Document:

EXHIBIT 10.5

                EXTENSION MODIFICATION OF RESEARCH COLLABORATION
                               AGREEMENT BETWEEN
                   B TWELVE, INC. (dba) KYTO BIOPHARMA, INC.
                                      AND
            THE RESEARCH FOUNDATION OF STATE UNIVERSITY OF NEW YORK

                               Modification No. 2
                         RF NO. (100) 1009663 - 006850
                         Effective December 17th, 2004

         The agreement entered into between FOUNDATION and COLLABORATOR made
effective as of August 19th, 1999 (the "Agreement") and modified by Modification
No. 1, Effective as of February 27th, 2001 (the "Modification I"), is hereby
further amended in this Modification 2 as follows, effective December 17, 2004:

1.   The "COLLABORATOR" in the Agreement and "Contractor" in Modification 1
     shall be KYTO BIOPHARMA, INC., doing business through B Twelve Limited,
     incorporated and organized under the laws of Canada and the Province of
     Ontario, on March 5, 1999, with its principal offices located at c/o B
     Twelve Limited, 41 A. Avenue Road, York Square, Toronto, Ontario M5R 2G3.

2.   The terms "COLLABORATOR" in the Agreement and "Contractor" in Modification
     1 shall be used interchangeably and shall be as defined in this
     Modification 2 as "CONTRACTOR". The CONTRACTOR shall be KYTO BIOPHARMA,
     INC. and B Twelve Limited, jointly and severally.

3.   Any reference to the UNIVERSITY in the Agreement shall be deleted and
     replaced with the FOUNDATION. The FOUNDATION assumes all rights, duties,
     and obligations of UNIVERSITY, if any, from the Agreement.

4.   CONTRACTOR and FOUNDATION shall pay the non-breaching party's litigation,
     court, and other fees and expenses, including attorney's fees, for any
     action to remedy a material breach hereunder, including non-payment of
     money owed or non-performance of the Research Plan as required.

5.   CONTRACTOR and FOUNDATION acknowledges that the "3-Way Confidentiality and
     Nondisclosure Agreement: dated June 1, 2003 was never fully executed and is
     rescinded and void. The Agreement contains a confidentiality provision for
     the conduct of this relationship which will govern.

6.   The parties agree to amend Article III, Performance of Research, Subpart
     14. a) as follows:

     a) ii. To authorize the initiation of Phase III research to the Research
            Plan as put forth in Exhibit B-2, attached, and;

     A. For CONTRACTOR to authorize additional funding of $35,000.00 USD to be
     appropriated for the initial 6 months of the conduct of the Research Plan
     from January 1, 2005 through June 30, 2005, and;
<PAGE>

     1. Such payment to be made to the FOUNDATION by CONTRACTOR prior to or upon
     the execution date of this Modification. The parties agree that no work on
     the Research Plan shall commence until full payment is received by
     FOUNDATION.

7.   The parties agree to delete Subpart b. of Article 14, Award, in its
     entirety.

8.   Pursuant to and subject to Section 3 of the Agreement, the parties shall
     cooperate in making a determination of ownership of any intellectual
     property rights.

9.   The parties agree to amend Article III, Subpart 15, Basic Term as follows:

Notwithstanding Article 16, Default and Termination, this Agreement shall
continue in perpetuity unless otherwise terminated by mutual consent of the
parties.

10.  It is agreed that CONTRACTOR shall, with due diligence, amend )Patent NO.
     5,688,504 awarded to Dr. Alton Charles Morgan Jr. and owned by CONTRACTOR
     to legally establish joint ownership of the same by CONTRACTOR and
     FOUNDATION and shall prepare and execute all necessary documents to that
     end.

11.  Under Modification No. 1, the Research Laboratory shall enter into a
     Confidentiality Agreement with either CONTRACTOR or FOUNDATION which is
     acceptable in all respects to FOUNDATION at its sole discretion. The
     parties agree that the Mutual Confidentiality and NonDisclosure Agreement
     between Contractor and Medarex, Inc. is acceptable. This Agreement is
     attached hereto as Attachment 3.

12.  Except as amended as herein above set forth, the said Agreement and
     Modification No.1 between the parties is hereby ratified and confirmed and
     shall continue in full force and effect according to its terms as evidenced
     by the signatures below.

THE RESEARCH FOUNDATION                    KYTO BIOPHARMA, INC.
OF STATE UNIVERISTY OF NEW YORK

By: /s/ Robert S. Mason     12/17/04       By: /s/ Jean Luc Berger   Dec 17 2004
    -------------------------------            ---------------------------------
         Signature            Date                   Signature          Date

   Printed Name and Title:                     Printed Name and Title:

   Robert S. Mason                             Jean Luc Berger
   Sr. Contract & Grant Specialist

<PAGE>

                                                           Exhibit B Amendment 2

                    SUNY-KYTO Research update and future work

1. Humanized monoclonal antibodies to human transcobalamin (TC)

2. Purification of the receptor for TC-Cbl

3. Further purification and identification of the receptor

4. Generation of monoclonal antibodies to the receptor protein

5. Alternate strategies for blocking the receptor protein[GRAPHIC OMITTED]
                                                                          vem ag

                                    AGREEMENT

This  Agreement  is  made  entered into on this 1st day of July 2005 ("Effective
Date")  by  and  between

VEM  AKTIENBANK  AG,  P.O.  Box  33  07  05,  D-80667  Munich,  Germany
                                                           - hereinafter "VEM" -
and

DERMISONICS,  INC.,  Four Tower Bridge, 200 Bar-Harbor Drive, West Conshohocken,
PA  19428
                                   - hereinafter "Dermisonics" or the "Company"-

                                    RECITALS:

WHEREAS,  VEM  is  a Munich-based investment bank which, in association with its
strategic  partners,  participates  in  the  capitalization of small and mid-cap
corporations.

WHEREAS,  Dermisonics  is  a  U.S.-based bio-technical research, development and
marketing  company  which  maintains  a  market for its common shares on the OTC
Bulletin  Board  ("OTCBB")  under  the  symbol  DMSI  and  is also listed in the
Freiverkehr  at  the  Berlin-Bremen  Stock  Exchange ("Berlin Exchange") and the
Frankfurt  Stock  Exchange  ("Frankfurt  Exchange")  under  the symbol FQC (ISIN
US24983U1043/  WKN  A0DK4Y).

WHEREAS,  Dermisonics is seeking to raise working capital by borrowing funds for
which  it  will  issue  convertible  promissory  notes.

NOW,  THEREFORE, in consideration of the mutual promises and other consideration
set  forth  herein,  the  parties  agree  as  follows:

                                1. DUTIES OF VEM

1.1  Subscription  services.  VEM  shall  provide  the  following  services:
     -----------------------

     VEM  shall subscribe for certain Convertible Promissory Notes (the "Notes")
     to  be issued by the Company during the course of a planned increase in the
     capitalization  of  the  Company.  The Notes shall be issued by the Company
     pursuant  to  the  exemption  from  the  registration  provisions  of  the
     Securities  Act  of  1933,  as  amended (the "Securities Act"), afforded by
     Regulation S promulgated thereunder, in a principal amount to be determined
     by  VEM  after  canvassing  its clientele and as may be subsequently agreed
     upon  by  the  Company (provided that such determination is made by VEM and
     agreement  is  secured  through the Company during the Engagement Period as
     subsequently  defined  in clause 4.1). The Notes shall bear interest in the
     amount of ten percent (10%) per annum, shall become due and payable two (2)
     years  after  the  date  of  issuance  by  the Company, and shall otherwise
     conform  to  the  terms  of  this  Placement Agreement and the form of Note
     attached  hereto  as  Schedule  A.

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                <C>                                                         <C>
VEM AKTIENBANK AG  TEL +49(0)89/2 30 01-0                                      VORSTAND: DIPL-KFM ANDREAS BEYER,
                   FAX: +49(0)89/2 30 01-111                                   DIPL-KFM ERICH PFAFFENBERGER
ROSENTAL 5         E-MAIL: INFO@VEM.AG \                                       VORSITZENDER DES AUFSICHTSRATES:
                   INTERNET: HTTP://WWW.VEM.AG                                 DIPL-KFM MATTHIAS GIRNTH
D - 80331 MUNCHEN  HYPOVEREINSBANK MUNCHEN (BLZ 700 202 70) KTO-NR 36 233 222  AMTSGERICHT MUNCHEN HRB 124 255
-----------------  ----------------------------------------------------------  ---------------------------------
</TABLE>

<PAGE>
1.2  Investor  Relation  Services.  VEM  shall  enlist  the  services  of  MIDAS
     -----------------------------
     Research  and/or such other financial analysts and service providers as VEM
     deems necessary in order to discharge its obligations under this Agreement.

1.3  Best  Efforts.  VEM  shall  exercise  its  best efforts and judgment in the
     --------------
     performance  of  the  service to be provided pursuant to clause 1.2, above.
     The parties acknowledge and agree that certain market and other factors are
     beyond  their  control  and that there can be no assurance that the desired
     results  of  the  investor  relation  activities  will  be  achieved.

1.4  Delegation.  VEM  shall  be  entitled  to  enlist  the  services  of  third
     -----------
     parties  at  its  own  discretion  and  cost to provide the above services.

                            2. DUTIES OF DERMISONICS

Upon  and  after  the execution hereof (the "Effective Date"), Dermisonics shall
provide  VEM  with  regular coverage of Company news and with all public reports
filed with the Securities and Exchange Commission (the "SEC") in relation to its
listing  on  the OTCBB, any materials filed with the Frankfurt and Berlin-Bremen
Stock Exchanges as well as any other materials that materially effect the market
value of the Company's securities without delay. Additionally, Dermisonics shall
make  available  any material public information disseminated in the U.S. market
simultaneously  to  the  German  market.

                  3. PURCHASE PRICE, DELIVERY, FEE AND EXPENSES

3.1  Investor  Relations  Services  Fee.  As  full compensation for the investor
     -----------------------------------
     relations  services  to  be  provided  under clause 1.2 herein, Dermisonics
     shall pay VEM a fee of EUR 20,000.00 to be delivered to VEM within ten (10)
     business  days  from  the  Effective  Date  of  this  Agreement.

3.2  Procedure  and  Payment  for  the Convertible Promissory Notes purchased by
     ---------------------------------------------------------------------------
     VEM.  The Company shall deliver or cause the delivery of the executed Notes
     ----
     made  in favor of VEM as soon as practicable after Dermisonics receives the
     loan  proceeds  related  to  each  such  Note.

3.3  Third  Party  Costs.  Any reasonable third party costs not in excess of USD
     --------------------
     1,000  that  are  incurred  by VEM in the performance of its services under
     this  Agreement  shall  be  reimbursed  by  Dermisonics  within  30 days of
     presentation  of  an  invoice  by VEM detailing such costs. Any third party
     costs  incurred  by  VEM  in excess of USD 1,000.00 shall require the prior
     approval  of Dermisonics. In particular, Dermisonics agrees to pay for such
     additional  services  under Section 1.4 provided that the prior approval of
     Dermisonics  has  been  granted.

                                     4. TERM

4.1  Term  of  Agreement.  This  Agreement  shall  commence  upon the date first
     --------------------
     written  above and end on August 31, 2005 (the "Engagement Period") subject
     to  VEM  fulfilling its obligations under this agreement. In the event that
     VEM  has  not met these obligations by October 31, 2005, this agreement can
     be  extended  upon  mutual  consent.

                                      2/9
<PAGE>
                           5. DEFAULT AND CANCELLATION

5.1  Failure  to  Pay  Fee.  In  the event Dermisonics fails to pay the Investor
     ---------------------
     Relations  Services  Fee  as  agreed to under Section 3.1, above, within 10
     business  days  from  the  Effective  Date,  VEM may in its sole discretion
     cancel  this  Agreement.

5.2  Unlawful  or  Improper  Activities.  In  the  event of an administrative or
     -----------------------------------
     judicial  determination  that  Dermisonics  is  engaged  in any unlawful or
     improper  activities,  VEM  may  terminate  this  Agreement  immediately.

5.3  Breach  of  Representations  and  Warranties  of  Dermisonics. In the event
     -------------------------------------------------------------
     that  Dermisonics  breaches  any  of  the representations or warranties set
     forth  in  Section 8.1(a) through Section 8.1 (c), below, Dermisonics shall
     have 30 days from the date of notice by VEM of such breach to cure any such
     breach,  and upon failure to do so, VEM shall have the right to cancel this
     Agreement.  In  the  event  that  Dermisonics  breaches  any  of  the
     representations  or  warranties set forth in Section 8.1(d) through Section
     8.1(e),  below,  VEM  may  terminate  this  Agreement  immediately.

5.4  Breach  of  Representations  and  Warranties  of VEM. In the event that VEM
     ----------------------------------------------------
     breaches  any of the representations or warranties set forth in Section 8.2
     (a),  Section 8.2 (b) or Section 8.2(c), below, VEM shall have 30 days from
     the  date  of notice by Dermisonics of such breach to cure any such breach,
     and  upon  failure  to do so, Dermisonics shall have the right to terminate
     this  Agreement.  In  the  event of any early termination of this Agreement
     pursuant  to  this  Section 5.4, VEM shall have the right to retain cash to
     pay  any  unreimbursed  expenses.

5.5  Payment  Due  Upon  Early  Termination.  Except  as  otherwise  expressly
     --------------------------------------
     provided  herein,  any early termination of this Agreement shall not affect
     VEM's  entitlement  to  payment  of  the fee referred to in Section 3.1 and
     reimbursement  for  expenses  due  up  to  the  time  of  termination.

5.7  Survival  of  Terms.  Notwithstanding  termination  of  this Agreement, the
     -------------------
     obligations  of  the Parties under Sections 2, 5.6, 5.7, 6.3, 6.4, and 7 of
     this  Agreement  shall  survive  termination.

                           6. LIABILITY AND INDEMNITY

6.1  VEM's  Liability.  Neither  VEM nor any officer, director, or agent thereof
     ----------------
     or  of  an  affiliated  company  shall  be  liable to Dermisonics or to any
     officer, director, employee, stockholder or creditor of Dermisonics for any
     act,  omission,  error  in  judgment  or  for  anything  except  willful
     malfeasance,  bad  faith,  gross  negligence  or  reckless disregard in the
     performance  of  its  duties under the terms of this Agreement. Neither VEM
     nor  any  person  designated  by  VEM  to  perform hereunder shall make any
     statements regarding the Company not included in the Company's filings with
     the  US  Securities  and  Exchange  Commission  without  the  prior written
     approval  of  the  Company.

6.2  Accuracy  and  Completeness  of  Information.  VEM  shall have the right to
     -------------------------------------------
     rely  upon  information  provided  by  Dermisonics  and  VEM  shall  not be
     responsible  for  the  accuracy  and  completeness  of  such  information.

6.3  Indemnification  by  Dermisonics.  Dermisonics  agrees  to  defend and hold
     ---------------------------------
     VEM  harmless, should any action relating to or arising from this Agreement
     be  brought  against  VEM  by

                                      3/9
<PAGE>
     any  third  party  except  in  those  cases  where VEM is guilty of willful
     malfeasance,  bad  faith,  gross  negligence  or  reckless disregard in the
     performance  of  its  duties under the terms of this Agreement, Dermisonics
     agrees  to defend, indemnify and hold VEM harmless from and against any and
     all  reasonable  costs,  expenses  and  liability  (including  reasonable
     attorney's  fee  paid  in  defense of VEM) which may in any way result from
     services  rendered  by  VEM  pursuant  to  or  in  any connection with this
     Agreement,  except in those cases where VEM acts, with willful malfeasance,
     bad  faith,  gross  negligence or reckless disregard in the performance its
     duties  under  the  terms  of  this  Agreement

6.4  Indemnification  by  VEM.  VEM  agrees  to  defend,  indemnify,  and  hold
     ------------------------
     Dermisonics  harmless  from  and against all reasonable costs, expenses and
     liability  (including  reasonable  attorney's  fees  paid  in  defense  of
     Dermisonics),  which  may  in any way result pursuant to VEM's or any party
     engaged  by  VEM  as  provided  in  Sections  1.2  and  1.4 hereof, willful
     malfeasance,  bad  faith,  gross  negligence  or  reckless disregard in the
     performance  of  its  duties  under  the  terms  of  this  Agreement, or in
     connection  with any actions or statements on behalf of Dermisonics made by
     VEM  without  the  prior  approval  or  authorization  of  Dermisonics.

                               7. CONFIDENTIALITY

Each  party  acknowledges that confidential information proprietary to the other
party may be obtained during the term of, and in connection with this Agreement.
Each  party  shall  hold strictly confidential any such confidential information
whether  disclosed  in  writing,  orally  or  otherwise, and neither party shall
disclose such confidential information to third parties, directly or indirectly,
without  the  prior  written  consent  of  the other party. This confidentiality
obligation  shall survive any termination of this Agreement. Notwithstanding the
foregoing,  this  confidentiality  obligation  shall  not  apply to confidential
information  that  was  obtained  from  a third party in good faith, or that was
developed  or  known  prior  to disclosure by the other party, or to information
that  is  in  the  public  domain.

                        8. REPRESENTATIONS AND WARRANTIES

8.1  Dermisonics  represents  and  warrants:
     --------------------------------------

     (a)  that it is a duly formed corporation domiciled and in good standing in
          United  States  of America with authority to conduct operations in all
          jurisdictions  where  it  does  business;

     (b)  that  it  is current in all of its filings with the SEC and the OTCBB;

     (c)  that  this  Agreement, including all transactions contemplated herein,
          have  been duly approved by the board of directors of Dermisonics, and
          that  Dermisonics  has obtained such additional approvals and consents
          as  may  be required by the law of the state of its incorporation, its
          charter,  its  bylaws  or  any  agreement  to  which  it  is  a party;

     (d)  that  it  shall not fail to disclose nor attempt to hide any relevant,
          material  information  about  Dermisonics,  or  its  stock,  financial
          condition,  management,  products  or  prospects;

     (e)  that  it  shall  not  provide  any  false,  inaccurate  or  misleading
          information  concerning  Dermisonics  to  VEM;  and

                                      4/9
<PAGE>
8.2  VEM  represents  and  warrants:
     ------------------------------

     (a)  that it is a duly formed corporation domiciled and in good standing in
          The  Federal Republic of Germany, licensed to operate as an investment
          bank  with  authority to conduct operations in all jurisdictions where
          it  does  business;

     (b)  that  this  Agreement, including all transactions contemplated herein,
          have  been duly approved by VEM's board of directors, and that VEM has
          obtained  such  additional  approvals  and  consents  (such  as  from
          shareholders,  lenders,  and  others) as may be required by the law of
          the  jurisdiction of its incorporation, its charter, its bylaws or any
          agreement  to  which  it  is  a  party;  and

     (c)  that  it will exercise its best efforts and judgment in performing its
          duties  under this Agreement and that it will conduct the placement in
          accordance  with  German  laws.

     (d)  Regulation  S  Representations,  Warranties  and  Covenants.

          (i)  (A)  VEM  understands and acknowledges that (I) the Notes and any
          Common  Stock  issuable  upon conversion of the Notes (the "Conversion
          Shares") have not been and will not be registered under the Securities
          Act  and may not be offered or sold in the United States or to, or for
          the  benefit of, any "U.S. person" (as defined in Regulation S, a copy
          of  which  is  attached  as  Schedule  B  hereto), unless the Notes or
          Conversion  Shares,  as  the  case  may  be,  are registered under the
          Securities  Act or such offer or sale is made pursuant to an exemption
          from  the  registration requirements of the Act, or (II) the Notes are
          being offered and sold pursuant to the terms of Regulation S under the
          Securities  Act,  which  permits  the  transfer  of  the Notes and the
          Conversion  Shares  to  non "U.S. Persons" in "off-shore transactions"
          (as defined in Regulation S), subject to certain terms and conditions,
          as  described  elsewhere  herein.

          (ii)  VEM  is not purchasing the Notes as a result of or in connection
          with  any  activity  that  would constitute "directed selling efforts"
          (within  the  meaning  given  that term in Regulation S) in the United
          States  and VEM will not undertake any such "directed selling efforts"
          in  connection  with the Notes or the Conversion Shares in the future.

          (iii) VEM is not a "U.S. Person," as defined in Rule 904 of Regulation
          S.

          (iv)  VEM  was  outside the United States at the time (A) the offer to
          purchase  and  the  sale  of the Notes was made, (B) the buy order was
          made  for  the  Notes  and  (C)  it  executed  this  Agreement.

          (v)  Unless  registered  under the Securities Act, VEM agrees that any
          offer,  sale  or transfer of the Notes or the Conversion Shares or any
          interest  therein to any non "U.S. Person" shall be made in accordance
          with  the  provisions of Regulation S and this Agreement, as described
          below,  and  that  the  Company  is under no obligation to register or
          recognize and may refuse the transfer of any of such securities by the
          undersigned  unless said offer, sale or transfer is made in accordance
          with  the provisions of this Agreement and Regulation S. The following
          provisions,  among  others  which  now exist or which may hereafter be
          enacted,  apply  to  any  proposed  offer,  sale  or  transfer  of the
          securities to a non "U.S. Person;" provided, however, that the Company
          may  refuse to register the transfer of any Notes or Conversion Shares
          despite a sale or transfer in conformity with the provisions described

                                      5/9
<PAGE>
          below  and  Regulation  S, if it reasonably believes that such sale or
          transfer  is being made in bad faith not in conformity with Regulation
          S:

               (A)  VEM  (and  any  subsequent  holder  of  any  of the Notes or
          Conversion  Shares  which  are  transferred  in  accordance  with  the
          provisions of this Agreement and Regulation S) must certify in writing
          that  neither  record  nor  beneficial  ownership  of  any  of  such
          securities,  or  any  interest  therein,  as the case may be, has been
          offered  or  sold  in  the  United  States or to or for the account or
          benefit  of  any  U.S.  Person.

               (B)  Any  proposed  transferee  or  holder  of  the  Notes or the
          Conversion  Shares  must  (I) certify in writing that it is not a U.S.
          Person and that it is not acquiring such securities for the account or
          benefit  of  a U.S. Person or if such transferee is a U.S. Person that
          it  acquired  such  securities  in  a transaction that did not require
          registration  under  the  Act  and  that  it agrees to be bound by the
          restrictions  on  resale  of  any of such securities set forth in this
          Agreement  and  Regulation  S;  (II)  agree  in writing to resell such
          securities  only  in accordance with the provisions of this Agreement,
          Regulation  S,  pursuant  to registration under the Securities Act, or
          pursuant to an available exemption from registration and must agree in
          writing  not  to  engage in hedging transactions with regard to any of
          such  securities  unless  in  compliance  with the Securities Act; and
          (III)  agree  in  writing  to  the  placement  of  a  legend  on  the
          certificate(s)  representing such securities substantially in the form
          set  forth  in  Section  8.2(d)(vii), below, and to the placement of a
          stop  transfer  on  the  Notes and the Conversions Shares on the stock
          books  and  records  maintained  by the Company or its transfer agent.

          (vii) Legend on Certificates. The Notes acquired by VEM hereby are and
          the  Conversion  Shares  if  and  when  acquired  will be, "restricted
          securities"  as  that  term  is  defined  in  Rule  144  ("Rule  144")
          promulgated  under  the  Securities  Act  and  are  subject  to  the
          restrictions on transfer imposed therein and pursuant to Regulation S.
          VEM  agrees  and acknowledges that the Notes and the Conversion Shares
          will  bear  a  restrictive legend in substantially the following form:

     "NEITHER  THIS PROMISSORY NOTE NOR THE SECURITIES INTO WHICH THIS NOTE
     IS  CONVERTIBLE  HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
     1933,  AS  AMENDED (THE "SECURITIES ACT") OR ANY OTHER SECURITIES LAWS
     AND  HAVE  BEEN  ISSUED  IN  RELIANCE  UPON  THE  EXEMPTION  FROM SUCH
     REGISTRATION  CONTAINED  IN REGULATION S UNDER THE SECURITIES ACT. THE
     SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
     TRANSFERRED  WITHIN  THE  UNITED  STATES  OR TO, OR FOR THE ACCOUNT OR
     BENEFIT  OF,  ANY "U.S. PERSON" (AS SUCH TERM IS DEFINED IN REGULATION
     S)  EXCEPT IN ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION
     UNDER  THE  SECURITIES  ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
     REGISTRATION  UNDER  THE  SECURITIES  ACT."

          (viii)  VEM  shall  not  engage in any activity for the purpose of, or
          which  may  reasonably be expected to have the effect of, conditioning
          the  market  in the United States for any of the Notes, or offer, sell
          or  transfer the Notes, or any interest therein to, or for the account
          of  benefit  of,  a  U.S.  Person.

                                      6/9
<PAGE>
          (ix)  VEM  will  not,  directly  or  indirectly, engage in any hedging
          transactions  (as  such  term  is  defined in the Securities Act) with
          respect to the Common Stock unless such transactions are in compliance
          with  the  Securities  Act.

          (xi)  If  VEM  publicly  re-offers all or any part of the Notes or the
          Conversion  Shares  in  the United States, VEM (and/or certain persons
          who  participate  in  any  such re-offer) may be deemed, under certain
          circumstances,  to  be an "underwriter" as defined in Section 2(11) of
          the  Act. If VEM plans to make any such re-offer, it will consult with
          its  counsel  prior  to  any  such  re-offer in order to determine its
          liabilities  and  obligations  under this Agreement, Regulation S, the
          Securities  Act  and  any  applicable  state  securities  laws.

                                 9. OTHER TERMS

9.1  Notices.  All  notices,  consents  and  other  communications  under  this
     --------
     Agreement  shall  be in writing and shall be deemed to have been duly given
     when:  (a)  delivered  by  hand with signed delivery receipt requested; (b)
     sent  by  facsimile  (with receipt confirmed), provided a copy is mailed on
     the  same day by registered mail, return receipt requested; or (c) received
     by  the  addressee,  if  sent  by Federal Express or other express delivery
     service  (receipt requested), in each case to the appropriate addresses (or
     to  such other addresses as a Party may designate as to itself by notice to
     the  other):

               If  to  Dermisonics:
               --------------------

               Dermisonics,  Inc.
               2  Park  Plaza,  Suite  450
               Irvine,  California  92614

               Attention:  Bruce  H.  Haglund,  Chairman

               If  to  VEM:
               ------------

               VEM  Aktienbank  AG
               Rosental  5
               80331  Munchen
               Germany

               Attention:  Andreas  Beyer,  CEO

9.2  Independent  Contractor.  This  Agreement  neither  expressly nor impliedly
     ------------------------
     creates a relationship of employer and employee between the parties. In its
     performance  hereunder,  VEM  and  its  agents  shall  act  as  independent
     contractors.  The  parties  acknowledge that the value of VEM's services is
     not  measurable  in  any  quantitative  manner,  and  that VEM shall not be
     obligated  to  spend  any  specific amount of time providing such services.
     Nothing  in  this  Agreement  shall  be construed to require VEM to provide
     services  to  Dermisonics at any specific time, or in any specific place or
     manner.

9.3  No  Partnership  or  Joint  Venture.  Nothing  herein  shall  expressly nor
     ------------------------------------
     impliedly constitute or be construed to be or create a partnership or joint
     venture  between  the  Parties  to  this  Agreement.

                                      7/9
<PAGE>
9.4  No  Principal  and  Agent.  This  Agreement neither expressly nor impliedly
     -------------------------
     creates  a relationship of principal and agent between the parties. Neither
     party  nor its agents are authorized to enter into any agreements on behalf
     of  the  other  party  without  the  other party's express written consent.

9.5  No  Authority  to  Bind  Other  Party.  No  party  shall  have any right or
     --------------------------------------
     authority,  express  or  implied, to commit or otherwise obligate the other
     parties in any manner whatsoever except to the extent specifically provided
     for  herein or specifically otherwise authorized in writing by the parties.
     Neither  party shall have any right or interest in any other party, nor any
     claim  of  lien  with respect thereto, arising out of this Agreement or the
     performance  of  the  services  hereunder.

9.6  Governing  Law,  Venue,  Attorneys' Fees and Costs. This Agreement shall be
     --------------------------------------------------
     construed  in  accordance with the substantive laws of the Federal Republic
     of  Germany  without regard to the conflict of laws principles thereof. The
     place  of performance of this Agreement is Germany, and exclusive venue for
     any  cause  of  action  that  may arise out of this Agreement shall be in a
     court  of competent jurisdiction in the city of Munich, Germany. Each Party
     consents  to  the jurisdiction of the courts of Federal Republic of Germany
     in the event any action is brought for declaratory relief or enforcement of
     any  of the terms and provisions of this Agreement. The prevailing party in
     any  such  action shall be entitled to recover, in addition to its costs of
     enforcement,  its  costs and expenses including reasonable attorney's fees.

                                10. MISCELLANEOUS

10.1 Entire  Agreement.  This  Agreement  sets  forth  the  entire agreement and
     ------------------
     understanding  among  the  Parties relating to the subject matter contained
     herein, and this Agreement supersedes all prior discussions, agreements and
     understandings  between  the  Parties  with  respect  thereto.

10.2 Amendment  of  Agreement.  This  Agreement  may be amended only in writing,
     ------------------------
     in  whole  or in part, at any time only by the agreement of the Parties. No
     provision of this Agreement may be waived except by a writing signed by the
     Party  to  be  charged  therewith.

10.3 Assignments.  No  party  shall  assign  the  benefit  or the burden of this
     -----------
     Agreement  without  the  written  consent of the other party, which consent
     shall  not  be  unreasonably  withheld.

10.4 Binding  Effect.  This  Agreement  shall  be binding upon, and inure to the
     ---------------
     benefit  of,  the  Parties  and  their  respective  successors and assigns.

10.5 No  Third  Party  Beneficiaries.  This  Agreement is made solely among, and
     -------------------------------
     for the benefit of the parties and their respective successors and assigns.
     No  provision  of this Agreement shall be applied for the benefit of, or be
     enforceable by any person who is not a party to, or authorized successor or
     assignee  of  this  Agreement.

10.6 Severability,  Validity.  If  any  provision  of  this Agreement is held to
     ------------------------
     be  invalid  under  applicable law, as applied to any fact or circumstance,
     such invalidity shall not affect the validity of any other provision hereof
     or  the  validity  of  such  provision  as  applied  to  any  other fact or
     circumstance.

10.7 Headings.  All  headings  contained  in  this Agreement are for convenience
     ---------
     of reference only and shall not be considered in any way in connection with
     the  interpretation  or  enforcement  of  any  provision of this Agreement.

                                      8/9
<PAGE>
10.8 Counterparts,  Facsimile  Copies.  This  Agreement  may  be executed in any
     ---------------------------------
     number  of  counterparts each of which shall be deemed an original, but all
     of which together shall constitute the same instrument. Facsimile copies of
     this Agreement or of any counterpart, and facsimile signatures hereon or on
     any  counterpart,  shall  have  the  same  force  and  effect as originals.

10.9 Authority.  The  parties  whose  signatures  appears  below  each represent
     ----------
     and warrant that they are authorized to enter into this agreement on behalf
     of  the named Parties and do so with the intention of binding those Parties
     by  the  terms  set  forth  herein.

IN  WITNESS  WHEREOF,  the  parties  have duly executed this Agreement to become
effective  on
the  date  first  stated  above.

Dermisonics,  Inc.                    VEM  Aktienbank  AG
a  Nevada  U.S.  corporation          a  German  stock  corporation

By:                                   By:
     ----------------------------          ----------------------------

Name:  Bruce  H.  Haglund             Name:  Andreas  Beyer

Title:  Chairman                      Title:  CEO

                                      9/9

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