        the timing and amounts of cash to be payable on or in respect of its debt).
        

       

      (x)
        Tax
        Status.
        Except
        for matters that would not, individually or in the aggregate, have or reasonably
        be expected to result in a Material Adverse Effect, the Company and each
        Subsidiary has filed all necessary federal, state and foreign income and
        franchise tax returns and has paid or accrued all taxes shown as due thereon,
        and the Company has no knowledge of a tax deficiency which has been asserted
        or
        threatened against the Company or any Subsidiary. 

       

      (y)
No
        General Solicitation. Neither the Company nor any Person acting on behalf of
        the Company has offered or sold any of the Units or Additional Warrants by
        any
        form of general solicitation or general advertising. The Company has offered
        the
        Units and the Additional Warrants for sale only to each Investor in the Offering
        and certain other “accredited investors” within the meaning of Rule 501 under
        the Securities Act. 

       

      (z)
        Foreign Corrupt Practices. Neither the Company, nor to the knowledge of
        the Company, any agent or other Person acting on behalf of the Company, has
        (i)
        directly or indirectly, used any corrupt funds for unlawful contributions,
        gifts, entertainment or other unlawful expenses related to foreign or domestic
        political activity, (ii) made any unlawful payment to foreign or domestic
        government officials or employees or to any foreign or domestic political
        parties or campaigns from corporate funds, (iii) failed to disclose fully
        any
        contribution made by the Company (or made by any Person acting on its behalf
        of
        which the Company is aware) which is in violation of law, or (iv) violated
        in
        any material respect any provision of the Foreign Corrupt Practices Act of
        1977,
        as amended. 

      

      (aa)
        Accountants.
        The
        Company’s accountants are set forth in the SEC Reports. To the Company’s
        knowledge, such accountants, who the Company expects will express their opinion
        with respect to the financial statements to be included in the Company’s
        upcoming annual report, are a registered public accounting firm as required
        by
        the Securities Act. 

       

      (bb)
        Indebtedness.
        Schedule
        4(bb)
        sets
        forth all outstanding secured and unsecured Indebtedness of the Company or
        any
        Subsidiary, or for which the Company or any Subsidiary has commitments. For
        the
        purposes of this Agreement, “Indebtedness”
shall
        mean (a) any liabilities for borrowed money or amounts owed in excess of
        $50,000
        (other than trade accounts payable incurred in the ordinary course of business),
        (b) all guaranties, endorsements and other contingent obligations in respect
        of
        Indebtedness of others, whether or not the same are or should be reflected
        in
        the Company’s balance sheet (or the notes thereto), except guaranties by
        endorsement of negotiable instruments for deposit or collection or similar
        transactions in the ordinary course of business; and (c) the present value
        of
        any lease payments in excess of $50,000 due under leases required to be
        capitalized in accordance with GAAP. Neither the Company nor any Subsidiary
        is
        in default with respect to any Indebtedness. As of the Closing Date, no more
        than $1,000,000 in principal amount of Indebtedness (not including interest,
        fees or liquidated damages thereon) or other claim against the Company or
        any
        Subsidiary will be senior to the Debentures in right of payment, whether
        with
        respect to interest or upon liquidation or dissolution, or otherwise, other
        than
        indebtedness secured by purchase money security interests (which is senior
        only
        as to underlying assets covered thereby) and capital lease obligations (which
        is
        senior only as to the property covered thereby). 

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

         

      

      (cc)
        No Disagreements with Accountants and Lawyers. There are no disagreements
        of any kind presently existing, or reasonably anticipated by the Company
        to
        arise, between the accountants and lawyers formerly or presently employed
        by the
        Company, that would, individually or in the aggregate, have or reasonably
        be
        expected to result in a Material Adverse Effect. 

       

      (dd)
        Maintenance Requirements.
        The
        Company’s Common Stock currently trades on the Over-the-Counter Bulletin Board.
        The Company has no reason to believe that it will not in the foreseeable
        future
        continue to maintain the ongoing SEC reporting requirements for trading on
        the
        Over-the-Counter Bulletin Board. 

       

      The
        Company certifies that each of the foregoing representations and warranties
        set
        forth in subsection (a) through (dd) inclusive of this Section 4 are true
        as of
        the date hereof, any applicable Closing Date and shall survive such dates.
        

       

      5.
        Registration Rights. 

       

      The
        Company grants registration rights to the Investor under the following terms
        and
        conditions: 

       

      (a)
        The
        Company shall prepare and file, at its own expense, within thirty (30) days
        of
        the Final Closing, a registration statement under the Securities Act (the
        “Initial
        Registration Statement”,
        provided that such Initial Registration Statement, may be an amendment to
        the
        Company’s registration statement that is currently pending Commission review
        under File No. 333-124609) with the Commission sufficient to permit the
        non-underwritten public offering and resale of all of the Shares and Warrant
        Shares (as subject to adjustment) (the “Initial
        Registrable Securities”)
        through the facilities of all appropriate securities exchanges, if any, on
        which
        the Company’s Common Stock is being sold or on the over-the-counter market if
        the Company’s Common Stock is traded thereon. The Company will use its best
        efforts to cause such Initial Registration Statement to become effective
        by the
        following dates, as applicable (i) ninety (90) days from the Final Closing
        in
        the event the Commission reviews the Initial Registration Statement, (ii)
        sixty
        (60) days from the Final Closing in the event the Commission notifies the
        Company that it will not review the Initial Registration Statement, or (iii)
        three (3) business days from Commission clearance to request acceleration
        of
        effectiveness. The number of shares designated in the Initial Registration
        Statement to be registered shall include all of the Initial Registrable
        Securities and shall include appropriate language regarding reliance upon
        Rule
        416 to the extent permitted by the Commission. The Company will notify the
        Investor of the date of effectiveness of the Registration Statement within
        two
        (2) business days of such event. In the event that the number of shares so
        registered shall prove to be insufficient to register the resale of all of
        the
        Initial Registrable Securities, including if the Commission advises the Company
        to limit the number of shares so registered in order that the selling
        shareholders thereunder not be deemed underwriters in a primary offering,
        then
        any Initial Registrable Securities not registered in the Initial Registration
        Statement shall be included in the Additional Registration Statement
        (hereinafter defined). 

       

      (b)
        The
        Company shall prepare and file, at its own expense, within one hundred and
        twenty (120) days of effectiveness of the Initial Registration Statement,
        a
        registration statement under the Securities Act (the “Additional
        Registration Statement”)
        with
        the Commission sufficient to permit the non-underwritten public offering
        and
        resale of all of the Additional Warrant Shares (as subject to adjustment)
        and
        any Initial Registrable Securities not registered in accordance with Section
        5(a) (collectively, the “Additional
        Registrable Securities”)
        through the facilities of all appropriate securities exchanges, if any, on
        which
        the Company’s Common Stock is being sold or on the over-the-counter market if
        the Company’s Common Stock is traded thereon. The Company will use its best
        efforts to cause such Registration Statement to become effective by the
        following dates, as applicable (i) ninety (90) days from filing of the
        Additional Registration Statement in the event the Commission reviews the
        Additional Registration Statement, (ii) sixty (60) days from filing of the
        Additional Registration Statement in the event the Commission notifies the
        Company that it will not review the Additional Registration Statement, or
        (iii)
        three (3) business days from Commission clearance to request acceleration
        of
        effectiveness. The number of shares designated in the Additional Registration
        Statement to be registered shall include all of the Additional Registrable
        Securities and shall include appropriate language regarding reliance upon
        Rule
        416 to the extent permitted by the Commission. The Company will notify the
        Investor of the date of effectiveness of the Additional Registration Statement
        within two (2) business days of such event. In the event that the number
        of
        shares so registered shall prove to be insufficient to register the resale
        of
        all of the Additional Registrable Securities, then the Company shall be
        obligated to file, within thirty (30) days of notice from any Investor, a
        further Registration Statement registering such remaining shares and shall
        use
        its reasonable best efforts
        to prosecute such additional Registration Statement to effectiveness within
        ninety (90) days of the date of such notice. 

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      (c)
        The
        term “Registration Statement” shall refer collectively to the Initial
        Registration Statement, the Additional Registration Statement, and any other
        registration statement required to be filed pursuant to this Section 5 to
        register Registrable Securities. The term “Registrable Securities” shall refer
        collectively to the Initial Registrable Securities and the Additional
        Registrable Securities. The Company will maintain the Registration Statement
        or
        post-effective amendment filed under the terms of this Subscription Agreement
        effective under the Securities Act until the earlier of (i) the date that
        all of
        the Registrable Securities have been sold pursuant to such Registration
        Statement, (ii)
        all
        Registrable Securities have been otherwise transferred to Persons who may
        trade
        such shares without restriction under the Securities Act, and the Company
        has
        delivered a new certificate or other evidence of ownership for such securities
        not bearing a restrictive legend, or (iii) all Registrable Securities may
        be
        sold at any time, without volume or manner of sale limitations pursuant to
        Rule
        144(k) or any similar provision then in effect under the Securities Act in
        the
        opinion of counsel to the Company, which counsel shall be reasonably acceptable
        to the Investor (the “Effectiveness
        Period”).
        

       

      (d)
        If,
        at any time during which a Registration Statement required by Section 5(a)
        and
        5(b) above is not effective, the Company shall determine to proceed with
        the
        preparation and filing of a registration statement pursuant to the Securities
        Act in connection with the proposed offer and sale of any of its securities
        by
        it or any of its security holders (other than a registration statement on
        Form
        S-4, S-8, or other limited purpose form), the Company will give written notice
        of its determination to the Investor. Upon receipt of a written request from
        the
        Investor, within thirty (30)
        days
        after receipt of any such notice from the Company, the Company will cause
        all
        such Registrable Securities requested by the Investor to be included in such
        registration statement, all to the extent required to permit the sale or
        other
        disposition by the Investor, of such shares. The obligation of the Company
        under
        this Section 5(d) shall be unlimited as to the number of registration statements
        to which it applies, unless the Effectiveness Period has ended, provided
        that
        there shall be no duplication and any Registrable Shares which are already
        included in a Registration Statement (other than a Registration Statement
        which
        has been withdrawn) may not be included in any other Registration Statement.
        Notwithstanding the foregoing, the Company shall have the right to postpone
        or
        withdraw any registration effected pursuant to this Section 5(d). In addition,
        if any registration effected pursuant to this Section 5(d) is a registered
        public offering involving an underwriting, the Company shall so advise the
        Investor as part of the written notice given pursuant to this Section 5(d).
        In
        such event, the right of any Investor to include Registrable Securities in
        such
        registration pursuant to this Section 5(d) shall be conditioned upon such
        Investor’s execution of an underwriting agreement upon customary terms with the
        underwriter or underwriters selected by the Company. Furthermore, if the
        lead
        underwriter advises the Company that marketing factors require a limitation
        (or
        elimination) of shares held by selling stockholders to be underwritten, the
        number of Registrable Securities that may be included in such Registration
        Statement and underwriting, if any, shall be allocated among all Investors
        and
        other holders of registration rights requesting registration in proportion,
        as
        nearly as practicable, to the respective number of shares of held by them
        and
        for which they have registration rights on the date the Company gives the
        notice
        specified in this Section 5(d). 

       

      (e)
        All
        fees, disbursements and out-of-pocket expenses and costs incurred by the
        Company
        in connection with the preparation and filing of the Registration Statement,
        in
        making filings with NASD or NASDR (including, without limitation, pursuant
        to
        NASD Rule 2710), and in complying with applicable federal securities and
        Blue
        Sky laws (including, without limitation, all attorneys’ fees of the Company)
        shall be borne by the Company. The Investor shall bear the cost of underwriting
        and/or brokerage discounts, fees and commissions, if any, applicable to the
        Registrable Securities being registered and the fees and expenses of their
        counsel. The Company shall use its reasonable best efforts to qualify any
        of the
        Registrable Securities for sale in such states as the Investor reasonably
        designates and shall furnish indemnification. However, the Company shall
        not be
        required to qualify in any state which will require an escrow or other
        restriction relating to the Company and/or the sellers, or which will require
        the Company to qualify to do business in such state or require the Company
        to
        file therein any general consent to service of process. The Company at its
        expense will supply the Investor with one unbound copy of the applicable
        Registration Statement and any prospectus included therein and other related
        documents. 

       

      (f)
        Certificates evidencing the Registrable Securities shall not contain any
        legend:
        (i) following any sale of such Registrable Securities pursuant to Rule 144,
        or
        (ii) if such Registrable Securities are eligible for legend removal under
        Rule
        144(k), or (iii) if such legend is not required under applicable requirements
        of
        the Securities Act (including judicial interpretations and pronouncements
        issued
        by the staff of the Commission). The Company shall cause
        its
        counsel to issue a “blanket” legal opinion to the Company’s transfer agent
        providing that while a Registration Statement covering the resale of any
        Registrable Securities is effective under the Securities Act, the transfer
        agent
        should remove the restrictive legend on any Underlying Shares immediately
        upon
        submission of such shares to the transfer agent together with a representation
        from Investor or Investor’s broker that prospectus delivery requirements under
        the Securities Act and rules and regulations of the Commission have been
        met.
        The Company shall also cause its counsel to issue any additional legal opinion
        to the Company’s transfer agent upon request of the Investor if required by the
        Company’s transfer agent to effect the removal of the legend hereunder. If all
        or any portion of a Debenture, Warrant or Additional Warrant is converted
        or
        exercised at a time when there is an effective registration statement to
        cover
        the resale of the Underlying Shares, or if such Underlying Shares may be
        sold
        under Rule 144(k) or if such legend is not otherwise required under applicable
        requirements of the Securities Act (including judicial interpretations thereof)
        then such Underlying Shares shall be issued free of all legends. The Company
        agrees that following the effectiveness of the Registration Statement or
        at such
        time as such legend is no longer required under this Section 5(f), it will,
        no
        later than three business days following the delivery by Investor to the
        Company’s transfer agent of a certificate representing Registrable Securities
        accompanied by appropriate stock power or other required documentation, as
        applicable, issued with a restrictive legend (such third Business Day, the
        “Legend
        Removal Date”),
        deliver or cause to be delivered to such Investor a certificate representing
        such shares that is free from all restrictive and other legends, in each
        case
        without charge to the Investor other than customary transfer fees which may
        be
        charged by the transfer agent or broker-dealer. The Company may not make
        any
        notation on its records or give instructions to any transfer agent of the
        Company that enlarge the restrictions on transfer set forth in this Section
        5(f). Without limiting the Investor’s other legal remedies, the Company shall
        immediately upon demand reimburse the Investor for the cost and losses
        occasioned by any buy-in resulting from the Company’s failure to timely deliver
        unlegended share certificates, provided Investor provides to the Company
        evidence of the amount of such loss. 

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      (g)
        In
        the event that (i) a Registration Statement is not filed or declared effective
        by the Commission within the required time frames as set forth in Sections
        5(a)
        and 5(b) above, each as applicable, or (ii) such Registration Statement is
        not
        maintained as effective by the Company for the Effectiveness Period or as
        allowed by 5(k)(2) below (each a “Registration
        Default”)
        then
        the Company will pay Investor (pro rated on a daily basis), as partial
        compensation for such failure and not as a penalty, one percent (1.0%) of
        the
        purchase price of the Registrable Securities purchased from the Company and
        held
        by the Investor for each month (or portion thereof) in which such failure
        occurs
        (regardless of whether one or more such Registration Defaults are then in
        existence, but without duplication of such partial compensatory payments)
        until
        such Registration Statement has been declared effective. Such compensatory
        payments shall be made to the Investors in cash, no later than the fifth
        business day following the month in which such Registration Default(s) occurred,
        provided, however, that the payment of such amounts shall not relieve the
        Company from its obligations to register the Registrable Securities pursuant
        to
        this Section 5. Notwithstanding anything to the contrary contained herein,
        in no
        event shall any liquidated damages be payable with respect to the Warrants,
        Additional Warrants, Warrant Shares or Additional Warrant Shares. 

       

      (h)
        If
        the Company does not remit the payment to the Investor as set forth in Section
        5(g) above, the Company will pay the Investor interest at the rate of 12%
        per
        annum, or the highest rate permitted by law, if less, until such sums have
        been
        paid in full, and reasonable costs of collection, including attorneys’ fees, in
        addition to the liquidated damages. The registration of the Registrable
        Securities pursuant to this provision or payment of such compensatory amounts
        shall not affect or limit the Investor’s other rights or remedies as set forth
        in this Subscription Agreement or at law. 

       

      (i)
        In
        the event a Registration Statement is not effective at any time after one
        year
        following the issuance date of the Warrants (other than an Allowed Delay,
        as
        defined in Section 5(k)(2) below), compensatory payments pursuant to Section
        5(g) above shall cease, the Warrants and certain of the Additional Warrants
        shall become exercisable pursuant to a cashless exercise feature, and the
        Company shall cause its counsel to issue such legal opinions as may be
        reasonably requested by the Investor in connection with any sales of Underlying
        Shares in accordance with Rule 144 under the Securities Act in accordance
        with
        the procedures of Section 5(f) above. 

       

      (j)
        At
        all times after one (1) year following the Final Closing, the Company will
        prepare and furnish to Investor and make publicly available in accordance
        with
        Rule 144(c) such information as is required for Investor to sell the Registrable
        Securities under Rule 144. The Company further covenants that it will take
        such
        further action as any holder of Registrable Securities may reasonably request,
        all to the extent required from time to time to enable such Person to sell
        such
        Registrable Securities without registration under the Securities Act within
        the
        limitation of the exemptions provided by Rule 144. 

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      (k)
        In
        the case of each registration effected by the Company pursuant to any section
        herein, the Company will keep each Investor advised in writing as to the
        initiation of each registration and as to the completion thereof. At its
        expense, the Company will: 

       

      (1)
        Prepare and file with the Commission such amendments and supplements to such
        registration statement and the prospectus used in connection with such
        registration statement as may be necessary to comply with the provisions
        of the
        Securities Act with respect to a disposition of all securities covered by
        such
        registration statement; 

       

      (2)
        Notify the Investor at any time when a prospectus relating thereto is required
        to be delivered under the Securities Act, of the happening of any event as
        a
        result of which the prospectus included in such registration statement, as
        then
        in effect, includes an untrue statement of a material fact or omits to state
        a
        material fact required to be stated therein or necessary to make the statements
        therein not misleading or incomplete in light of the circumstances then
        existing, and at the request of the shareholders, prepare and furnish to
        them a
        reasonable number of copies of a supplement to or an amendment of such
        prospectus as may be necessary so that, as thereafter delivered to the Investor,
        such prospectus shall not include an untrue statement of a material fact
        or omit
        to state a material fact required to be stated therein or necessary to make
        the
        statements therein not misleading or incomplete in light of the circumstances
        then existing; provided
        that,
        for not
        more than ten (10) consecutive business days (or a total of not more than
        thirty
        (30) calendar days in any twelve (12) month period), the Company may delay
        the
        disclosure of material non-public information concerning the Company the
        public
        disclosure of which at the time is not, in the good faith opinion of the
        Company
        in the best interests of the Company and which may, based on the advice of
        outside counsel, be delayed under applicable law or regulation (an “Allowed
        Delay”);
        provided,
        further,
        that
        the Company shall promptly (a) notify each Investor in writing of the existence
        of (but in no event, without the prior written consent of such Investor,
        shall
        the Company disclose to such Investor any of the facts or circumstances
        regarding) material non-public information giving rise to an Allowed Delay
        and
        (b) advise each Investor in writing to cease all sales under such registration
        statement until the termination of the Allowed Delay; 

       

      (3)
        Use
        its commercially reasonable best efforts to prevent the issuance of any stop
        order or other suspension of effectiveness of a registration statement, and,
        if
        such an order is issued, to obtain the withdrawal of such order at the earliest
        possible moment and to notify Investor (and, in the event of an underwritten
        offering, the managing underwriter) of the issuance of such order and the
        resolution thereof; 

       

      (4)
        If
        NASD Rule 2710 requires any broker-dealer to make a filing prior to executing
        a
        sale of Registrable Securities by an Investor, make an Issuer Filing with
        the
        NASD Corporate Financing Department pursuant to NASD Rule 2710 and respond
        within five business days to any comments received from NASD in connection
        therewith. 

       

      (5)
        Otherwise use its commercially reasonable best efforts to comply with all
        applicable rules and regulations of the Commission. 

       

      (l)
        To
        the extent Investor includes any Underlying Shares in a registration statement
        pursuant to the terms hereof, the Company will indemnify and hold harmless
        Investor, its directors and officers, and each Person, if any, who controls
        Investor within the meaning of the Securities Act, from and against, and
        will
        reimburse Investor, its directors and officers and each controlling Person
        with
        respect to, any and all loss, damage, liability, cost and expense to which
        Investor or such controlling Person may become subject under the Securities
        Act
        or otherwise, insofar as such losses, damages, liabilities, costs or expenses
        are caused by any untrue statement or alleged untrue statement of any material
        fact contained in such registration statement, any prospectus contained therein
        or any amendment or supplement thereto, or arise out of or are based upon
        the
        omission or alleged omission to state therein a material fact required to
        be
        stated therein or necessary to make the statements therein, in light of the
        circumstances in which they were made, not misleading; provided,
        however,
        that
        the Company will not be liable in any such case to the extent that any such
        loss, damage, liability, cost or expense arises out of or is based upon an
        untrue statement or alleged untrue statement or omission or alleged omission
        so
        made in conformity with information furnished by Investor or any such
        controlling Person in writing specifically for use in the preparation thereof.
        

       

      (m)
        To
        the extent Investor includes any Underlying Shares in a registration statement
        pursuant to the terms hereof, Investor will indemnify and hold harmless the
        Company, its directors and officers and any controlling Person
        from and against, and will reimburse the Company, its directors and officers
        and
        any controlling Person with respect to, any and all loss, damage, liability,
        cost or expense to which the Company, its directors and officers or such
        controlling Person may become subject under the Securities Act or otherwise,
        insofar as such losses, damages, liabilities, costs or expenses are caused
        by
        any untrue statement or alleged untrue statement of any material fact contained
        in such registration statement, any prospectus contained therein or any
        amendment or supplement thereto, or arise out of or are based upon the omission
        or alleged omission to state therein a material fact required to be stated
        therein or necessary to make the statements therein, in light of the
        circumstances in which they were made, not misleading, in each case to the
        extent, but only to the extent, that such untrue statement or alleged untrue
        statement or omission or alleged omission was so made in reliance upon and
        in
        conformity with written information furnished by or on behalf of the Investor
        specifically for use in the preparation thereof and provided further, that
        the
        maximum amount that may be recovered from Investor shall be limited to the
        amount of proceeds received by Investor from the sale of such shares of Common
        Stock 

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

       (n)
        To
        the extent any indemnification by an indemnifying party is prohibited or
        limited
        by law, the indemnifying party agrees to make the maximum contribution with
        respect to any amounts for which it would otherwise be liable hereunder to
        the
        extent permitted by law, provided that (i) no contribution shall be made
        under
        circumstances where the indemnifying party would not have been liable for
        indemnification pursuant to the provisions hereof, (ii) no seller of securities
        guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
        of
        the Securities Act) shall be entitled to contribution from any seller of
        securities who was not guilty of such fraudulent misrepresentation, and (iii)
        the amount of the contribution together with any other payments made in respect
        of such loss, damage, liability or expense, by any seller of securities shall
        be
        limited to the net amount of proceeds received by such seller from the sale
        of
        such securities. 

       

      (o)
        It
        shall be a condition precedent to the Company’s obligations to take any action
        pursuant to Section 5(a) that the Investor will execute and return the Selling
        Securityholder Notice and Questionnaire attached hereto as Exhibit B. The
        Investor shall also cooperate with the Company in connection with this
        Subscription Agreement, including timely supplying all information and executing
        and returning any other documents requested by the Company which are required
        to
        enable the Company to perform its obligations to register the Underlying
        Shares.

       

      6.
        Other
        Agreements of the Company and the Investor.
        

       

      (a)
        Right
        to Pledge. The Company acknowledges and agrees that Investor may from time
        to
        time pledge pursuant to a bona fide margin agreement with a registered
        broker-dealer or grant a security interest in some or all of the Units or
        Underlying Shares to a financial institution that is an “accredited investor” as
        defined in Rule 501(a) under the Securities Act and who agrees to be bound
        by
        the provisions of this Agreement. Such a pledge would not be subject to approval
        of the Company and no legal opinion of legal counsel of the pledgee, secured
        party or pledgor shall be required in connection therewith. Further, no notice
        shall be required of such pledge. However, if required under the terms of
        such
        arrangement to transfer pledged or secured Units or Underlying Shares to
        the
        pledgees or secured parties, such a transfer would be subject to approval
        of the
        Company and a legal opinion of legal counsel of the pledgee, secured party
        or
        pledgor shall be required in connection therewith. At Investor’s expense, the
        Company will execute and deliver such reasonable documentation as a pledgee
        or
        secured party of such securities may reasonably request in connection with
        a
        pledge or transfer of the Debentures, Shares, Warrants, Additional Warrants,
        Warrant Shares or Additional Warrant Shares. 

       

      (b)
        Acknowledgment
        of Dilution.
        The
        Company acknowledges that the issuance of the Underlying Shares may result
        in
        dilution of the outstanding shares of Common Stock, which dilution may be
        substantial. The Company further acknowledges that its obligations under
        this
        Subscription Agreement, including without limitation its obligation to issue
        the
        Underlying Shares, are unconditional and absolute and not subject to any
        right
        of set off, counterclaim, delay or reduction, regardless of the effect of
        any
        such dilution or any claim the Company may have against any Investor and
        regardless of the dilutive effect that such issuance may have on the ownership
        of the other stockholders of the Company. 

       

      (c)
        Furnishing
        of Information.
        Until
        the earlier of (i) five (5) years from the Final Closing after such date
        or (ii)
        the date that all Debentures and Warrants issued in the Offering have been
        converted, exercised, redeemed or expired, and all Registrable Securities
        have
        been sold, the Company covenants to timely file (or obtain extensions in
        respect
        thereof and file within the applicable grace period) all reports required
        to be
        filed by the Company after the date hereof pursuant to the Exchange Act.
        

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

       (d)
        Integration.
        The
        Company shall not sell, offer for sale or solicit offers to buy or otherwise
        negotiate in respect of any security (as defined in Section 2 of the Securities
        Act) that would be integrated with the offer or sale of the Units or Additional
        Warrants in a manner that would require the registration under the Securities
        Act of the Offering or, if then listed or quoted on a trading market, that
        would
        be integrated with the Offering for purposes of the rules and regulations
        of any
        trading market. 

       

      (e)
        Exercise
        Procedures.
        The
        form of Notice of Conversion included in the Debenture and form of Notice
        of
        Exercise included in the Warrant and the Additional Warrants each set forth
        the
        totality of the procedures required of the Investor in order to convert its
        Debenture and exercise its Warrant or Additional Warrants, respectively.
        No
        additional legal opinion or other information or instructions shall be required
        of the Investor to convert its Debenture or exercise its Warrant or Additional
        Warrants. The Company shall honor conversions of the Debentures and exercises
        of
        the Warrants and Additional Warrants and shall deliver the underlying Shares,
        Warrant Shares or Additional Warrant Shares, respectively, in accordance
        with
        the terms, conditions and time periods set forth in this Subscription Agreement
        and the forms of Debenture and of Warrant. 

       

      (f)
        Shareholders Rights Plan.
        No
        claim will be made or enforced by the Company or, to the knowledge of the
        Company, any other Person that any Investor is an “Acquiring Person” under any
        shareholders rights plan or similar plan or arrangement in effect or hereafter
        adopted by the Company, or that any Investor could be deemed to trigger the
        provisions of any such plan or arrangement, by virtue of receiving the
        Debentures, Warrants, Additional Warrants or Underlying Shares or under any
        other agreement between the Company and the Investor. The Company shall conduct
        its business in a manner so that it will not become subject to the Investment
        Company Act. 

       

      (g)
        Non-Public
        Information.
        The
        Company covenants and agrees that neither it nor any other Person acting
        on its
        behalf will provide the Investor or its agents or counsel with any information
        that the Company believes constitutes material non-public information, unless
        prior thereto Investor shall have executed a written agreement regarding
        the
        confidentiality and use of such information. The Company understands and
        confirms that Investor shall be relying on the foregoing representations
        in
        effecting transactions in securities of the Company. 

       

      (h)
        Use
        of
        Proceeds.
        The
        Company shall use the net proceeds from the sale of the Units hereunder for
        technology development and for working capital purposes. The Company will
        not
        use the proceeds from the sale of the Units hereunder for the satisfaction
        of
        the Company’s debt other than (i) up to $475,000 in repayment of existing debt
        of the Company as further described in Schedule 4(bb) hereto and (ii) payment
        of
        trade payables in the ordinary course of the Company’s business and prior
        practices). The Company will not use any proceeds from the sale of the Units
        to
        redeem any Common Stock or securities convertible or exercisable into Common
        Stock, or to settle any outstanding litigation. 

       

      (i)
        Reimbursement.
        If
        Investor becomes involved in any capacity in any Proceeding by or against
        any
        Person who is a stockholder of the Company (except as a result of sales,
        pledges, margin sales and similar transactions by such Investor to or with
        any
        current stockholder), solely as a result of such Investor’s acquisition of the
        Debentures, Warrants, Additional Warrants or Underlying Shares, and the Investor
        is successful in the Proceeding, the Company will reimburse such Investor
        for
        its reasonable legal and other expenses (including the cost of any
        investigation, preparation and travel in connection therewith) incurred in
        connection therewith, as such expenses are incurred. The reimbursement
        obligations of the Company under this paragraph shall be in addition to any
        liability which the Company may otherwise have, shall extend upon the same
        terms
        and conditions to any Affiliates of the Investor who is actually named in
        such
        action, proceeding or investigation, and partners, directors, agents, employees
        and controlling persons (if any), as the case may be, of the Investor and
        any
        such Affiliate, and shall be binding upon and inure to the benefit of any
        successors, assigns, heirs and personal representatives of the Company, the
        Investor and any such Affiliate and any such Person. 

       

      (j)
        Indemnification
        of Investor.
        Subject
        to the provisions of this Section 6(j), the Company will indemnify and hold
        the
        Investor and its directors, officers, shareholders, partners, employees and
        agents (each, an “Investor
        Party”)
        harmless from any and all losses, liabilities, obligations, claims,
        contingencies, damages, costs and expenses, including all judgments, amounts
        paid in settlements, court costs and reasonable attorneys’ fees and costs of
        investigation that any such Investor Party may suffer or incur as a result
        of or
        relating to (a) any material breach of any of the representations, warranties,
        covenants or agreements made by the Company in this Subscription Agreement
        or (b)
        any
        action instituted against Investor, or its respective Affiliates, by any
        stockholder of the Company who is not an Affiliate of Investor, with respect
        to
        any of the transactions contemplated by this Subscription Agreement (unless
        such action
        is
        based upon a breach of Investor’s representation, warranties or covenants under
        this Subscription Agreement or any agreements or understandings Investor
        may
        have with any such stockholder or any violations by the Investor of state
        or
        federal securities laws or any conduct by such Investor which constitutes
        fraud,
        gross negligence, willful misconduct or malfeasance). If any action shall
        be
        brought against any Investor Party in respect of which indemnity may be sought
        pursuant to this Agreement, such Investor Party shall promptly notify the
        Company in writing, and the Company shall have the right to assume the defense
        thereof with counsel of its own choosing. Any Investor Party shall have the
        right to employ separate counsel in any such action and participate in the
        defense thereof, but the fees and expenses of such counsel shall be at the
        expense of such Investor Party except to the extent that (i) the employment
        thereof has been specifically authorized by the Company in writing, (ii)
        the
        Company has failed after a reasonable period of time to assume such defense
        and
        to employ counsel or (iii) in such action there is, in the reasonable opinion
        of
        such separate counsel, a material conflict on any material issue between
        the
        position of the Company and the position of such Investor Party. The Company
        will not be liable to any Investor Party under this Agreement (i) for any
        settlement by a Investor Party effected without the Company’s prior written
        consent, which shall not be unreasonably withheld or delayed; or (ii) to
        the
        extent, but only to the extent that a loss, claim, damage or liability is
        attributable to any Investor Party’s breach of any of the representations,
        warranties, covenants or agreements made by Investor in this Subscription
        Agreement. 

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      (k)
        Transfer
        and Tradability of the Underlying Shares.
        The
        Company shall provide a transfer agent and registrar for all shares of its
        Common Stock, including the Shares, Warrant Shares and Additional Warrant
        Shares
        at least until such time as all the Underlying Shares have been sold. The
        Company shall cause all shares of Common Stock which are registered in
        accordance with the provisions of Section 5 above to be listed or included
        for
        quotation on each exchange or marketplace on which the Company’s shares of
        Common Stock are then listed or included for quotation at least until the
        earlier of (i) five (5) years from the Final Closing and (ii) such time as
        all
        the Shares, Warrant Shares and Additional Warrant Shares have been sold by
        all
        of the Investors in the Offering and there are no Debentures, Warrants or
        Additional Warrants outstanding and unconverted or unexercised. 

       

      (l)
        Future
        Priced Securities.
        From
        the date hereof until the date that less than 20% of the Warrants remain
        outstanding and unexercised, the Company shall be prohibited from effecting
        or
        entering into an agreement to effect any financing involving a “Variable
        Rate Transaction”
unless
        the Company obtains express written consent and authorization from the holders
        of at least seventy-five percent (75%) of the then-outstanding and unexercised
        Warrants. The term “Variable
        Rate Transaction”
shall
        mean a transaction in which the Company issues or sells (i) any debt or equity
        securities that are convertible into, exchangeable or exercisable for, or
        include the right to receive additional shares of Common Stock either (A)
        at a
        conversion, exercise or exchange rate or other price that is based upon and/or
        varies with the trading prices of or quotations for the shares of Common
        Stock
        at any time after the initial issuance of such debt or equity securities,
        or (B)
        with a conversion, exercise or exchange price that is subject to being reset
        at
        some future date after the initial issuance of such debt or equity security
        or
        upon the occurrence of specified or contingent events directly or indirectly
        related to the business of the Company or the market for the Common Stock.
        

       

      (m)
        Right
        of First Refusal.
        For a
        period of eighteen (18) months following the Final Closing, the Company agrees
        to promptly notify each Investor in writing (a “Rights Notice”) of the
        terms and conditions of any proposed private placement offering of Common
        Stock
        or securities convertible or exercisable into shares of Common Stock
        (“Subsequent Financing”), not including offerings pursuant to (i) equity
        incentive plans established for the benefit of the Company’s employees,
        consultants, officers or directors, (ii) strategic partnerships or other
        investments where a strategic investor(s) is(are) the sole investor(s), (iii)
        up
        to $2,010,000 in financing by Triumph Small Cap Fund, Inc. plus warrants
        issued
        in connection therewith, (iv) mergers or acquisitions, or (v) public offerings;
        provided, however, prior to delivering to each Investor a Rights Notice,
        the
        Company shall first deliver to each Investor a written notice of its intention
        to effect a Subsequent Financing (“Pre-Notice”) within three (3) trading
        days of receiving an applicable offer, which Pre-Notice shall ask such Investor
        if it wants to review the details of such financing. Upon the request of
        an
        Investor, and only upon a request by such Investor within three (3) trading
        days
        of receipt of a Pre-Notice, the Company shall promptly, but no later than
        two
        (2) trading days after such request, deliver a Rights Notice to such Investor.
        The Rights Notice shall grant Investors the right to purchase their pro rata
        portion, based on their respective initial purchase amounts hereunder, of
        all or
        part of the securities being offered in such Subsequent Financing, on the
        same,
        absolute terms and conditions as contemplated by such Subsequent Financing,
        and
        shall be delivered at least ten (10) business days prior to the closing of
        any
        such Subsequent Financing. Each Investor will have ten (10) business days
        from
        the date of the Rights Notice in which to advise the Company in writing whether
        it intends to participate in such Subsequent Financing, and in what amounts,
        which amount shall not exceed Investor’s purchase amount hereunder except as
        allowed by the following sentence (unless otherwise agreed between the
Company
        and Investor without infringing on the rights of any other Investor hereunder).
        If any Investor elects not to participate in such Subsequent Financing, the
        purchase right granted to such Investor pursuant to its Rights Notice shall
        be
        assigned pro rata among all other Investors participating in the Subsequent
        Financing, based on the respective initial purchase amounts of such
        participating Investors hereunder. 

       

      
        
           

        

        
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      (n)
        Equal
        Treatment of Investors.
        No
        consideration shall be offered or paid to any Person to amend or consent
        to a
        waiver or modification of any provision of such Person’s Subscription Agreement
        unless the same consideration is also offered to all Investors in the Offering.
        For clarification purposes, this provision constitutes a separate right granted
        to each Investor by the Company and shall not in any way be construed as
        the
        investors in the Offering acting in concert or as a group with respect to
        the
        purchase, disposition or voting of the Debentures, Shares, Warrants, Warrant
        Shares, Additional Warrants, Additional Warrant Shares or otherwise.

      

      7.
        Specific
        State Legends.
        

       

      FOR
        NEW HAMPSHIRE RESIDENTS ONLY:
        NEITHER
        THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS
        BEEN
        FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
        EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
        CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
        RSA 421-B OF THE NEW HAMPSHIRE UNIFORM SECURITIES ACT IS TRUE, COMPLETE AND
        NOT
        MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION
        IS
        AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE
        HAS
        PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR
        GIVEN
        APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE,
        OR
        CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
        REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. 

       

      FOR
        FLORIDA RESIDENTS ONLY:
        EACH
        FLORIDA RESIDENT WHO SUBSCRIBES FOR THE PURCHASE OF SECURITIES HEREIN HAS
        THE
        RIGHT, PURSUANT TO SECTION 517.061(11)(A)(5) OF THE FLORIDA SECURITIES ACT,
        TO
        WITHDRAW HIS SUBSCRIPTION FOR THE PURCHASE AND RECEIVE A FULL REFUND OF ALL
        MONIES PAID WITHIN THREE BUSINESS DAYS AFTER THE EXECUTION OF THIS SUBSCRIPTION
        AGREEMENT OR PAYMENT FOR THE PURCHASE HAS BEEN MADE, WHICHEVER IS LATER.
        WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH
        THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO THE
        COMPANY
        AT THE ADDRESS SET FORTH IN THIS SUBSCRIPTION AGREEMENT INDICATING HIS INTENTION
        TO WITHDRAW. 

       

      SUCH
        LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
        AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY
        CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND
        ALSO
        TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON
        OR
        BY TELEPHONE TO AN OFFICER OF THE COMPANY, A WRITTEN CONFIRMATION THAT THE
        REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED. 

       

      FOR
        GEORGIA RESIDENTS ONLY THE
        SECURITIES OFFERED HEREBY ARE BEING ISSUED OR SOLD IN RELIANCE ON PARAGRAPH
        (13)
        OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT
        BE
        SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
        OR
        PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT 

       

      FOR
        RESIDENTS OF ALL STATES:
        THE
        SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
        OF
        1933 OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
        RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
        SUCH
        LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
        AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND
        SUCH
        LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
        AWARE
        THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
        FOR AN
        INDEFINITE PERIOD OF TIME. 

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      THE
        SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
        COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY,
        NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS
        OF
        THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 

       

      8.
        Miscellaneous.
        

       

      (a)
        Termination.
        The
        Investor agrees that he shall not cancel, terminate or revoke this Subscription
        Agreement or any agreement of the Investor made hereunder other than as set
        forth herein, and that this Subscription Agreement shall survive the death
        or
        disability of the Investor. If the Company elects to cancel this Subscription
        Agreement, in whole or in part, provided that it returns to the Investor,
        without interest and without deduction, all sums paid by the Investor (or
        such
        rejected portion thereof), this Subscription shall be null and void and of
        no
        further force and effect, and no party shall have any rights against any
        other
        party hereunder 

       

      (b)
        Entire
        Agreement.
        This
        Subscription Agreement, together with the schedules and exhibits hereto,
        contains the entire understanding of the Company and the Investor with respect
        to the subject matter hereof. 

       

      (c)
        Notices.
        Any and
        all notices or other communications or deliveries required or permitted to
        be
        provided hereunder shall be in writing and shall be deemed given and effective
        on the earliest of (a) the date of transmission, if such notice or communication
        is delivered via facsimile at the facsimile number set forth on the signature
        pages attached hereto prior to 5:30 p.m. (New York City time) on a Business
        Day,
        (b) the next Business Day after the date of transmission, if such notice
        or
        communication is delivered via facsimile at the facsimile number set forth
        on
        the signature pages attached hereto on a day that is not a Business Day or
        later
        than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business
        Day following the date of mailing, if sent by U.S. nationally recognized
        overnight courier service, or (d) upon actual receipt by the party to whom
        such
        notice is required to be given. The address for such notices and communications
        shall be to the Investor at his address set forth on the Investor Signature
        Page, to the Company at the addresses set forth above, and to the Placement
        Agent at 100 Wall Street, 7th
        Floor,
        New York, NY 10005. 

       

      (d)
        Amendments;
        Waivers.
        No
        provision of this Subscription Agreement may be waived or amended except
        in a
        written instrument signed, in the case of an amendment, by the Company and
        the
        Investor or, in the case of a waiver, by the party against whom enforcement
        of
        any such waiver is sought. No waiver of any default with respect to any
        provision, condition or requirement of this Subscription Agreement shall
        be
        deemed to be a continuing waiver in the future or a waiver of any subsequent
        default or a waiver of any other provision, condition or requirement hereof,
        nor
        shall any delay or omission of either party to exercise any right hereunder
        in
        any manner impair the exercise of any such right. Notwithstanding any of
        the
        representations, warranties, acknowledgments or agreements made herein by
        the
        Investor, the Investor does not thereby or in any manner waive any rights
        granted to the Investor under federal or state securities laws. 

       

       (e)
        Construction.
        The
        headings herein are for convenience only, do not constitute a part of this
        Subscription Agreement and shall not be deemed to limit or affect any of
        the
        provisions hereof. 

       

      (f)
        Successors
        and Assigns.
        This
        Subscription Agreement shall be binding upon and inure to the benefit of
        the
        parties and their successors and permitted assigns. The Company may not assign
        this Subscription Agreement or any rights or obligations hereunder without
        the
        prior written consent of each Investor in the Offering. Investor may assign
        any
        or all of its rights under this Subscription Agreement to any Person to whom
        Investor assigns or transfers any the Debentures, Warrants, Additional Warrants
        or Underlying Shares, provided such transferee agrees in writing to be bound,
        with respect to such transferred securities, by the provisions hereof that
        apply
        to the Investor. 

       

      (g)
No
        Third-Party Beneficiaries. This Subscription Agreement is intended for the
        benefit of the parties hereto and their respective successors and permitted
        assigns and is not for the benefit of, nor may any provision hereof be enforced
        by, any other Person, except as otherwise set forth in Section 6(j).

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

      (h)
        Governing Law. All questions concerning the construction, validity,
        enforcement and interpretation of this Subscription Agreement shall be governed
        by and construed and enforced in accordance with the internal laws of the
        State
        of New York, without regard to the principles of conflicts of law thereof.
        Each
        party agrees that all legal proceedings concerning the interpretations,
        enforcement and defense of the transactions contemplated by this Subscription
        Agreement (whether brought against a party hereto or its respective affiliates,
        directors, officers, shareholders, employees or agents) shall be commenced
        exclusively in the state and federal courts sitting in the City of New York.
        Each party hereby irrevocably submits to the exclusive jurisdiction of the
        state
        and federal courts sitting in the City of New York, borough of Manhattan
        for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein, and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        that
        such suit, action or proceeding is improper or inconvenient venue for such
        proceeding. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof via registered or certified mail or overnight delivery
        (with evidence of delivery) to such party at the address in effect for notices
        to it under this Subscription Agreement and agrees that such service shall
        constitute good and sufficient service of process and notice thereof. Nothing
        contained herein shall be deemed to limit in any way any right to serve process
        in any manner permitted by law. The parties hereby waive all rights to a
        trial
        by jury. If either party shall commence an action or proceeding to enforce
        any
        provisions of this Subscription Agreement, then the prevailing party in such
        action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred with the investigation, preparation
        and prosecution of such action or proceeding. 

       

      (i)
        Survival.
        The
        representations and warranties contained herein shall survive each Closing
        Date
        and the delivery and/or exercise of the Units and Underlying Shares, as
        applicable for the applicable statue of limitations for a period of three
        (3)
        years from the date hereof. 

       

      (j)
        Execution.
        In the
        event that any signature is delivered by facsimile transmission, such signature
        shall create a valid and binding obligation of the party executing (or on
        whose
        behalf such signature is executed) with the same force and effect as if such
        facsimile signature page were an original thereof. 

       

      (k)
        Severability.
        If any
        provision of this Subscription Agreement is held to be invalid or unenforceable
        in any respect, the validity and enforceability of the remaining terms and
        provisions of this Subscription Agreement shall not in any way be affected
        or
        impaired thereby and the parties will attempt to agree upon a valid and
        enforceable provision that is a reasonable substitute therefor, and upon
        so
        agreeing, shall incorporate such substitute provision in this Subscription
        Agreement. 

       

      (l)
        Rescission
        and Withdrawal Right.
        Notwithstanding anything to the contrary contained in (and without limiting
        any
        similar provisions of) this Subscription Agreement, whenever Investor exercises
        a right, election, demand or option under this Subscription Agreement or
        the
        Warrant or Additional Warrants, and the Company does not timely perform its
        related obligations within the periods therein provided, then Investor may
        rescind or withdraw, in its sole discretion from time to time upon written
        notice to the Company, any relevant notice, demand or election in whole or
        in
        part without prejudice to its future actions and rights; provided,
        however,
        in the
        case of a rescission of an exercise of a Warrant or Additional Warrant, Investor
        shall be required to return any shares of Common Stock subject to any such
        rescinded exercise notice. 

       

      (m)
        Replacement
        of Securities.
        If any
        certificate or instrument evidencing any Debentures, Warrants or Underlying
        Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
        cause
        to be issued in exchange and substitution for and upon cancellation thereof,
        or
        in lieu of and substitution therefor, a new certificate or instrument, but
        only
        upon receipt of evidence reasonably satisfactory to the Company of such loss,
        theft or destruction and customary and reasonable indemnity, if requested.
        The
        applicants for a new certificate or instrument under such circumstances shall
        also pay any reasonable third-party costs associated with the issuance of
        such
        replacement securities. 

       

      (n)
        Remedies.
        In
        addition to being entitled to exercise all rights provided herein or granted
        by
        law, including recovery of damages, each of Investor and the Company will
        be
        entitled to specific performance under this Subscription Agreement. The parties
        agree that monetary damages may not be adequate compensation for any loss
        incurred by reason of any breach of obligations described in the foregoing
        sentence and hereby agrees to waive in any action for specific performance
        of
        any such obligation the defense that a remedy at law would be adequate.

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      (o)
        Payment Set Aside. To the extent that the Company makes a payment or
        payments to Investor pursuant to this Subscription Agreement or an Investor
        enforces or exercises its rights thereunder, and such payment or payments
        or the
        proceeds of such enforcement or exercise or any part thereof are subsequently
        invalidated, declared to be fraudulent or preferential, set aside, recovered
        from, disgorged by or are required to be refunded, repaid or otherwise restored
        to the Company, a trustee, receiver or any other person under any law
        (including, without limitation, any bankruptcy law, state or federal law,
        common
        law or equitable cause of action), then to the extent of any such restoration
        the obligation or part thereof originally intended to be satisfied shall
        be
        revived and continued in full force and effect as if such payment had not
        been
        made or such enforcement or setoff had not occurred. 

       

      (p)
        Liquidated Damages.
        The
        Company’s obligations to pay any partial liquidated damages or other amounts
        owing under this Subscription Agreement is a continuing obligation of the
        Company and shall not terminate until all unpaid partial liquidated damages
        and
        other amounts have been paid notwithstanding the fact that the instrument
        or
        security pursuant to which such partial liquidated damages or other amounts
        are
        due and payable shall have been canceled. 

      
        
          

          [REMAINDER
            OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS] 

           

          
            
               

            

            
              20

              
                

              

            

            
               

            

          

           

          INVESTOR
            SIGNATURE PAGE FOR TECHNOCONCEPTS, INC. SUBSCRIPTION AGREEMENT

          Please
            print or type, Use ink only. (All Parties Must Sign) 

           

          The
            undersigned Investor hereby certifies that he (i) has received and relied
            solely
            upon the SEC Reports, the Offering Memorandum and this Subscription Agreement
            and their respective exhibits and schedules, (ii) agrees to all the terms
            and
            conditions of this Subscription Agreement, (iii) meets the suitability
            standards
            set forth herein and (iv) is a resident of the state or foreign jurisdiction
            indicated below. 

          

            
              	
                      Dollar
                        Amount of Units Subscribed for: $__________________

                    	
                      ($30,000
                        Units for $30,000 Debenture convertible @ $1.50, 10,000 Warrants
                        @ $1.90
                        and 10,000 Warrants @ $2.75)

                    
	 	 
	 	
                      o
                        Check here if
                        payment is being made by exchange of Series A Secured Subordinated
                        Promissory Notes

                    
	 	 
	
                      
                        

                      

                      Name
                        of Investor (Print)

                       

                      
                        

                      

                      Name
                        of Joint Investor (if any) (Print)

                       

                       

                      
                        

                      

                      Signature
                        of Investor 

                       

                       

                      
                        

                      

                      Signature
                        of Joint Investor (if any) 

                       

                      
                        

                      

                      Capacity
                        of Signatory (if applicable)

                       

                      
                        

                      

                      Social
                        Security or Taxpayer Identification Number 

                       

                      Investor
                        Address: 

                       

                      
                        

                      

                      Street
                        Address

                    	
                      If
                        other than individual check one and indicate capacity of
                        signatory under
                        the signature:

                      o
                        Trust

                      o
                        Estate 

                      o
                        Uniform Gifts to Minors Act, State of
                        __________

                      o
                        Attorney-in-fact

                      o
                        Corporation

                      o
                        Other

                       

                      If
                        Joint Ownership, Check one:

                      o
                        Joint Tenants with Right of
                        Survivorship

                      o
                        Tenants in Common

                      o
                        Tenants by the Entirety

                      o
                        Community by Property

                       

                      Backup
                        Withholding Statement:

                      o
                        Please check this box only if the investor is
                        subject to backup withholding

                       

                      Foreign
                        Person:

                      o
                        Please check this box only if the investor is a
                        nonresident alien, foreign corporation, foreign partnership,
                        foreign trust
                        or foreign estate

                    
	 	
                      Country
                        ________________ Passport # _______________ 

                    
	
                      
                        

                      

                      
                        City                       State     Zip
                          Code

                      

                    	
                      ID
                        #___________________ ID Type _________________ 

                    
	 	 
	
                      Telephone:
                        (        )             Fax:
                        (        )

                    	 
	 	 
	
                      Email:_____________________________________________

                    	 
	 	 
	
                      Instructions
                        for Delivery of Securities:

                    	 
	 	 
	
                      o
                        Deposit to my Westminster brokerage
                        account

                    	
                      o
                        Deliver to an alternate
                        address:

                    
	 	 
	
                      o
                        Deliver to the address above

                    	
                      ________________________________________________

                    
	 	
                    
	 	
                      ________________________________________________

                    
	
                      Broker:
                        

                    	 
	
                      o
                        Westminster Registered
                        Rep._______________________

                    	
                      o
                        Other Investor Representative:
                        ____________________

                    

            

             

            
              The
                investor agrees to the terms of this Subscription Agreement and,
                as required by
                the Regulations pursuant to the Internal Revenue Code, certifies
                under penalty
                of perjury that (1) the Social Security Number or Taxpayer Identification
                Number
                and address provided above is correct, (2) the investor is not subject
                to backup
                withholding (unless the Backup Withholding Statement box is checked)
                either
                because he has not been notified that he is subject to backup withholding
                as a
                result of a failure to report all interest or dividends or because
                the Internal
                Revenue Service has notified him that he is no longer subject to
                backup
                withholding and (3) the investor (unless, the Foreign Person box
                above is
                checked) is not a nonresident alien, foreign partnership, foreign
                trust or
                foreign estate. 

               

              THE
                SUBSCRIPTION FOR UNITS OF TECHNOCONCEPTS, INC. BY THE ABOVE NAMED
                INVESTOR(S) IS
                ACCEPTED THIS ________ DAY OF ______________________, 2007.

              
                	 	 	 
	 	
                        TECHNOCONCEPTS,
                          INC. 

                      
	 
 	 
 	 
 
	
                      	By:  	
                      
	 	Name:  	
                        

                      
	 	Title: 	 

              

            

          

        

      

    

     

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    
      

      Schedule
        4(g) 

      Capitalization
        

       

      The
        number of shares and type of all authorized, issued and outstanding capital
        stock of the Company, as of January 19, 2007, is as follows: 

      

        
          	 	 	
                   

                  Authorized

                	
                   

                	
                  Outstanding

                	 
	
                  Common
                    Stock:

                	 	 	
                  100,000,000

                	 	 	
                  31,391,316

                	 
	
                  Series
                    A-1 Preferred Stock:

                	 	 	
                  5,000,000

                	 	 	
                  4,000

                	 
	
                  Series
                    A-2 Preferred Stock:

                	 	 	
                  12,000

                	 	 	
                  12,000

                	 
	
                  Series
                    B Preferred Stock:

                	 	 	
                  800

                	 	 	
                  800

                	 
	
                  Series
                    B-1 Preferred Stock:

                	 	 	
                  2,300

                	 	 	
                  2,203

                	 
	
                  Series
                    C Preferred Stock:

                	 	 	
                  25,000

                	 	 	
                  —

                	 

        

      

      
         

      

      Listed
        below are all of the outstanding options, warrants, script rights to subscribe
        to, calls or commitments of any character whatsoever relating to, or securities,
        rights or obligations convertible into or exchangeable for, or giving any
        Person
        or entity any right to subscribe for or acquire, any shares of Common Stock,
        or
        contracts, commitments, understandings or arrangements by which the Company
        is
        or may become bound to issue additional shares of Common Stock, or securities
        or
        rights convertible or exchangeable into shares of Common Stock. Concerning
        the
        anti-dilution provisions identified below, the Company is obligated to provide
        notice to the applicable security holder in the event of any reduction in
        the
        applicable security’s conversion price or exercise price, as the case may
        be.  

      
         

        
          	
                  Assumes
                    Maximum Offering of $4 million  

                	 	 	 	 	 	 	 	 	 
	 	 	
                  
                    As
                      of 

                    1/19/2007

                  

                	 	
                  
                    
                      Debt
                        to

                      Equity
                        

                      Conversion
                        (1)

                    

                  

                	 	
                  Offering
                    

                	 	
                  Post
                    

                  Offering
                    

                	 
	
                  Preferred
                    Stock

                	 	 	 	 	 	 	 	 	 
	
                  Preferred
                    A-1 

                	 	 	
                  4,000
                    

                	 	 	 	 	 	 	 	 	
                  4,000

                	 
	
                  Preferred
                    A-2 

                	 	 	
                  12,000
                    

                	 	 	 	 	 	 	 	 	
                  12,000

                	 
	
                  Preferred
                    B 

                	 	 	
                  800
                    

                	 	 	 	 	 	 	 	 	
                  800

                	 
	
                  Preferred
                    B-1 

                	 	 	
                  2,203
                    

                	 	 	 	 	 	 	 	 	
                  2,203
                    

                	 
	
                  Common
                    Stock (2)(3) 

                	 	 	
                  31,391,316
                    

                	 	 	
                  3,784,760
                    

                	 	 	
                  1,333,333
                    

                	 	 	
                  36,509,409
                    

                	 
	
                  Warrants
                    (2)(3) 

                	 	 	
                  28,135,110
                    

                	 	 	
                  15,233,148
                    

                	 	 	
                  4,333,333
                    

                	 	 	
                  47,701,591
                    

                	 
	
                   Stock
                    Options ($1.95 wtd avg price) 

                	 	 	
                  6,204,500
                    

                	 	 	
                  -

                	 	 	
                  -

                	 	 	
                  6,204,500
                    

                	 
	
                   
Preferred
                    B Conversion 

                	 	 	
                  800,000
                    

                	 	 	
                  -

                	 	 	
                  -

                	 	 	
                  800,000
                    

                	 
	
                   
Preferred
                    B1 Conversion 

                	 	 	
                  2,203,000
                    

                	 	 	
                  -

                	 	 	
                  -

                	 	 	
                  2,203,000
                    

                	 
	
                  8%
                    Secured Convertible
                    Debenture (4) 

                	 	 	
                  -

                	 	 	
                  -

                	 	 	
                  5,333,333
                    

                	 	 	
                  5,333,333
                    

                	 
	 	 	 	
                  68,733,926
                    

                	 	 	
                  19,017,908
                    

                	 	 	
                  11,000,000
                    

                	 	 	
                  98,751,833
                    

                	 

        

        

          (1)
            $5,420,668
            of the Series A Notes Payable is converting into equity at $1.50 and
            will also
            receive warrants for 3,613,779 shares of common stock at $1.90 and warrants
            3,613,779 shares of common stock at $2.75 

           

          (2)
            Assumes
            Triumph Small Cap Fund, Inc. ("Triumph") purchases 1,333,333 shares of
            common
            stock at $1.50 with 2 sets of warrants for 666,667 shares of common stock
            at
            $1.90 and $2.75, repsectively. In addition, since Triumph is purchasing
            $2,000,000 in common stock, Triumph will receive 3 sets of warrants to
            purchase
            1,333,333 shares of common stock at $2.00 per share, $2.50 per share
            and $3.50
            per share, respectively. 

           

          (3)
            Does
            not
            assume that anyone besides Triumph invests over $2,000,000 in the investment.
            An
            investment of at least $2,000,000 would result in additional warrants
            for at
            least 3,999,999 shares of common stock. 

           

          (4)
            Assumes
            Maximum Offering of $4,000,000, which, on an as converted basis, is composed
            of
            2,666,667 shares of common stock and warrants for 2,666,667 shares of
            common
            stock.

          

          Warrant
            Breakdown 

           

          
            	
                    $
                      1.00

                  	
                    $
                      1.90

                  	
                    $
                      2.10 

                  	
                    $
                      2.50

                  	
                    $
                      2.75 

                  	
                    $
                      3.00

                  	
                    $
                      3.50

                  	
                    $
                      3.75 

                  	
                    $
                      3.85 

                  	
                    $
                      4.00 

                  	
                    $
                      4.50

                  	
                    $
                      6.00 

                  
	
                    19,621,990

                  	
                    1,500,000
                      

                  	
                    1,500,000
                      

                  	
                    1,720,800
                      

                  	
                    1,500,000
                      

                  	
                    469,000

                  	
                    1,524,160

                  	
                    40,000

                  	
                    150,000

                  	
                    24,160

                  	
                    75,000

                  	
                    10,000
                      

                  

          

           

           

          
            
               

            

            
              22

              
                

              

            

            
               

            

          

          

          Schedule
            4(bb)

          Indebtedness
            

           

          Assumes
            Maximum Offering of $4million 

           

            
              	 	 	
                      As
                        of

                      1/19/2007

                    	 	
                      Conversion

                      to
                        Equity

                    	 	
                      Exchanged

                      into
                        Offering

                    	 	
                      Offering

                    	 	
                      Post-
                        Offering

                    	 
	
                      Notes
                        Payable to Shareholder

                    	 	 	
                      58,497
                        

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      58,497

                    	 
	
                      Notes
                        Payable (1)

                    	 	 	
                      950,000
                        

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      (375,000

                    	
                      )

                    	 	
                      575,000

                    	 
	
                      Convertible
                        Debentures (2)

                    	 	 	
                      250,000
                        

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      250,000
                        

                    	 
	
                      Series
                        A Notes Payable (3)(4)(5)(6)

                    	 	 	
                      10,590,822
                        

                    	 	 	
                      (5,677,140

                    	
                      )

                    	 	
                      (456,089

                    	
                      )

                    	 	
                      -

                    	 	 	
                      4,457,592

                    	 
	
                      January
                        2007 Convertible Debenture (7)

                    	 	 	
                      500,000
                        

                    	 	 	
                      -

                    	 	 	
                      (500,000

                    	
                      )

                    	 	
                      -

                    	 	 	
                      -

                    	 
	
                      8%
                        Secured Convertible Debentures 

                    	 	 	
                      -

                    	 	 	
                      -

                    	 	 	
                      956,089
                        

                    	 	 	
                      3,043,911
                        

                    	 	 	
                      4,000,000

                    	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Total
                        Debt

                    	 	 	
                      12,349,319
                        

                    	 	 	
                      (5,677,140

                    	
                      )

                    	 	
                      -

                    	 	 	
                      2,668,911
                        

                    	 	 	
                      9,341,089

                    	 

            

          

        

        
          

          (1)
            $375,000 of the Notes Payable will be paid at closing. The maturity of
            the
            remaining Notes Payable will be extended until six months after the closing
            of
            this Offering. 

           

          (2)
            The
            Convertible Debentures have a secured interest in the assets of the Company
            that
            is senior to the Securities in the Offering. 

           

          (3)
            $5,420,668 of the Series A Notes Payable is converting into equity at
            $1.50 and
            will also receive warrants for 3,613,779 shares of common stock at $1.90
            and
            warrants 3,613,779 shares of common stock at $2.75 

           

          (4)
            Certain holders of the Series A Notes Payable, that convert in over $2,000,000
            shares of common stock will receive three sets of warrants for shares
            of common
            stock equal to 100% of the common stock underlying the conversion of
            their note,
            exercisable at $2.10 per share, $2.50 per share and $3.50 per share,
            respectively. 

           

          (5)
            $445,000 of the Series A Notes Payable is converting into the Securities
            of this
            Offering at face value. 

           

          (6)
            Includes accrued interest for the debt that is converting into equity
            of the
            Securities of this Offering of $267,561 and $164,353 for the debt that
            is
            currently not converting. 

           

          (7)
            The
            January 2007 Convertible Debenture is convertible into the Securities
            of this
            Offering at face value. 

        

        
          

          
            
               

            

            
              23

              
                

              

            

            
               

            

          

        

      

    

    

      Exhibit
        A 

      

      Statement
        of Accredited Investor 

       

      To:
        TechnoConcepts, Inc. 

      6060
        Sepulveda Blvd 

      Suite
        202

      Van
        Nuys,
        CA 91411 

       

      Ladies
        and Gentlemen: 

       

      The
        undersigned hereby refers to the Subscription Agreement executed and delivered
        to TechnoConcepts, Inc. (the “Company”) by the undersigned as of the date
        herewith. In connection with the subscription thereunder by the undersigned
        to
        purchase securities of the Company, the undersigned hereby represents and
        warrants to you that such individual or entity meets at least one of the
        tests
        listed on the attached Exhibit I for an “accredited investor” (as such term is
        defined under Regulation D promulgated pursuant to the Securities Act of
        1933,
        as amended). 

       

      I
        qualify
        under: 

       

        o  Paragraph
        1 (Officer or Director of the Company) 

        o  
Paragraph
        2 (Income exceeds $200,000 (Individual) or $300,000 (Joint)) 

        o  
Paragraph
        3 (Individual or Joint Assets exceed $1,000,000) 

        o  
Paragraph
        4 (Trust Assets exceed $5,000,000, with limitations) 

        o  
Paragraph
        5 (Corporate Assets exceed $5,000,000, with limitations) 

        o  
Paragraph
        6 (Entity owners are Accredited) 

      

      Dated:
        ______________, 2007 

       

      
        	 	 	Very
                truly yours,
                
	 	 	 
	
              	
              	
              
	 	
                
Name
                of Individual #1 or Entity 
	 	 
	 	 
	 	
                
Authorized
                Signature 
	 	 
	 	 
	 	
                
Name
                of Individual #2, if applicable 
	 	 
	 	 
	 	
                
Authorized
                Signature 

         

        
          
             

          

          
            A-1

            
              

            

          

          
             

          

        

         

        EXHIBIT
          I TO STATEMENT OF ACCREDITED INVESTOR 

         

        ACCREDITED
          INVESTOR STATUS 

         

        NOTE:
          Individuals who hold certain positions with an issuer or its affiliates,
          or who
          have certain minimum individual income or certain minimum net worth (each
          as
          described below) may qualify as Accredited Investors. Partnerships, corporations
          or other entities may qualify as Accredited Investors if they fulfill certain
          financial and other standards or if all of their equity owners have incomes
          and/or net worth which qualify them individually as Accredited Investors,
          and
          trusts may qualify as Accredited Investors if they meet certain financial
          and
          other tests (as described below). 

         

        You
          may
          qualify as an Accredited Investor under Regulation D promulgated under
          the
          Securities Act of 1933 (the “1933 Act”) if you meet any of the following tests:

         

        FOR
          INDIVIDUALS ONLY 

         

        1.
          You
          are a director or an executive officer of TechnConcepts, Inc. An “executive
          officer” is the president, any vice president in charge of a principal business
          unit, division or function (such as sales, administration or finance),
          any other
          officer who performs a policy making function or any other person who performs
          similar policy making functions for TechnoConcepts, Inc. 

         

          OR
          

         

        2.
          You
          had individual income (exclusive of any income attributable to your spouse)
          of
          more than $200,000 in each of the two most recent fiscal years, and reasonably
          expect to have an individual income in excess of $200,000 in the current
          year,
          or your spouse and you had a joint income in excess of $300,000 in each
          of the
          two most recent fiscal years, and you reasonably expect to have a joint
          income
          in excess of $300,000 in the current year. 

          OR
          

         

        3.
          You
          have an individual net worth, or your spouse and you have a combined net
          worth
          in excess of $1,000,000. For purposes of this statement, “net worth” means the
          excess of total assets at fair market value, including home, home furnishings
          and automobiles, over total liabilities. 

         

        FOR
          TRUSTS ONLY 

         

        4.
          The
          Trust has total assets in excess of $5,000,000, was not formed for the
          specific
          purpose of acquiring securities of TechnoConcepts, Inc., and the purchase
          of
          such securities is directed by a person with such knowledge and experience
          in
          financial and business matters that he is capable of evaluating the risks
          and
          merits of the prospective investment in such securities. 

         

        FOR
          CORPORATIONS, PARTNERSHIPS OR OTHER PURCHASING ENTITIES 

         

        5.
          Any
          corporation, partnership, limited liability company or limited liability
          partnership not formed for the specific purpose of acquiring securities
          of
          TechnoConcepts, Inc. with total assets in excess of $5,000,000. 

        

        OR
          

         

        6.
          All
          equity owners of the purchasing entity are Accredited Investors. 

         

        
          
             

          

          
            A-2

            
              

            

          

          
             

          

        

         

        Exhibit
          B 

         

        TechnoConcepts,
          Inc. 

        

        Selling
          Securityholder Notice and Questionnaire 

         

        The
          undersigned beneficial owner of common stock, no par value (the “Common
          Stock”),
          TechnoConcepts, Inc., a Colorado corporation (the “Company”),
          understands that the Company has filed or intends to file with the Securities
          and Exchange Commission (the “Commission”)
          a
          registration statement (the “Registration
          Statement”)
          for
          the registration and resale under Rule 415 of the Securities Act of 1933,
          as
          amended (the “Securities
          Act”),
          of
          the securities subscribed for in accordance with the terms of the Subscription
          Agreement among the Company and each Investor named therein (the “Subscription
          Agreement”)
          (the
“Registrable
          Securities”).
          A
          copy of the Subscription Agreement is available from the Company upon request
          at
          the address set forth below. All capitalized terms not otherwise defined
          herein
          shall have the meanings ascribed thereto in the Subscription Agreement.
          

         

        Certain
          legal consequences arise from being named as a selling securityholder in
          the
          Registration Statement and the related prospectus. Accordingly, holders
          and
          beneficial owners of Registrable Securities are advised to consult their
          own
          securities law counsel regarding the consequences of being named or not
          being
          named as a selling securityholder in the Registration Statement and the
          related
          prospectus. 

        

        NOTICE
          

         

        The
          undersigned beneficial owner (the “Selling
          Securityholder”)
          of
          Registrable Securities hereby elects to include the Registrable Securities
          owned
          by it and listed below in Item 3 (unless otherwise specified under such
          Item 3)
          in the Registration Statement. 

         

        The
          undersigned hereby provides the following information to the Company and
          represents and warrants that such information is accurate: 

        

        QUESTIONNAIRE
          

         

        1.
          Name. 

        

        

        
          
            	
                    (a)

                  	
                    Full
                      Legal Name of Selling Securityholder

                  
	 	 
	 	 
	
                    (b)
                      

                  	
                    Full
                      Legal Name of Registered Holder (if not the same as (a) above)
                      through
                      which Registrable Securities Listed in Item 3 below are
                      held:

                  
	 	 
	 	 
	
                    (c)
                      

                  	
                    Full
                      Legal Name of Natural Control Person (which means a natural
                      person who
                      directly you indirectly alone or with others has power to vote
                      or dispose
                      of the securities covered by the questionnaire):

                  
	 	 
	 	 

          

        

      

    

     

     

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

     

    
      2.
        Address for Notices to Selling Securityholder: 

       

       

      
        	 	 
	 	 

      

       

      
        	Telephone:
	
              	Fax:	
              

      

       

      
        	Contact
                Person (if other than Selling Securityholder):	 

      

       

      

        3.
          Beneficial Ownership of Registrable Securities: 

         

        (a)
          Type
          and Principal Amount of Registrable Securities beneficially owned: 

         

        
          	
                  #
                    Shares of Common Stock 

                	 
	
                  #
                    Shares of Common Stock Underlying Debentures 

                	 
	
                  #
                    Shares of Common Stock Underlying Preferred Stock 

                	 
	
                  #
                    Shares of Common Stock Underlying Warrants 

                	 
	
                  TOTAL
                    

                	 

        

        

        4.
          Broker-Dealer Status: 

        

          
            	
                  	(a)	
                    Are
                      you a broker-dealer? 

                  

          

           

          Yes
o
            No o

          
            	
                  	Note:	
                    If
                      yes, the Commission’s staff has indicated that you may be identified as an
                      underwriter in the Registration
                      Statement.

                  

          

        

         

        
          	
                	(b)	
                  Are
                    you an affiliate of a
                    broker-dealer?

                

        

      

     

    Yes
o
      No o

    
      

        
          	
                	(c)	
                  If
                    you are an affiliate of a broker-dealer, do you certify that
                    you bought
                    the Registrable Securities as an investment in the ordinary course
                    of
                    business, and at the time of the purchase of the Registrable
                    Securities to
                    be resold, you had no agreements or understandings, directly or
                    indirectly, with any person to distribute the Registrable
                    Securities?

                

        

      

    

     

    Yes
o
      No o

     

    
      
        	
              	Note:	
                If
                  no, the Commission’s staff has indicated that you should be identified as
                  an underwriter in the Registration
                  Statement.

              

      

    

     

     

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

    
      

      5.
        Beneficial Ownership of Other Securities of the Company Owned by the Selling
        Securityholder. 

       

      Except
        as set forth below in this Item 5, the undersigned is not the beneficial
        or
        registered owner of any securities of the Company other than the Registrable
        Securities listed above in Item 3. 

       

      (a)
        Type
        and Amount of Other Securities beneficially owned by the Selling Securityholder:
        

       

      
        	 
	 
	 

      

      

      6.
        Relationships with the Company: 

       

      Except
        as set forth below, neither the undersigned nor any of its affiliates, officers,
        directors or principal equity holders (owners of 5% of more of the equity
        securities of the undersigned) has held any position or office or has had
        any
        other material relationship with the Company (or its predecessors or affiliates)
        during the past three years. 

       

      State
        any
        exceptions here: 

      
         

        
          	 
	 
	 

        

        
7.
          Short Selling Covenant:
          

      

       

      Each
        Holder understands and acknowledges that the Commission currently takes the
        position that coverage of short sales of shares of the Common Stock “against the
        box” prior to the effective date of the Registration Statement with the Shares
        purchased hereunder is a violation of Section 5 of the Securities Act, as
        set
        forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available
        Telephone Interpretations, dated July 1997, compiled by the Office of Chief
        Counsel, Division of Corporation Finance. Accordingly, each Holder hereby
        agrees
        not to use any of the Registrable Securities to cover any short sales made
        prior
        to the Effective Date. 

       

      The
        undersigned agrees to promptly notify the Company of any inaccuracies or
        changes
        in the information provided herein that may occur subsequent to the date
        hereof
        at any time while the Registration Statement remains effective. 

       

      By
        signing below, the undersigned consents to the disclosure of the information
        contained herein in its answers to Items 1 through 6 and the inclusion of
        such
        information in the Registration Statement and the related prospectus. The
        undersigned understands that such information will be relied upon by the
        Company
        in connection with the preparation or amendment of the Registration Statement
        and the related prospectus. 

       

      IN
        WITNESS WHEREOF the undersigned, by authority duly given, has caused this
        Notice
        and Questionnaire to be executed and delivered either in person or by its
        duly
        authorized agent.  

       

      
        
          	 	 	 	 
	Dated: 	 	
                  Beneficial 

                  Owner Name: 

                	 
	
                  
                    

                  

                	 	 	
                  
 
	 	 	Signature: 	 
	 	 	
                  By:
                    Name: 

                  Title:
                    

                	
                  
 

        

      

       

      PLEASE
        FAX OR MAIL A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE
        TOGETHER WITH YOUR EXECUTED SUBSCRIPTION AGREEMENT 

      

      
        
           

        

        
          B-3

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