FORM 2A LISTING STATEMENT OF BIOSIGN TECHNOLOGIES INC by AprilY

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									                              FORM 2A

                      LISTING STATEMENT

                                  OF

                  BIOSIGN TECHNOLOGIES INC.
(AN ENTITY FORMED UPON THE AMALGAMATION OF BIOSIGN TECHNOLOGIES INC.
                      AND KARMA CAPITAL CORP.)

                       Dated as of August 16, 2006
                                                                                ii


GLOSSARY .................................................................................................................................................. v
2.      Corporate Structure .............................................................................................................................. 8
     2.1        Name and Address ...................................................................................................................... 8
     2.2        Incorporation................................................................................................................................ 8
     2.3        Intercorporate Relationships........................................................................................................ 8
     2.4        Amalgamation Transaction .......................................................................................................... 8
     2.5        Foreign Incorporation................................................................................................................... 9
3.      Development of the Business............................................................................................................... 9
     3.1        General Development of the Biosign Business ........................................................................... 9
     3.2        Significant Acquisitions and Disposals ...................................................................................... 10
     3.3        Commitments and Trends ......................................................................................................... 10
4       Narrative Description of the Business ................................................................................................ 10
     4.1        General ...................................................................................................................................... 11
                Overview ................................................................................................................................... 11
                Available Funds......................................................................................................................... 11
                Principal Products and Services ............................................................................................... 12
                   UFIT Platform (“UFIT”).......................................................................................................... 12
                   UFIT Measurement Automation Expert (“UFIT-MAX”) ......................................................... 13
                   UFIT Tensiometer (“UFIT-TEN”)........................................................................................... 14
                Product Development................................................................................................................ 14
                Operations................................................................................................................................. 14
                Markets...................................................................................................................................... 15
                   Clinical Research Market...................................................................................................... 15
                   Clinical Operations Market.................................................................................................... 16
                Market Approach ....................................................................................................................... 17
                Regulatory Matters.................................................................................................................... 18
                   ISO 13485:2003.................................................................................................................... 18
                   UFIT-MAX ............................................................................................................................. 18
                   UFIT-TEN.............................................................................................................................. 18
                Competition ............................................................................................................................... 20
                Proprietary Protection ............................................................................................................... 20
                Previously Proposed Amalgamation ......................................................................................... 21
     4.2        Asset Backed Securities ............................................................................................................ 22
     4.3        Mineral Projects ......................................................................................................................... 22
     4.4        Oil and Gas Operations ............................................................................................................. 22
5.      Selected Financial Information ........................................................................................................... 22
     5.1        Annual Information..................................................................................................................... 22
                  Karma ................................................................................................................................... 22
                  Biosign.................................................................................................................................. 23
     5.2        Quarterly Information ................................................................................................................. 25
     5.3        Dividends ................................................................................................................................... 25
     5.4        Foreign GAAP............................................................................................................................ 25
6.      Management's Discussion and Analysis ............................................................................................ 25
     6.1        Date ........................................................................................................................................... 25
                                                                              iii

                     Management’s Discussion and Analysis – January 1, 2006 to March 31, 2006.................. 25
                     Management’s Discussion and Analysis – January 1, 2005 to December 31, 2005 ........... 26
                     Management’s Discussion and Analysis – March 11, 2004 to December 31, 2004............ 28
     6.2        Overall Performance.................................................................................................................. 29
     6.3        Selected Annual Information...................................................................................................... 29
     6.4        Period Variations ....................................................................................................................... 29
     6.5        Results of Operations ................................................................................................................ 29
     6.6        Summary of Quarterly Results .................................................................................................. 29
     6.7        Liquidity...................................................................................................................................... 29
     6.8        Capital Resources ..................................................................................................................... 29
     6.9        Off-Balance Sheet Arrangements.............................................................................................. 29
     6.10       Transactions with Related Parties ............................................................................................. 29
     6.11       Fourth Quarter ........................................................................................................................... 29
     6.12       Proposed Transaction................................................................................................................ 30
     6.13       Changes in Accounting Policies including Initial Adoption ........................................................ 30
     6.14       Financial Instruments and Other Instruments............................................................................ 30
     6.15 and 6.16              Interim MD&A ........................................................................................................... 30
     6.17       Additional Disclosure for Issuers without Significant Revenue.................................................. 30
7.      Market for Securities........................................................................................................................... 30
8.      Consolidated Capitalization................................................................................................................ 30
9.      Options to Purchase Securities .......................................................................................................... 30
10.         Prior Sales...................................................................................................................................... 31
     10.1       Description of capital ................................................................................................................. 31
     10.2       Prior Sale Prices ........................................................................................................................ 32
     10.3       Stock Exchange Price................................................................................................................ 33
11.         Escrowed Securities....................................................................................................................... 33
12.         Principal Shareholders ................................................................................................................... 34
13          Directors and Officers .................................................................................................................... 35
     13.1 to 13.5 Information about Directors and Officers............................................................................ 35
     13.6       Cease Trade Orders or Bankruptcies........................................................................................ 37
     13.7       Penalties or Sanctions ............................................................................................................... 38
     13.8       Personal Bankruptcies............................................................................................................... 38
     13.9       Conflicts of Interest .................................................................................................................... 38
     13.10 Information about Management.................................................................................................... 38
14.         Capitalization.................................................................................................................................. 39
15.         Executive Compensation ............................................................................................................... 42
16.         Indebtedness of Directors and Executive Officers......................................................................... 44
17          Risk Factors ................................................................................................................................... 44
                                                                               iv

18.         Promoters....................................................................................................................................... 60
19.         Legal Proceedings ......................................................................................................................... 60
20.         Interest of Management and Others in Material Transactions....................................................... 60
21.         Auditors, Transfer Agents and Registrars...................................................................................... 60
     21.1       Auditor........................................................................................................................................ 60
     21.2       Transfer Agent and Registrar .................................................................................................... 60
22.         Material Contracts .......................................................................................................................... 60
23          Interest of Experts .......................................................................................................................... 61
24.         Other Material Facts....................................................................................................................... 61
25.         Financial Statements...................................................................................................................... 61
CERTIFICATE OF THE ISSUER ................................................................................................................ 62
APPENDIX “A” – Opening Balance Sheet .................................................................................................. 63
APPENDIX “B” - Financial Statements of Biosign Technologies Inc.......................................................... 65
APPENDIX “C” - Financial Statements of Karma Capital Corp. ................................................................. 86
                                             v


                                          GLOSSARY

Unless the context otherwise provides, the following terms used in this Listing Statement and the
Appendices hereto shall have the meanings ascribed to them as set forth below:

“Affiliate” means a Company that is affiliated with another Company as described below:

       A Company is an “Affiliate” of another Company if:

        (a)     one of them is the subsidiary of the other, or

        (b)     each of them is controlled by the same person;

“Amalgamation” means the amalgamation of Biosign Technologies Inc. and Karma Capital Corp.
pursuant to the certificate of amalgamation, dated July 14, 2006, issued by the Director appointed
under Section 278 of the OBCA pursuant to Section 273 of the OBCA;

“Amalgamation Agreement” means the amalgamation agreement dated July 5, 2006 between
Biosign and Karma, particulars of which are described under section 2.4;

“Amalgamation Date” means the date shown on the certificate of amalgamation issued by the
Director appointed under Section 278 of the OBCA pursuant to Section 273 of the OBCA giving
effect to the Amalgamation;

“Associate” when used to indicate a relationship with a person or company, means

        (a)     an issuer of which the person or company beneficially owns or controls, directly
                or indirectly, voting securities entitling him to more than 10% of the voting rights
                attached to outstanding securities of the issuer,

        (b)     any partner of the person or company,

        (c)     any trust or estate in which the person or company has a substantial beneficial
                interest or in respect of which a person or company serves as trustee or in a
                similar capacity,

        (d)     in the case of a person, a relative of that person, including

                (i)     that person’s spouse or child, or

                (ii)    any relative of the person or of his spouse who has the same residence
                        as that person.

“Biosign” means Biosign Technologies Inc., a private corporation incorporated under the laws of
the Province of Ontario which was amalgamated with Karma to form the Issuer;

“Clinical Operations Market” means the healthcare market which includes medical offices,
hospitals and home care;

“Clinical Research Market” means the research divisions of pharmaceutical companies and
clinical research organizations, as well as university based or academic research laboratories and
other similar groups and organizations that focus on drug, pharmacological and physiological
research activity;

“CNQ” or “Exchange” means the Canadian Trading and Quotation System Inc;

“Company” unless specifically indicated otherwise, means a corporation, incorporated
association or organization, body corporate, partnership, trust, association or other entity other
than an individual;
                                               vi

“Control Person” means any person or company that holds or is one of a combination of persons
or companies that holds a sufficient number of any of the securities of an issuer so as to affect
materially the control of that issuer, or that holds more than 20% of the outstanding voting
securities of an issuer except where there is evidence showing that the holder of those securities
does not materially affect the control of the issuer;

“Effective Date” means the effective date of this Listing Statement, being August 16, 2006;

“Effective Time” means 12:01 a.m. (Toronto time) on the Effective Date;

“Exchange” or “CNQ” means the Canadian Trading and Quotation System Inc;

“Insider” if used in relation to an issuer, means:

        (a)      a director or senior officer of the issuer;

        (b)      a director or senior officer of a Company that is an Insider or subsidiary of the
                 issuer;

        (c)      a person that beneficially owns or controls, directly or indirectly, voting shares
                 carrying more than 10% of the voting rights attached to all outstanding voting
                 shares of the issuer; or

        (d)      the issuer itself if it holds any of its own securities;

“Issuer” means “Biosign Technologies Inc.”, the corporation formed on the amalgamation of
Biosign and Karma, pursuant to the terms and conditions of the Amalgamation Agreement;

“Karma” means Karma Capital Corp., a public corporation incorporated under the laws of the
Province of British Columbia which was amalgamated with Biosign to form the Issuer;

“Listing Statement” means this listing statement of the Issuer including the Appendices hereto;

“Non Arm’s Length Party” means in relation to a Company, a promoter, officer, director, other
Insider or Control Person of that Company (including an issuer) and any Associates or Affiliates
of any of such Persons. In relation to an individual, means any Associate of the individual or any
Company of which the individual is a promoter, officer, director, Insider or Control Person;

“OBCA” means the Business Corporations Act (Ontario);

“Person” means a Company or an individual;

“Private Placement” means the private placement basis of a minimum of $3,000,000 by Biosign
and Karma respectively, pursuant to the Amalgamation Agreement, through the issuance of
Securities of Biosign and Karma at $0.30 and $0.05 respectively. These prices being equivalent
to the deemed Issuer common share price of $1.00 on completion of the Amalgamation;

“Proprietary Rights Agreement” means the agreement dated April 15, 2004 between Biosign,
Radu Leca and Richard Potts, pursuant to which Biosign acquired certain of its intellectual
property and capital assets as described under section 3.2;

“TSXV” means the TSX Venture Exchange Inc.;

“UFIT” means Biosign’s technology platform for biosignal processing that combines hardware,
software, and the Internet to synchronize, gather, organize, and store biosignal measurements
from a single re-useable platform;

“UFIT-MAX” means Biosign’s “Measurement Automation Expert” the name for Biosign’s research
tool which is intended for use in studies in the Clinical Research Market;
                                             vii

“UFIT-TEN” means Biosign’s “Tensiometer”, the name for a series of products Biosign intends to
develop for use in medical physical assessment of patients in the Clinical Operations Market;



Words importing the singular number only include the plural and vice versa, and words importing
any gender include all genders; and

All dollars amounts herein are in Canadian dollars, unless otherwise stated.

A Company is “controlled” by a Person if:

        (a)     voting securities of the Company are held, other than by way of security only, by
                or for the benefit of that person, and

        (b)     the voting securities, if voted, entitle the person to elect a majority of the directors
                of the Company.

A person beneficially owns securities that are beneficially owned by:

        (a)     a Company controlled by that person, or

        (b)     an Affiliate of that person or an Affiliate of any Company controlled by that
                person.



              SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Listing Statement constitute forward-looking statements. The
use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”,
“should”, “believe” and similar expressions are intended to identify forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors that may
cause actual results or events to differ materially from those anticipated in such forward-looking
statements. Karma and Biosign believes the expectations reflected in those forward-looking
statements are reasonable but no assurance can be given that these expectations will prove to
be correct and such forwarding-looking statements speak only as of the date of this Listing
Statement.
                                               -8-


2.    Corporate Structure

2.1   Name and Address
      The Issuer’s full corporate name is Biosign Technologies Inc., having its registered office and
      principal place of business at 25 Sheppard Avenue West, Suite 1010, Toronto, Ontario, M2N
      6S6.

2.2   Incorporation

      The Issuer is an Ontario company created by the amalgamation of Biosign and Karma pursuant
      to the Articles of Amalgamation dated July 14, 2006. The Issuer continued under the name
      “Biosign Technologies Inc.”.

      Karma was incorporated on September 1, 1999 under the laws of the Province of British
      Columbia as 591722 B.C. Ltd. and changed its name to Karma Capital Corp. on February 4,
      2000. Pursuant to the Annual and Special Meeting of the shareholders of Karma held on June
      30, 2006 and reconvened on July 10, 2006 the shareholders of Karma voted in favour to
      continue Karma under the Business Corporations Act (Ontario) and amalgamate with Biosign to
      form the Issuer.

      Biosign was incorporated under the Business Corporations Act (Ontario) on March 11, 2004.
      Pursuant to the Annual and Special Meeting of the shareholders of Biosign held on June 28
      2006 the shareholders of Biosign voted in favour of the amalgamation with Karma to form the
      Issuer.

      For more detailed information surrounding the amalgamation transaction please refer section
      2.4 and to Karma’s Management Information Circular dated May 31, 2006 which can be found
      on www.sedar.com.


2.3   Intercorporate Relationships

      The Issuer has no subsidiaries and neither Biosign nor Karma had any subsidiaries


2.4   Amalgamation Transaction

      The Issuer completed on July 14, 2006 the acquisition of all of the share capital of Biosign (the
      “Biosign Acquisition”) pursuant to the Articles of Amalgamation dated July 14, 2006. Following
      the completion of the Biosign Acquisition, the Issuer’s business became the business of
      Biosign. The Biosign Acquisition is described below:

          -   A condition of completion of the Amalgamation was that prior to the completion of the
              Amalgamation Biosign and Karma would complete a non-brokered private placement of
              at least $3,000,000 (the “Private Placement”). Pursuant to the Amalgamation
              Agreement it was anticipated that $2,500,000 of the Private Placement would be
              completed by Biosign and $500,000 would be completed by Karma, provided that
              either party may have, with the consent of the other party, increased or decreased the
              size of its portion of the Private Placement. Prior to completion of the Amalgamation
              Biosign had raised $2,977,478 through the issuance of convertible notes and
              $2,524,955 through the issuance of common shares and Karma had raised $500,000
                                               -9-

                through the issuance of common shares pursuant to the Private Placement.

            -   Karma had a total of 13,054,000 common shares and 796,000 common share warrants
                issued and outstanding on July 13, 2006. Pursuant to the Amalgamation Agreement
                the common shares and common share warrants issued and outstanding were
                consolidated on a 20-for-1 basis resulting in a total of 652,700 post consolidation
                common shares and 39,800 post consolidation common share warrants being issued
                and outstanding.

            -   Pursuant to the Amalgamation Agreement and the terms of the convertible debt,
                Biosign converted 100% of its outstanding convertible debt of $5,019,319, including
                accrued interest, to common shares of Biosign immediately prior to the Amalgamation.
                Biosign had a total of 189,481,994 common shares and 766,971 common share
                warrants issued and outstanding on July 14, 2006 which included the common shares
                issued on conversion of the convertible debt and common shares and common share
                purchase warrants issued to agents as fees pursuant to the Private Placement.
                Pursuant to the Amalgamation Agreement the common shares and common share
                warrants issued and outstanding were consolidated on a 1-for-0.30 basis resulting in a
                total of 56,844,673 post consolidation common shares and 230,096 post consolidation
                common share warrants being issued and outstanding.

            -   In total, on July 14, 2006 the Issuer had 57,497,373 post consolidation common shares
                and 269,896 post consolidation common share purchase warrants issued and
                outstanding.

        For more detailed information surrounding the amalgamation transaction refer to Karma’s
        Management Information Circular dated May 31, 2006 which can be found on www.sedar.com.

2.5   Foreign Incorporation
      This section is not applicable.

3.    Development of the Business

      Karma had been inactive since approximately June, 2004 when a proposed amalgamation was
      terminated. As Karma had no material operations before completion of the amalgamation with
      Biosign, and Biosign’s business will be the continuing business of the Issuer, the discussion of
      the business will focus solely on the business of Biosign.

3.1   General Development of the Biosign Business

      Biosign was incorporated under the Business Corporations Act (Ontario) on March 11, 2004.
      Since that time Biosign has been focused on product commercialization activities for UFIT-MAX
      and UFIT-TEN, establishing business relationships, hiring staff, and securing financing for the
      business.

      Biosign’s biosignal instrumentation and measurement technology is the result of over 10 years of
      research and development. The concepts, programs, models and techniques underlying the
      technology date back to a company founded in 1995 by Dr. Radu Leca, Biosign’s President and
      Chief Technology Officer. Prior to Biosign acquiring the technology in March 2004, the focus of
      the previous company had been on research and development activities.
                                                 - 10 -

      Biosign has developed an easy-to-use non-invasive technology to improve the relevance,
      availability, and timeliness of health measurements to ultimately improve the standard of patient
      care. Biosign’s web-based biosignal processing technology platform, UFIT, combines industry
      standard and proprietary technologies for data acquisition, storage, measurement and analysis,
      and is intended to provide multiple physiological measurements from a single reading of the radial
      arterial pulse.

      Biosign’s biosignal processing technology may be applied to industries where the measurement
      of biological parameters is of interest. The potential markets for biosignal instrumentation and
      measurement technologies include, but are not limited to: healthcare, military, security, and
      entertainment.

      Biosign intends to focus its products for use in the healthcare industry in both the Clinical
      Research Market and the Clinical Operations Market while continuing to be open to any other
      industry opportunity which may present itself. Biosign's initial target market will be the Clinical
      Research Market where FDA, Health Canada or other regulatory clearances are not currently
      required. Biosign will also continue to develop, commercialize and obtain regulatory approvals for
      its products for the Clinical Operations Market as business requires. Biosign is currently
      marketing its products but to date has no revenue generating operations.

3.2   Significant Acquisitions and Disposals

      Pursuant to the Proprietary Rights Agreement, Biosign purchased its intellectual property and
      certain capital assets in a non-arm’s length acquisition from Dr. Radu Leca and Mr. Richard Potts
      for total cash consideration of $30,000. Dr. Leca and Mr. Potts are shareholders, directors, and
      officers of Biosign and had previously acquired the intellectual property and certain capital assets,
      valued at $30,002, in exchange for releasing certain claims against the vendors of the intellectual
      property and the capital assets.

      Pursuant to the Proprietary Rights Agreement, Biosign acquired the intellectual and other
      property rights related to UFIT (User Fully Integrated Terminal), including, but not limited to all:
      discoveries; inventions; prototypes; modifications; improvements; simulators; experimentation
      results; notes; designs; documents; white papers; source code; software programs; works of
      authorship; documentation; formula; data; techniques; know-how; trade secrets; and copyright,
      trademark or intellectual property rights related to the foregoing. In addition, Biosign acquired
      certain capital assets, primarily office furniture and computer equipment as well as packaging
      designs, brands, URL’s, trade names and the trademark registration for UFIT in the USA.

      Biosign has not completed any other significant acquisitions or dispositions during the most
      recently completed financial period. Biosign is not planning any major acquisition or dispositions
      in the near term.

3.3   Commitments and Trends

      Refer to discussions set out in section 4 and section 6 for a discussion of any trends,
      commitments, events or uncertainties both presently known to management and reasonably
      expected to have a material effect on Biosign's business, financial condition or results of
      operations as of the date hereof. For discussion of the risks material to the business of Biosign
      refer to section 17.

4     Narrative Description of the Business

      Karma had been inactive since approximately June, 2004 when a proposed amalgamation was
      terminated. As Karma had no material operations before completion of the amalgamation with
                                                   - 11 -

      Biosign, and Biosign’s business will be the continuing business of the Issuer, the discussion of
      the business will focus solely on the business of Biosign.

4.1   General

      Overview

      Biosign’s name for its healthcare platform is UFIT - User Fully Integrated Terminal (“UFIT”).
      Biosign’s UFIT has been developed to offer an automated solution to help solve the fundamental
      problem of data acquisition and measurement integrity in medical examinations. Targeting the
      international healthcare industry, Biosign intends to market its technology in both the unregulated
      and regulated healthcare markets. Biosign’s goal is to provide an easy-to-use non-invasive
      technology to improve the relevance, availability, and timeliness of vital sign and health
      measurements to ultimately improve the standard of patient care.

      Biosign intends to promote UFIT as a standard for testing, monitoring and measuring health
      outcomes for diseases such as hypertension and diabetes in both the Clinical Research Market
      and the Clinical Operations Market. Biosign has established relationships with industry leaders,
      professional organizations and academia to validate its technology offering. Biosign is now in the
      commercialization phase of UFIT-MAX and UFIT-TEN and has the following business objectives:

          -    To build-out research & development, production, sales, support and administrative
               teams;

          -    To promote existing products;

          -    To fund production and inventory to meet supply requirements; and

          -    To continue research & development on its technology.


      Available Funds

      As of July 14, 2006, the Issuer had working capital of approximately $5,259,071. The following
      table sets forth the proposed use of funds for the next 12 months.




       Working Capital at July 14, 2006                                                   $5,259,071


       Uses
       Expenses related to Amalgamation                                                      $50,000
       Staff salaries and benefits                                                        $1,800,000

       Professional, regulatory and advisor fees                                            $150,000

       Occupancy                                                                            $125,000

       Insurance                                                                            $135,000

       Office, travel and miscellaneous                                                     $225,000
                                           - 12 -


 Capital asset purchases                                                               $150,000

 Working Capital                                                                      $2,624,071

 Total Uses                                                                           $5,259,071


Notes: Notwithstanding the proposed uses of available funds as discussed above, there may be
circumstances where, for sound business reasons, a reallocation of funds may be necessary. It
is difficult, at this time, to definitively project the total funds necessary to affect the planned
activities of the Issuer. For these reasons, management considers it to be in the best interests of
the Issuer and its shareholders to afford management a reasonable degree of flexibility as to how
the Issuer’s funds are employed among the uses identified above, or for other purposes, as the
need arises. Further, the above uses of available funds should be considered estimates.

Principal Products and Services

Biosign has developed a non-invasive technology for the acquisition, storage, measurement and
analysis of multiple physiological parameters utilizing radial arterial pulse data.

In anatomy, the radial artery is the main blood vessel, with oxygenated blood, of the lateral aspect
of the forearm. In medicine, a person's pulse is the throbbing of their arteries as an effect of the
heart beat - it can be felt at the neck, at the wrist and other places. The term pulse is also used,
although incorrectly, to denote the frequency of the heart beat, usually measured in beats per
minute. Besides its rate, the pulse has other qualities which reflect the state of the cardiovascular
system, such as its rhythm, fullness and the shape of the pulse wave with certain diseases
causing characteristic changes in these qualities. For example, under certain circumstances,
including arrhythmias, some of the heart beats are ineffective and the aorta is not stretched
enough to create a measurable pressure wave causing the pulse to be irregular and the heart
rate can be much higher than the pulse rate.

UFIT Platform (“UFIT”)

One of the challenges in research and medical practice is to extract meaning from data coming
from a variety of sources on a timely basis. Digital signal processing techniques when combined
with virtual instrumentation provide a flexible, effective and economical solution to this challenge.

Biosign’s UFIT is a web-based platform for processing biosignals from the radial arterial pulse.
UFIT combines computing (hardware and software) and communication (Internet) technologies to
provide an engineering standards-based technology to gather physiological data in a safe,
relevant, and cost effective manner. The UFIT platform functions include biosignal data
acquisition, storage, and retrieval. Utilizing the concept of virtual instrumentation, software
algorithms, including neural networks, can be used to process the biosignal to provide
measurement and analysis. The UFIT platform is the foundation on which Biosign is building its
products, including UFIT-MAX and UFIT-TEN.

The data acquisition device consists of specially designed and engineered hardware and
proprietary software and resembles a non-invasive automated blood pressure monitor with a wrist
cuff. To use the data acquisition device users require a computer with USB and Internet access
facilities. The acquisition device is controlled by software installed on the user’s computer and
contains sensors which, when combined with Biosign’s proprietary methods, results in the
gathering of a high resolution biosignal through a single measurement of the radial arterial pulse.
The biosignal gathering and processing for each reading takes approximately two minutes.

The data gathered by the acquisition device is converted into a digital signal which is sent to a
central server, via the Internet, where it is stored. The stored signal is then available for
immediate and future analysis, to aid in reviewing and auditing product post-market performance
                                           - 13 -

as well as in measuring and monitoring additional features such as health outcomes and risk
assessments. All the data may be securely stored and transferred to an electronic health record
depending on customer needs. The UFIT platform offers the following benefits:

    -   provides an engineering standards-based technology to gather physiological data in a
        safe, relevant, and cost effective manner;

    -   the storage database provides a secure electronic repository of the biosignal data;

    -   the hardware instrument is simple to use and can be operated without the need for
        specially trained staff to be on hand, thereby reducing data acquisition costs and allowing
        for more frequent data acquisition; and

    -   the software includes logic to detect errors and reduce noise during the signal acquisition
        process, immediately informing the user of the error and prompting them to repeat the
        process, reducing the possibility of incorrect data being gathered.

Utilizing UFIT-MAX or UFIT-TEN software tools (virtual instrumentation) the signal can be
analyzed and provide multiple physiological measurements from the single reading. The results
can immediately be returned to the user in the form of a numerical and graphical display.

UFIT Measurement Automation Expert (“UFIT-MAX”)

Biosign’s UFIT-MAX is a research tool, which is intended for use in such areas as pharmacology
and epidemiological research in the Clinical Research Market. UFIT-MAX is intended to allow
researchers to gather participant data in a reliable and cost effective manner and then store,
manipulate and review this data in graphic or numerical displays to aid in their decision making
process.

UFIT-MAX combines Biosign’s UFIT acquisition, storage and retrieval technology with the UFIT-
MAX software toolbox. The UFIT-MAX software toolbox is designed to provide researchers with
the flexibility to select the method and type of data analysis used for interpretation of the data.
The unprocessed biosignal can also be used to generate clinical measures such as blood
pressure, heart rate or other cardiovascular parameters, utilizing the software developed for the
UFIT-TEN products or their own algorithms.

Biosign believes that its technology will appeal to the Clinical Research Market as it addresses
the need for: data accuracy; data integrity; multiple measurement possibilities; ease of use; non-
invasive data capture; error source identification and technical error correction handling; runtime
calibration and quality assurance; and, a database driven digitally stored signal which can be
reanalyzed. In addition to offering the benefits of the UFIT platform, the UFIT-MAX toolbox
provides researchers the ability to:

    -   analyze the biosignal data using their own mathematical algorithms or Biosign’s; graph
        the biosignal data; export the biosignal data in a format required by third party analysis
        tools; or a combination of these steps, without changing the nature of the underlying
        biosignal, providing the ability to perform multiple analysis from one consistent data
        source;

    -   validate past results by rerunning an algorithm in the event there are questions
        surrounding the initial analysis as the unaltered biosignal is stored and available for future
        analysis and audit.

To date Biosign has developed a generic user interface for UFIT-MAX but expects that it may
                                           - 14 -

require customization for each customer in order to meet the unique requirements of each
research application. In addition Biosign expects that the users will require that the biosignal data
be converted into specific data formats to allow the biosignal data to be read by their chosen
analysis tool.    Due to the platform’s web-based design, these modifications and data
requirements can be met through software programming and will not require changes to the
hardware. Biosign only plans to undertake this customization work as part of a confirmed
contract.

Currently there are no regulatory approvals required to market and sell the UFIT-MAX for use in
clinical trials or studies. Biosign is promoting its UFIT-MAX in the Clinical Research Market and
has received positive feedback but to date has not made any sales. Biosign has, and intends to
continue, to approach this market directly using its own internal resources.

UFIT Tensiometer (“UFIT-TEN”)

Biosign’s UFIT-TEN is the name for a series of products that Biosign is developing for the medical
assessment of patients. Biosign’s UFIT-TEN series will provide software algorithms to resolve a
variety of clinical instrumentation and measurement needs into one easy-to-use system that
integrates information currently collected from different medical devices.

The UFIT-TEN series of products will utilize the UFIT platform to gather the biosignal data as the
input to pre-programmed software (virtual instrumentation) to provide measurements to be used
to assist in the diagnosis and monitoring a variety of conditions.

Biosign believes that it is possible to develop software algorithms to measure physiological
features of clinical interest. If successful, the UFIT-TEN could be able to provide some of the
information that is currently acquired using other medical devices. To date, Biosign has
developed the UFIT-TEN Blood Pressure Monitor and which has received its CE Marking as well
as Health Canada approval. In addition Biosign has been developing and testing UFIT-TEN
capabilities to other medical devices including cardiac monitors, electrocardiography (EKG),
echocardiography (ultrasound) and blood glucose meters.

The UFIT-TEN products will be classified as medical devices and will require certain regulatory
approvals before they can be marketed. There is no guarantee that Biosign will be able to
develop these products and, if required, receive regulatory approval.

Product Development

The development of Biosign’s UFIT-MAX and UFIT-TEN products is closely connected as the
UFIT Platform is the foundation for the software applications for UFIT-MAX and UFIT-TEN.
Biosign expects to perform most of these activities with its internal resources and will supplement
its staff with outsourced expertise as required.

Operations

Biosign expects that it will continue to focus on its core competency of biosignal processing and
analysis and will partner with third party suppliers to access expertise in areas such as
manufacturing, certifications, distribution, product support, and intellectual property protection as
required.

Biosign anticipates that the proprietary hardware component of the UFIT platform will continue to
be manufactured to Biosign’s specifications by a contract manufacturer.            The current
manufacturer is based in Taiwan and was responsible for manufacturing the first 900 units and is
familiar with Biosign’s specifications and requirements. The manufacturer is currently a certified
ISO compliant manufacturer of blood pressure devices and manufactures blood pressure and
                                                          - 15 -

        other devices under its own brand as well as other brands which are marketed around the world.
        In addition the manufacturer provides procurement services for some of the various components
        required in the manufacturing process. In the event that the current hardware manufacturer
        cannot or will not manufacture Biosign’s hardware component Biosign has identified several other
        possible manufacturers. While Biosign believes it would be possible to have the hardware
        component manufactured by these other manufacturers Biosign does not have an established
        business relationship. It could take time for Biosign to establish these relationships, which could
        result in delays in the manufacturing process.

        The software portion of the platform is proprietary and will continue to be developed by Biosign.
        Both the client and server software have been developed to run on a Windows-based platform.

        Biosign’s operations are located at 25 Sheppard Avenue West, Suite 1010 in Toronto, Ontario,
        where Biosign currently leases approximately 3,000 square feet. The lease expires on December
        31, 2006 and Biosign expects that the space will not be sufficient to house its staff as Biosign
        executes its business plan and accordingly, Biosign has begun to search for new office space in
        the Greater Toronto Area. Biosign expects to secure approximately 5,000-6,000 square feet for
        its next office. In addition, Biosign has signed a one year licensing arrangement for
        approximately 350 square feet in the MaRS Discovery District at 149 College Street, Toronto,
        Ontario commencing on August 1, 2005 with an option to renew for an additional year. This
        space is intended to be used as a showcase and demonstration office to gain access to the
        Research Market and promote Biosign’s UFIT. Biosign currently has a total of 9 employees and
        leverages the expertise of outsourced partners on an as needed basis.

        Markets

        Clinical Research Market

        Biosign intends to target pharmaceutical research and development as well as epidemiology
        studies with its initial UFIT-MAX offering. There are currently in excess of 41,000 active industry
        and government-sponsored clinical trials as well as new drug therapies in research1. It has been
        estimated in that the cost of bringing a new drug to market is in the range of US$0.8-$1.4 billion.2
        In addition, it was estimated that in 2002 US$14.9 billion was spent on clinical trials in the United
        States and that this spending was forecasted to grow at 12.3% on average per year to almost
        US$26.5 billion by 20073.

        In the United States, for example, pharmaceutical research for a new drug includes laboratory
        and pre-clinical studies followed by clinical trials on humans. These clinical trials are normally
        conducted in multiple phases, with each successive phase involving a larger number of people.

             Phase I testing – This phase typically last for several months and is done on a small number
             of healthy participants (20 to 100). This initial testing is primarily concerned with assessing
             the drug's safety. The study is designed to determine what happens to the drug in the human
             body including how it is absorbed, metabolized, and excreted. A phase I study will investigate
             side effects that occur as dosage levels are increased.

             Phase II testing – This phase is designed to test the efficacy of the drug. This second phase
             of testing may last from several months to two years and involve up to several hundred
             participants. Most phase II studies are randomized trials where one group of patients will

1
    Thomson CenterWatch web-site, June 2005, www.centerwatch.com

2
    Tufts Center for the Study of Drug Development, Backgrounder: How New Drugs Move Through the Development and
    Approval Process, Boston: November 2001; and Gilbert J, P Henske, and A Singh, “Rebuilding Big Pharma’s Business Model,”
    In Vivo, the Business & Medicine Report, Windhover Information, Vol. 21, No. 10, November 2003.
3
    Business Communications Company, Inc. RB-171 The Clinical Trials Business, May 2003.
                                           - 16 -

    receive the experimental drug, while a second group will receive a standard treatment or
    placebo. These studies are often "blinded" in that neither the patients nor the researchers
    know who is getting the experimental drug. This step is taken to provide the pharmaceutical
    company and the regulatory authority comparative information about the relative safety of the
    new drug, and its effectiveness.

    Phase III study – In this phase a drug is tested in several hundred to several thousand
    patients and the study typically last several years. This large-scale testing provides the
    pharmaceutical company and the regulatory authority with a more thorough understanding of
    the drug's effectiveness, benefits, and the range of possible adverse reactions. Most phase
    III studies are randomized and blinded trials. Once a phase III study is successfully
    completed, a pharmaceutical company can request approval from the FDA or other
    appropriate regulatory agency for marketing the drug.

    Phase IV - Once the drug is on the market, the company must continue to perform
    observational studies as part of an ongoing evaluation of the drug's safety during routine use.
    The company also attempts to monitor any usage of the drug for conditions other than the
    approved medical indication. If the drug is being successfully used for off-label indications,
    the company will often initiate further clinical trials for those indications in order to widen the
    potential market for the drug.

As each of the above phases of the clinical trial process is completed, the results must be
submitted to the FDA for review and approval before receiving permission to proceed with the
next phase. Collection of accurate physiological data from the participants enrolled in a clinical
trial is a key component of the data being collected and submitted to the regulatory agency during
each phase of these trials, both to measure potential therapeutic benefits of the new drug and to
monitor potential adverse side-effects.

Research tools, such as UFIT-MAX, are critical in assessing the viability of a project on an
ongoing basis. In the Clinical Research Market buyers of research tools are scientists responsible
for clinical trial protocol design, physiological modeling of disease, drug response simulation and
feature extraction. These scientists are involved at all stages of drug development from concept
to post market surveillance. Their purchasing decisions for research tools are based on the
following criteria:

    -   familiarity – research tools need to be simple to use, designed using a well know
        technology, with a standard interface and minimal proprietary features. Biosign’s UFIT
        platform has been developed to comply with engineering standards and utilizes standard
        technologies to ensure familiarity;

    -   modularity – products designed with an open architecture are essential so customer
        feedback can be absorbed into product upgrades and new releases. Biosign’s UFIT
        platform is software driven which enables more rapid integration of customer solutions;
        and

    -   cost – research tools like Biosign’s UFIT platform that are multi-functional and
        customizable enable researchers to limit cost overruns, a major issue for large
        pharmaceutical companies today.

Clinical Operations Market

Biosign intends to target the Clinical Operations Market with its UFIT-TEN family of products. The
profile of diseases contributing most heavily to death, illness, and disability has changed
dramatically during the last century. Today, chronic diseases - such as cardiovascular disease
and diabetes - are among the most prevalent and costly of all health problems. The management
                                                              - 17 -

            of chronic diseases has been estimated to consume more than 75% of the $1.44 trillion dollars
            spent on healthcare in the United States. Remote monitoring of home-bound patients has proven
            to be a cost-effective method of delivering high quality care and new medical devices which can
            reduce the number of office, hospital or in home visits can change the health care model.

            The Clinical Operations Market has two segments – professional and personal. The distinction
            between the two is somewhat grey depending on political structures and jurisdiction. Unlike other
            markets, healthcare does not operate with the normal economic prompts such as supply and
            demand. Management has assessed the potential of the UFIT platform in four sectors of the
            Clinical Operations Market as follows:

                -    Government – the largest single payer in any healthcare system. It is anticipated that
                     government will dominate the healthcare market worldwide and to continue to define
                     medical care. To that end Biosign has developed, and will continue to develop, products
                     that support highly centralized, tightly controlled, and standardize healthcare delivery
                     systems;

                -    Medical Office (Clinical Practice) – the size of this market is hard to quantify but
                     approximately 60% of physicians deliver office based patient care. Biosign’s target will
                     be medical offices that are set to become healthcare “boutiques” or specialized centers
                     for “executive care”;

                -    Patients (Home) – the largest buyer in any health system. The most profitable segment
                     is females aged between 35-55 that are well educated, well employed, with children,
                     health conscious and visit doctor on a regular basis. They also constitute the majority of
                     internet visitors looking for health information. Through them we will reach the patients
                     who are sick of hypertension and/or diabetes – themselves or their loved ones;

                -    Hospitals (Institutional) – these are the large bulk buyers.


            Market Approach

            Management has elected to target the Clinical Research Market initially where the UFIT platform
            is not regulated. Entering the Clinical Research Market first will also establish a firm platform and
            nurture strong relationships both of which will be critical to a successful entry into the Clinical
            Operations Market.

            In the Clinical Research Market Biosign is adopting a direct approach deploying their own sales
            and support staff and using their relationships to build distribution channels. The Company is
            frequently invited to join pilot studies. Management intends to use pilot studies to build a
            reputation for the UFIT platform and to gain internal validation amongst large pharmaceutical
            companies. In parallel management will leverage key relationships that have been established
            with leading academic and healthcare organizations

            Biosign will target the Clinical Operations Market on a jurisdictional basis depending on when it
            receives the required regulatory approval. Unlike the Clinical Research Market, management
            intends to build sales and support team and distribution channels using channel partners. These
            channel partners will include pharmaceutical companies who have the UFIT platform as a

4
    National Center for Chronic Disease Prevention and Health Promotion WEB Site, April, 2004 “Chronic Disease Overview”
                                          - 18 -

research tool, manufacturers and wholesalers through outsourced manufacturing and third party
licensing or distribution agreements, national and local foundations and communication
companies looking to provide a healthcare offering.

Regulatory Matters

Depending on application and the country of use, Biosign’s technology may be subject to
regulatory control. Both the manufacturing and marketing of medical devices are governed by a
variety of laws and regulations in Canada, the United States, the European Union, and
elsewhere. These laws require that medical devices be approved as safe and effective for their
intended use prior to being marketed.


ISO 13485:2003

Biosign plans to build all its current products based on the UFIT platform in compliance with ISO
13485:2003 standards for quality. ISO 13485:2003 represents a model for quality assurance in
design, development, production, installation and servicing and is an international standard
designed to provide medical device suppliers with a common approach to applying a Quality
Management System. This international standard addresses most Canadian, U.S. and European
requirements for Medical Device regulatory purposes. The ISO 13485:2003 standard is based on
the ISO 9001:2000 standard and includes the old ISO 13488. At present the FDA document
21CFR820 is still aligned with the old standard. The intent of ISO 13485:2003 is to provide for
the development of a quality management system that ensures to prospective customers and
regulatory bodies that the goods and services offered by the organization will meet customer and
regulatory requirements.
Biosign engaged an ISO Quality Systems consultant to complete its quality system manual and
implement the system. Biosign has received its ISO 13485:2003 certification (certificate
#CA05/3732).

UFIT-MAX

UFIT-MAX has been designed for study purposes to provide researchers with the flexibility to
select the method of analysis and to interpret the results. It is not intended, nor recommended, for
use in any medical specialty.

Biosign intends to produce UFIT-MAX in compliance with ISO 13485:2003 standards for medical
devices. Management believes that ISO certification along with research ethics board approvals
will be sufficient to allow Biosign to sell UFIT-MAX for use in the Research Market.

UFIT-TEN

Biosign believes that the UFIT-TEN product series will be classified as minor risk devices for
regulatory purposes and will require regulatory approval prior to marketing. Each regulatory
agency will determine the classification of each UFIT medical device upon submission of the
regulatory filing documentation and they will then determine the regulatory approval process that
must be completed prior to marketing the product.


Canada

In Canada, medical devices are regulated by Health Canada and are classified into one of four
regulatory classes depending upon the risk the medical device presents to the patient. Except for
Class I devices, all medical devices are required to have a device license before they can be sold
                                           - 19 -

within Canada. As the risk level increases, additional data is required to demonstrate the safety
and effectiveness of the medical device before a medical device license is issued by Health
Canada. Manufacturers of medical devices are required to meet the requirements of Health
Canada’s Canadian Medical Devices Conformity Assessment System and submit to Health
Canada a valid ISO 13485 quality management system certificate issued to the manufacturer by
third-party organizations recognized by Health Canada and accredited by the Standards Council
of Canada to issue such certificates to Health Canada.

United States

In the United States medical devices are regulated by the FDA. The FDA classifies medical
devices into one of three regulatory classes. As in Canada, a higher classification generally
indicates a greater potential risk to the patient, and therefore, the FDA imposes a greater level of
regulatory control over such products. As the risk level increases, additional data is required to
demonstrate the safety and effectiveness of the device. There are two review procedures by
which medical devices can receive FDA clearance or approval for marketing in the United States.

    A pre-market notification, or 510(k) notification, must be submitted for certain Class I devices
    as well as for the majority of Class II and certain Class III devices. The 510(k) notification
    must establish that the medical device, in comparison with an existing legally marketed
    product (a ‘‘predicate device’’): (i) is substantially equivalent, (ii) has the same intended use,
    and (iii) is as safe and effective and does not raise different questions of safety or
    effectiveness. Marketing a medical device that is subject to a 510(k) notification may begin
    upon the FDA issuing a clearance letter finding substantial equivalence to the predicate
    device.

    FDA approval of a Pre-Market Approval (PMA) application is required for most Class III
    devices and for those medical devices for which the manufacturer is unable to establish
    substantial equivalence to an existing legally marketed product. A PMA application is much
    more detailed than a pre-market notification and must include clinical data demonstrating that
    the medical device is safe and effective. Typically before conducting a clinical study to
    generate the required safety and efficacy data, the developer must file an Investigational
    Device Exemption (IDE) application with the FDA. The IDE application must include, among
    other things, the pre-clinical data and any clinical data that justify the proposed investigation.
    The clinical development program required to support a PMA application initially involves the
    conduct of studies testing the device in a small number of patients to determine the safety of
    the device. If the studies successfully conclude that the device is safe, an expanded patient
    population is studied at multiple sites to establish longer-term safety and effectiveness. The
    pre-clinical (where necessary) and clinical studies are subject to the Good Laboratory
    Practice and Good Clinical Practice regulations and policies of the FDA and the results are
    detailed in the PMA application. Once a PMA application has been submitted, the FDA has a
    statutory 180-day review cycle, though in practice a PMA application often requires
    significantly more time before approval. The FDA’s PMA approval review process generally
    takes one to three years after filing, but may take longer. Before granting approval to market
    a medical device, the FDA may convene a medical advisory board review, which can add to
    the review time. In addition, prior to approval, the FDA typically conducts a facility inspection
    to verify that the manufacturing systems for the medical device conform to the FDA’s Quality
    System Regulation that establishes ‘‘Good Manufacturing Practice’’, or ‘‘GMP’’, requirements.

Europe

Similar to Canada and the United States, medical devices are classified depending upon the risk
the medical device presents to the patient. Medical devices require quality systems certification
by a third party assessment agency known as a Notified Body. Medical devices marketed in
European Union countries must carry CE Marking under the applicable medical device directive.
                                         - 20 -

Each of the medical device directives imposes essential requirements on the applicable medical
devices. The CE Marking represents compliance with a specific device directive and can be
achieved through self-assessment or a certification body depending upon the device
classification. The manufacturer of medical devices must prepare a technical file with evidence of
compliance to the applicable directive and standards.


Competition

Biosign will compete with a number of companies who provide current stand alone measurement
devices. Biosign believes long-term competition can be expected from medical device divisions
of large companies. This competition can be expected to become more intense as commercial
applications for biosignal products increase. Some competitors, primarily large companies, have
greater clinical, regulatory and marketing resources and experience than Biosign. Many of these
companies have commercial arrangements with other companies in the industry to supplement
their own research capabilities.

Biosign has identified companies with products which could compete with Biosign’s UFIT-MAX in
pharmaceutical and clinical research. Some of these devices also use web-based biosignal
processing technologies to collect and display medical information relevant to patient health. A
number of these companies are marketing their products to one or more of the target markets
identified by Biosign.

Based on a review of the technology Biosign believes that its UFIT is superior to these other
devices in one or more of the following areas:

    -   Biosign’s software includes logic to automatically detect errors during the signal
        acquisition process and can immediately inform the user of the error and prompt them to
        repeat the process, reducing the possibility of incorrect data being gathered;

    -   Biosign’s database provides a secure electronic repository of the trial participants’
        biosignal while competition provides static results via report;

    -   Biosign’s open architecture allows a researcher to run customized mathematical
        algorithms on the raw biosignal data while the competition’s algorithms and analysis tools
        are preset by the manufacturer;

    -   Biosign’s unaltered biosignal is available for future analysis and audit providing the
        researcher the ability to validate past test results by rerunning an algorithm while the
        competition provides only the test results; and

    -   Biosign’s system interface can be modified for a researcher, including the user interface
        layout, colours, language and unit of measure while the competition is restricted by
        hardware design and manufacturing.

Proprietary Protection

Presently Biosign relies on copyright, trademark and trade secrets as the means of protecting its
intellectual property. In addition, Biosign employs confidentiality procedures and contractual
provisions to protect its proprietary and confidential information rights.
                                            - 21 -

Biosign believes that its current intellectual property rights are sufficient to carry on its business
as currently planned. Despite efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of Biosign’s products or obtain and use information Biosign considers to
be proprietary. In addition, the laws of some foreign countries do not protect Biosign’s proprietary
rights as fully as do the laws of Canada, the United States, and the European Union. There can
be no assurance that Biosign’s efforts will be adequate or that its competition will not
independently develop similar technology. Biosign’s only current registered intellectual property
rights are its United States trademark for its UFIT brand name.

Biosign, working with its advisors will continue to review the practice in this area and will adjust its
strategy as appropriate.

Previously Proposed Amalgamation

On March 21, 2005, Biosign entered into an amalgamation agreement with Arrabbiata Capital
Corp., a company listed on the TSX Venture Exchange Inc. (“TSXV”). Closing of the
amalgamation was subject to certain conditions, including, among other things, that the
transaction be completed by March 15, 2006. The transaction was conditionally approved by the
TSXV with the major condition of the TSXV listing being that Biosign and Arrabbiata Capital Corp.
complete a concurrent fundraising of a minimum of $13.6 million. On March 15, 2006 the
companies were not able to satisfy this condition and the transaction was terminated by
Arrabbiata Capital Corp.

Bankruptcy and Receivership Proceedings

The Issuer has not gone through any bankruptcy or any receivership or similar proceeding within
the three most recently completed fiscal years or the current financial year.

Reorganizations

Karma

Karma was incorporated by memorandum and articles under the BCBCA on September 1, 1999
as 591722 B.C. Ltd., and changed its name to Karma Capital Corp., on February 4, 2000. The
authorized capital of Karma consists of 1,000,000,000 common shares without par value.

Pursuant to a prospectus dated November 3, 2000 and amended and restated on May 1, 2001
(the “Prospectus”), Karma made an initial public offering of 1,350,000 Karma Shares at $0.15 for
aggregate gross proceeds of $202,500. The Karma Shares were listed and posted for trading on
the TSX Venture Exchange Inc. (the “TSXV”) on May 11, 2001 as a capital pool company.

In accordance with the TSXV’s policies Karma did not complete its “qualifying transaction” within
the specified time and accordingly, the Karma Shares were suspended from trading on February
21, 2003. On March 25, 2005, the TSXV delisted the securities of Karma, in accordance with its
policies for failure to complete a qualifying transaction. As a result of such delisting all non-arms
length escrow seed shares, a total of 2,406,667 Karma Shares, have been irrevocably cancelled
as per the escrow agreement that relates to those shares.

As a result of Karma’s failure to complete its qualifying transaction within the specified time and
subsequent suspension and delisting of the Karma Shares from the TSXV, Karma failed to
maintain its annual and interim financial statement and other filings in good standing and as a
result a cease trade order was issued against Karma by the British Columbia Securities
Commission (the “BCSC”) under section 164 of the Securities Act (British Columbia) on June 2,
2004. Equivalent cease trade orders were subsequently issued by the Alberta Securities
                                                 - 22 -

      Commission (the “ASC”) and the Autorite des Marches Financiers (the “AMF”) in Alberta and
      Quebec, respectively.

      By letter of intent dated May 1, 2006, Karma proposed to merge with Biosign Technologies Inc.
      (“Biosign”) by way of statutory amalgamation pursuant to which all of the outstanding securities of
      Karma and Biosign would be exchanged for securities of the continuing amalgamated entity
      under the name “Biosign Technologies Inc.”.

      In June, 2006 Karma applied to the BCSC, the ASC and the AMF (together the “Commissions”)
      for an order (the “Revocation Order”) lifting the outstanding cease trade orders (collectively the
      “Cease Trade Orders”) against the securities of Karma to allow Karma to hold an Annual and
      Special Meeting of the shareholders of Karma to approve the continuance of Karma into Ontario
      and the proposed Amalgamation. On June 29, 2006 the BCSC and on June 30, 2006 the ASC
      provided a Partial Revocation Order to permit Karma to:
          1. hold the annual and special meeting of the shareholders of Karma to approve the
              Amalgamation;
          2. complete the Amalgamation;
          3. issue common shares in connection with the settlement of outstanding debt; and
          4. issue common shares in connection with the Private Placement.

      On July 3, 2006 the AMF approved the Revocation Order as well as approved the removal of
      reporting issuer status of Karma in Quebec.

      On July 14, 2006, pursuant to the Articles of Amalgamation, Karma and Biosign amalgamated to
      form the Issuer. On August 10, 2006 the Issuer received a full revocation order from the BCSC
      and on August 15, 2006 the Issuer received a full revocation order from the ASC to allow it to
      resume trading.

      Biosign

      Refer to section 3.2 for a description of how the significant assets of Biosign were acquired.

4.2   Asset Backed Securities
      This section is not applicable

4.3   Mineral Projects
      This section is not applicable.

4.4   Oil and Gas Operations
      This section is not applicable.

5.    Selected Financial Information

      Karma had been inactive since approximately June, 2004 when a proposed amalgamation was
      terminated. As Karma had no material operations before completion of the amalgamation with
      Biosign, and Biosign’s business will be the continuing business of the Issuer, the discussion of
      the financial information will focus on the business and operations of Biosign.

5.1   Annual Information

      Karma
                                                      - 23 -



        In the last three years Karma has incurred the following costs in seeking, evaluating and
        negotiating potential transactions, and in meeting the disclosure obligations required for a
        reporting issuer. The selected historical financial data should be read in conjunction with the
        unaudited financial statements of Karma for the interim period ended March 31, 2006 and audited
        financial statements of Karma, and the notes thereto attached, for the period ended December
        31, 2005 and 2004 included in Appendix C. The Karma financial statements were prepared on
        the basis of Canadian Generally Accepted Accounting Principles (“GAAP”) and are expressed in
        Canadian dollars.


                                 Six months ended        Year ended             Year ended                Year ended
                                   June 30, 2006      December 31, 2005      December 31, 2004         December 31, 2003
                                    (unaudited)           (audited)              (audited)                 (audited)
Interest income                                  $-                    $5                   $18                    $1,127
Net loss                                    $62,798               $4,997                $42,826                   $39,790
Loss per share                                $0.05                 $0.00                  $0.03                     $0.03
Total assets                                   $715               $8,558                 $9,625                    $8,406

        Biosign

        Biosign was incorporated under the Business Corporations Act (Ontario) on March 11, 2004. The
        following table presents selected historical financial data of Biosign for the periods indicated. The
        selected historical financial data should be read in conjunction with the unaudited financial
        statements of Biosign for the interim period ended March 31, 2006 and audited financial
        statements of Biosign, and the notes thereto attached, for the period ended December 31, 2005
        and 2004 included in Appendix B. The Biosign financial statements were prepared on the basis
        of Canadian Generally Accepted Accounting Principles (“GAAP”) and are expressed in Canadian
        dollars.


                                                         March 31, 2006      December 31, 2005       December 31, 2004
 Income Statement Items
                                                          (unaudited)            (audited)               (audited)

 Revenues                                                         Nil                 Nil                       Nil

 Expenses

            Salaries and benefits                              $348,017           $1,381,825              $929,165

            Professional fees                                    $4,836             $81,555                $35,479

            Product testing and registration fees               $17,915             $77,555                           $-

            Occupancy and communications                        $26,760            $105,121                $57,736

            Insurance                                           $33,586             $91,611                 $1,205

            Research materials & consultants                    $18,685             $18,617                $30,869

            Amortization                                         $5,190             $17,333                 $7,250

            General                                             $19,438            $119,644                $65,261

            Investment tax credits                                      $-        $(257,000)                          $-
                                                             - 24 -


                                                                March 31, 2006   December 31, 2005   December 31, 2004
Income Statement Items
                                                                 (unaudited)         (audited)           (audited)

              Interest income                                         $(1,182)         $(13,600)           $(1,448)

              Interest expense on notes payable                        $46,399         $173,259            $20,125

              - Deferred charges                                      $168,576                $-                 $-

Net Loss                                                              $688,220       $1,795,920         $1,145,642

Weighted average number of shares outstanding                    162,750,397        155,138,653         94,458,319

Loss per common share                                                  ($0.00)           ($0.01)            ($0.01)



                                                               March 31, 2006    December 31, 2005   December 31, 2004
Balance Sheet Items
                                                                (unaudited)          (audited)           (audited)

Assets

              Cash                                                    $295,236          $438,568        $1,377,136

              Other current assets                                    $305,626          $304,105           $22,408

              Deferred charges                                              $-          $168,576                  -

              Capital assets                                           $32,506           $37,696           $26,983

Total Assets                                                          $633,368          $948,945        $1,426,527

Liabilities

              Current liabilities                                     $490,922          $335,668          $150,544
               Notes payable and accrued interest, current
                                                                  $1,950,508          $1,904,109        $1,695,125
              (1)
Shareholder’s Equity

              Share Capital (1)                                   $1,821,720          $1,650,730          $726,500

              Retained Deficit                                   $(3,629,782)        $(2,941,562)      $(1,145,642)
Total Liabilities and Shareholders Equity                             $633,368          $948,945        $1,426,527
                                                - 25 -


5.2   Quarterly Information

      Biosign was not a reporting issuer and did not previously prepare quarterly financial statements.

5.3   Dividends

      The holders of the common shares of the Issuer will be entitled to dividends as and when
      declared by the Directors of the Issuer. It is not contemplated that any dividends will be paid in
      the immediate or foreseeable future of the Issuer.


5.4   Foreign GAAP

      The financial statements are prepared in accordance with Canadian GAAP.

6.    Management's Discussion and Analysis

6.1   Date
      The MD & A included below is dated as of August 16, 2006.


      Management’s Discussion and Analysis – January 1, 2006 to March 31, 2006

      The following discussion and analysis prepared by management of Biosign should be read in
      conjunction with Biosign’s unaudited financial statements for the period ended March 31, 2006
      and the related notes which are attached as Appendix B.

      Revenues

      Biosign had no revenue for the three months ended March 31, 2006.

      Expenses

      Salaries and benefits include all salary, bonus and benefits for Biosign employees, Biosign did
      not change its staff count during the three months ended March 31, 2006.

      Professional fees include $4,000 for the audit and taxation services plus other fees and
      reimbursements.

      Product testing and registration fees include $16,000 for ISO consultant and audit services plus
      other fees and reimbursements.

      Occupancy and communication expenses include office and storage space rental, repairs,
      telephone and internet access.

      Insurance expense includes key man life insurance, directors and officers’ liability insurance and
      general liability insurance. The key man life insurance and directors and officers liability
      insurance totaled $32,408 in the quarter.

      General expenses include office supplies, travel and entertainment, and security filing fees.

      Deferred charges relate to the expensing of costs incurred with respect to the company’s
                                           - 26 -

previously proposed amalgamation with Arrabbiata Capital Corp., a company listed on the TSX-V.
Closing of the amalgamation was subject to certain conditions, including, among other things, that
the transaction be completed by March 15, 2006. The transaction was conditionally approved by
the TSX-V with the major condition of the TSX-V listing being that Biosign and Arrabbiata Capital
Corp. complete a concurrent fundraising of a minimum of $13.6 million. On March 15, 2006 the
companies were not able to satisfy this condition and the transaction was terminated by
Arrabbiata Capital Corp.

Net Loss

Biosign incurred a net loss of $688,220 for the three months ended March 31, 2006.

Current Assets, Current Liabilities and Share Capital

The current assets position at March 31, 2006 is comprised primarily of cash and investment tax
credits receivable. The decrease in cash for the period is primarily the result of Biosign funding
its continuing operations offset by proceeds from the issuance of common shares. During the
three months ended March 31, 2006 Biosign issued 505,695 in Biosign Shares for gross
proceeds of $189,989.

Current liabilities are comprised primarily of trade payables and accrued liabilities and the Biosign
Notes, the Biosign Notes are convertible to Biosign Shares at the option of the holder, at a price
of $0.2667 per Biosign Share and are automatically convertible into Biosign Shares at a price of
$0.2667 per Biosign Share in connection with a “going public” transaction or other “liquidity” event
and will be deemed to be converted on Closing of the Amalgamation.

Capital Assets

During the three months ended March 31, 2006 Biosign did not purchase any capital assets.

Liquidity and Solvency

Biosign had cash of $295,236 on March 31, 2006 and a working capital deficit of $1,840,568.
The decrease in cash during the year is the result of funding the operations of the company. The
working capital deficiency includes the Biosign Notes and accrued interest totalling $1,950,509,
which are convertible to Biosign Shares at the option of the holder, at a price of $0.2667 per
Biosign Share.

Management’s Discussion and Analysis – January 1, 2005 to December 31, 2005

The following discussion and analysis prepared by management of Biosign should be read in
conjunction with Biosign’s audited financial statements for the period ended December 31, 2005
and the related notes which are attached as Appendix B.

Revenues

Biosign had no revenue for the year ended December 31, 2005.

Expenses

Salaries and benefits include all salary, bonus and benefits for Biosign employees, compared to
2004 this expense increased $452,660 or 49%. This increase is a result of the fact that 2004 was
not a complete 12 month period and the company hired 3 additional staff members in 2006.

Professional fees include $49,574 for researching government programs on healthcare,
                                           - 27 -

assistance with financing activities and corporate communications, $15,000 for the audit and
taxation services, $6,186 in legal fees plus other fees and reimbursements. The increase over
2004 is primarily the result of the fees for researching government programs on healthcare,
assistance with financing activities and corporate communications.

Product testing and registration fees include $68,153 for ISO 13485:2003 consultant and audit
services plus other fees and reimbursements. These expenses were not incurred in 2004.

Occupancy and communication expenses include office and storage space rental, repairs,
telephone and internet access for an entire year in 2005; in 2004 the company only rented an
office for 4 months.

Insurance expense includes key man life insurance, directors and officers’ liability insurance and
general liability insurance. The key man life insurance and directors and officers liability
insurance totaled $87,742 in 2005 and were nil in 2004.

Investment tax credits are claims made in respect of scientific research and experimental
development expenditures for income tax purposes.

General expenses include office supplies, travel and entertainment, and security filing fees.

Net Loss

Biosign incurred a net loss of $1,795,920 for the year ended December 31, 2005 compared to
$1,145,642 in 2004.

Current Assets, Current Liabilities and Share Capital

The current assets position at December 31, 2005 is comprised primarily of cash and investment
tax credits receivable. The decrease in cash for the year ended December 31, 2005 is primarily
the result of Biosign funding its continuing operations offset by proceeds from the issuance of
common shares. During the year ended December 31, 2005 Biosign issued 2,380,614 in Biosign
Shares for proceeds of $859,956 net of fees of $34,439.

Current liabilities are comprised primarily of trade payables and accrued liabilities and the Biosign
Notes. The Biosign Notes are convertible to Biosign Shares at the option of the holder, at a price
of $0.2667 per Biosign Share and are automatically convertible into Biosign Shares at a price of
$0.2667 per Biosign Share in connection with a “going public” transaction or other “liquidity” event
and will be deemed to be converted on Closing of the Amalgamation. During the year ended
December 31, 2005 Biosign issued $100,000 in Biosign Notes and converted $64,274, including
accrued interest of $851, of the Biosign Notes into 241,000 Biosign Shares at a price of $0.2667
per share.

Deferred Charges

Represents legal, accounting and other costs related to the proposed amalgamation with a CPC
company on the TSX-V.

Capital Assets

During the year ended December 31, 2005 Biosign purchased computer hardware totaling
$28,046.
                                          - 28 -

Liquidity and Solvency

Biosign had cash of $438,568 on December 31, 2005 and a working capital deficit of $1,497,104.
The decrease in cash during the year is the result of funding the operations of the company. The
working capital deficiency includes the Biosign Notes and accrued interest totalling $1,904,109,
which are convertible to Biosign Shares at the option of the holder, at a price of $0.2667 per
Biosign Share.

Management’s Discussion and Analysis – March 11, 2004 to December 31, 2004

The following discussion and analysis prepared by management of Biosign should be read in
conjunction with Biosign’s audited financial statements for the period ended December 31, 2004
and the related notes which are attached to this Listing Statement as Appendix B.

Revenues

Biosign had no revenue for the period March 11, 2004 to December 31, 2004.

Expenses

Salaries and benefits include all salary, bonus and benefits for Biosign employees and payments
under a contract with KBI Capital Corp. to provide the management services of Richard Potts.
Occupancy and communication expenses include office and storage space rental, repairs,
telephone and internet access. Professional fees include legal and tax fees associated with
establishing the business, financial statement audit fees, and consultant fees for researching
government programs on healthcare and financing. General expenses include office supplies,
travel and entertainment, amortization, insurance and security filing fees.

Net Loss

Biosign incurred a net loss of $1,145,642 in 2004.

Current Assets, Current Liabilities and Share Capital

The current assets position of Biosign in 2004 was comprised primarily of cash from Biosign’s
private placement financing of $2,400,000 which was comprised of $725,000 through the sale of
Biosign Shares and $1,675,000 through the sale of Biosign Notes. Biosign has used the funds
for continuing operations.

Current liabilities are comprised primarily of the Biosign Notes, which mature on October 30,
2005. On maturity, in the event that Biosign fails to complete an amalgamation, or such other
transaction, with a company that has the status of a reporting issuer in a province in Canada and
whose shares are listed on a recognized stock exchange in Canada, on or before October 30,
2005, the Biosign Note subscriber shall be issued one additional Biosign Share for each $0.2667
of outstanding Biosign Notes and accrued interest outstanding, by such subscriber for no
additional consideration. The Biosign Notes are convertible to Biosign Shares at the option of the
holder, at a price of $0.2667 per Biosign Share and are automatically convertible into Biosign
Shares at a price of $0.2667 per Biosign Share in connection with a “going public” transaction or
other “liquidity” event and will be deemed to be converted on Closing of the Amalgamation.

Share capital includes the founders’ capital, (150,000,000 Biosign Shares at a price of $0.00001
per Biosign Share for gross proceeds of $1,500.00) and the proceeds from the Biosign private
placement financing of 2,718,410 Biosign Shares at a price of $0.2667 per Biosign Share for
gross proceeds of $725,000.
                                                  - 29 -

       Capital Assets

       The capital assets of $26,983 reflect the $34,233 purchase of office equipment and computers
       net of accumulated amortization.

       Liquidity and Solvency

       Biosign had cash of $1,377,136 on December 31, 2004 and a working capital deficit of $446,125.
       The working capital deficiency includes the current portion of the Biosign Notes which are
       convertible to Biosign Shares at the option of the holder, at a price of $0.2667 per Biosign Share.

6.2    Overall Performance

       Refer to section 5.1 and 6.1.

6.3    Selected Annual Information

       Refer to section 5.1 and 6.1.

6.4    Period Variations

       Refer to section 5.1 and 6.1.

6.5    Results of Operations

       Refer to section 6.1.

6.6    Summary of Quarterly Results

       Biosign is not a reporting issuer and did not previously prepare quarterly financial statements.

6.7    Liquidity

       Refer to section 6.1.

6.8    Capital Resources

       Refer to section 6.1.



6.9    Off-Balance Sheet Arrangements

       This section is not applicable.



6.10   Transactions with Related Parties

       Refer to the Audited Financial Statements in Appendix B and C.

6.11   Fourth Quarter
                                                         - 30 -


       See discussion in sections 6.1 to 6.8.

6.12   Proposed Transaction

       Refer to section 2.4 and 25.2 for a discussion of the amalgamation.

6.13   Changes in Accounting Policies including Initial Adoption

       Refer to the Audited Financial Statements in Appendix B and C.

6.14   Financial Instruments and Other Instruments

       Refer to the Audited Financial Statements in Appendix B and C.

6.15 and 6.16             Interim MD&A

       See discussion in sections 6.1 to 6.8.

6.17   Additional Disclosure for Issuers without Significant Revenue

       Refer to section 6.1.

7.     Market for Securities

7.1    Prior to listing on the CNQ there was no public market for any securities of the Issuer. Karma
       was delisted from the TSXV on March 25, 2005 and since that date Karma’s shares have not
       been listed on any exchange or quotation system. Biosign was a private company prior to the
       Amalgamation and was not listed on any exchange or quotation system.

8.     Capitalization

       The following table sets forth the common share and loan capital of the Issuer as at the date of
       this Listing Statement after giving effect to the Amalgamation, and should be read in conjunction
       with the opening balance sheet attached in Appendix A hereto:

                    Capital                      Amount Authorized                Amount Outstanding as at July
                                                                                           14, 2006
        Convertible Notes                            Not Applicable                           nil
        Common shares                                   Unlimited                            $9,864,372
                                                                                    (57,497,373 common shares)

       Notes:

       (1)         At Closing of the Amalgamation, the Issuer had stock options outstanding entitling the holders to purchase
       3,030,000 common shares at a price of $1.00 per common share and common share purchase warrants outstanding
       entitling the holders to purchase 269,896 common shares at a price of $1.00 per common share.



9.     Options to Purchase Securities
                                                   - 31 -


       As part of the Amalgamation the Issuer created an incentive stock option plan (the “Plan”) as
       described below. The Issuer will issue options under the new Plan to certain officers, directors,
       consultants and employees of the Issuer. The purpose of the Plan is to provide compensation
       opportunities to directors, officers, consultants and employees to align their interests with those of
       shareholders and to assist the Issuer in attracting and retaining individuals of exceptional ability to
       serve the Issuer.

       The maximum number of shares reserved for issue under the Plan cannot exceed 10% of the
       outstanding common shares of the Issuer as at the date of the grant. The maximum number of
       common shares reserved for issue to any one person under the Plan cannot exceed 5% of the
       issued and outstanding of common shares at the date of the grant and the maximum number of
       common shares reserved for issuance to a consultant or a person engaged in investor relations
       activities cannot exceed 1% of the issued and outstanding common shares at the date of the
       grant. In the absence of disinterested shareholder approval, options in respect of not more than
       10% of the issued and outstanding common shares may be granted in any 12 month period.

       The exercise price of each option granted under the Plan may not be less than the greater of the
       closing prices of the common shares on the Exchange on (i) the last trading day prior to the day
       the option is granted and (ii) the date of grant of the stock option. Options may be granted for a
       maximum term of ten years, are non-assignable and expire within 90 days of termination of
       employment or holding office as a director or officer of the Issuer and, in the case of death, expire
       within one year thereafter. Upon death, the options may be exercised by legal representatives or
       designated beneficiaries of the holder of the option. The terms of a stock option cannot be
       amended once issued and if an option is cancelled prior to its expiry date the Issuer cannot grant
       a new option to the same person for a period of 30 days from the date of cancellation.

       In connection with the Amalgamation the Issuer issued 3,030,000 options to the officers,
       directors, employees and consultants of the Issuer which will be exercisable at a price of $1.00
       for a maximum ten year term, subject to such vesting requirements as determined by the board of
       directors of The Issuer, if any, and earlier termination in accordance with Exchange
       Requirements.

       Set out below are stock options which are currently issued and outstanding:
                                                                   Number of Options
                    Officers                                                1,360,000
                    Directors                                                 450,000
                    Employees                                                 465,000
                    Consultants                                               755,000
                                                                            3,030,000




10.    Prior Sales

10.1   Description of capital

       As of the date of this Listing Statement there are 57,497,373 common shares and 269,896
       common share purchase warrants issued and outstanding. The authorized capital of the Issuer
       consists of unlimited number of common shares having the following material characteristics:
                                                      - 32 -

        Common Shares

        The holders of common shares are entitled to dividends as and when declared by the Directors of
        the Issuer. They are also entitled to one vote per share on all matters at all meetings of the
        shareholders of the Issuer and, upon liquidation, are entitled to receive such assets of the Issuer
        as are distributable pro rata to the holders of the common shares. There are no pre-emptive
        rights or conversion rights attached to the common shares. There are also no redemption or
        purchase for cancellation or surrender provisions, sinking or purchase fund provisions, or any
        provisions as to modification, amendment or variation of any such rights or provisions attached to
        the common shares.

       Common Share Warrants

        Pursuant to the Private Placement completed by Karma and Biosign both Karma and Biosign
        issued common share warrants as part of the fee paid to eligible finders. Upon amalgamation the
        common share purchase warrants were exchanged for common share purchase warrants in the
        Issuer. Each common share purchase warrant entitles the holder thereof to purchase one
        common share of the Issuer at a price of $1.00 until July 13, 2007.

10.2    Prior Sale Prices

        In the last 12 months the Issuer has issued/cancelled the following common shares:

                                                                                                  Nature of
                                                Issue Price per
         Date            Number of Shares                              Gross Proceeds           Consideration
                                                    Share
                                                                                                  Received
 Balance of Shares
 outstanding at              3,756,667
 December 31, 2004
 April 16, 2006            (2,406,667) (1)         Cancelled

 July 12, 2006               10,000,000              $0.05                 $500,000                  Cash

 July 12, 2006              1,324,000(2)              $0.05                $66,200              Debt settlement
                                                                                               Agent finder fees
 July 12, 2006               380,000(3)               $0.05                $19,000              associated with
                                                                                               Private Placement
 Sub-Total Prior to
 Amalgamation                13,054,000

 July 14, 2006 (20-to-
 1 share
 consolidation
                              652,700
 pursuant to the
 Amalgamation
 Agreement)
 July 14, 2006
 (shares issued on                                                                              100% of Biosign
                             56,844,673
 acquisition of                                                                                 common shares
 Biosign)
 TOTAL:                      57,497,373

Notes:
(1)   All of these Karma Shares were sold to directors and officers of the Corporation and were placed in escrow
pursuant to an escrow agreement. In accordance with TSXV policies Karma did not complete its qualifying
                                                       - 33 -

transaction within the specified time and accordingly, the Karma’s shares were suspended from trading on February
21, 2003. On March 25, 2005, the TSXV delisted the securities of Karma, in accordance with TSXV policy for failure
to complete a Qualifying Transaction. As a result of the delisting all non-arms length escrow seed shares, a total of
2,406,667 Karma Shares, have been irrevocably cancelled as per the escrow agreement that relates to those shares.

(2)   Pursuant to the Amalgamation Agreement Karma settled $66,200 of its outstanding debt through the issuance
of common shares at a value of $0.05 per common share.

(3)   Pursuant to the terms of the Private Placement Agents were entitled to a finders fee which was payable in
cash or common shares.



10.3     Stock Exchange Price

         The Karma common shares were initially listed for trading on the TSXV under the trading symbol
         “KAC” on May 11, 2001. The Karma Shares were suspended from trading on February 20, 2003
         and subsequently delisted from the TSXV on March 25, 2005. Since February 20, 2003 the
         Karma shares have not been listed on any exchange or quotation system.



11.      Escrowed Securities
         Pursuant to the policies of the Exchange and an escrow agreement entered into by Biosign,
         Pacific Corporate Trust Company and the principal shareholders of Biosign (the “Escrow
         Agreement”), with the Escrow Agreement becoming effective upon the listing of the Issuer on the
         Exchange, there are 40,511,667 Issuer common shares held in escrow. The release of these
         shares from escrow is based on a time release formula as detailed in the chart below. In the
         event that the Issuer subsequently meets the criteria of an established issuer pursuant to National
         Policy 46-201 the release from escrow requirements may be amended in accordance with such
         policy which could result in a reduction in the period that the common shares are subject to
         escrow.


              Designation of class                 Number of securities
                held in escrow                       held in escrow                         Percentage of
                                                                                                class
                 Common Shares                            40,511,667                           70.5%



       Release from Escrow

            On the date Biosign's securities are listed on the                      1/10 of escrow securities
            Exchange (the listing date)
                                                                                    1/6 of remaining escrow
            6 months after the listing date
                                                                                    securities
                                                                                    1/5 of remaining escrow
            12 months after the listing date
                                                                                    securities
                                                                                    1/4 of remaining escrow
            18 months after the listing date
                                                                                    securities
                                                                                    1/3 of remaining escrow
            24 months after the listing date
                                                                                    securities
                                                                                    1/2 of remaining escrow
            30 months after the listing date
                                                                                    securities
                                                           - 34 -

                                                                                          remaining escrow
              36 months after the listing date
                                                                                          securities
          *In the simplest case, where there are no changes to the escrow securities initially deposited and
          no additional escrow securities, the release schedule outlined above results in the escrow
          securities being released in equal tranches of 15% after completion of the release on the listing
          date.

12.       Principal Shareholders
          As of the date of this Listing Statement, to the best of the knowledge of the Issuer, the only
          Persons who beneficially own, directly or indirectly, or exercise control or direction over, more
          than 10% of the voting rights attached to all of the outstanding shares of the Issuer are as follows:

  Shareholder and Municipality          Number of Common Shares and           Percentage of Common Shares - Basic/Fully
         of Residence                          Stock Options                                   Diluted

 Richard Potts                            Common Shares – 6,240,000                           10.9%/11.3%
 Toronto, Ontario                           Stock Options – 600,000
 Angela Potts                             Common Shares – 7,712,165                           13.4%/12.7%
 Toronto, Ontario                            Stock Options - nil
                (1)
 Dr. Radu Leca                            Common Shares – 20,385,000                          35.5%/34.2%
 Roseneath, Ontario                         Stock Options – 400,000


Note:
    (1)      Of these common shares, 17,175,000 are held indirectly through 2048703 Ontario Inc. and 3,210,000 are controlled
             directly by Dr. Radu Leca. 2048703 Ontario Inc. is a company controlled by Dr. Radu Leca. Dr. Radu Leca and Ms.
             Eva Kettle, who may be considered Associates of each other, own on a combined basis 83% of 2048703 Ontario Inc.
             Ms. Kettle owns directly 1,300,001 common shares and 180,000 Stock Options (2.3%/2.4%).
                                                                   - 35 -


13             Directors and Officers

13.1 to 13.5 Information about Directors and Officers

                                                                     Number of shares and
                                                                      options beneficially
       Name and                                                        owned directly or       Percentage of shares beneficially
      Municipality of                                               indirectly or over which    owned directly or indirectly or
       Residence                        Office Held                  control or direction is   over which control or direction is
                                                                           exercised            exercised – Basic/Fully Diluted
                  (2)
Suresh Kumar                Director - effective July 14, 2006      Common shares 50,001/                 0.1%/0.3%
Princeton, New                                                          Options 150,000
Jersey
                  (1)
Dr. Radu Leca               Director, President and Chief               Common shares                    35.5%/34.2%
Roseneath, Ontario          Technology Officer - effective July           20,385,000/
                            14, 2006 (held the same positions           Options 400,000
                            with Biosign since March 11, 2004)
                (2)
Richard Potts               Director, Chairman and Chief                Common shares                    10.9%/11.3%
Toronto, Ontario            Executive Officer - effective July            6,240,000/
                            14, 2006 (held the same positions           Options 600,000
                            with Biosign since March 11, 2004)
                      (2)
Jeffrey D. Puritt           Director – effective July 14, 2006          Common Shares                     2.0%/2.1%
Toronto, Ontario            (held the same positions with                 1,125,000/
                            Biosign since March 11, 2004)               Options 150,000

Dr. David Silver            Director - effective August 16, 2006      Common Shares Nil/                   Nil%/0.2%
                                                                        Options 150,000


Kevin Gilbride              Chief Financial Officer and             Common shares 850,001/                1.5%/1.7%
Pickering, Ontario          Corporate Secretary – effective             Options 180,000
                            July 14, 2006 (held the same
                            positions with Biosign since March
                            11, 2004)
Eva Kettle                  Vice-President Research –                   Common shares                     2.3%/2.4%
Roseneath, Ontario          effective July 14, 2006 (held the             1,300,001/
                            same positions with Biosign since           Options 180,000
                            March 11, 2004)
The aggregate number of common shares and options of the             Common shares basic                 52.1%/52.2%
Issuer beneficially owned, directly or indirectly, or over which        29,950,003/
control or direction will be exercisable by all directors and
                                                                      Common shares fully
officers of the Issuer as a group.
                                                                       diluted 31,760,003


Notes:

(1)       Of these common shares, 17,175,000 common shares are held indirectly through 2048703 Ontario Inc. and 3,210,000
          common shares are controlled directly by Dr. Radu Leca. 2048703 Ontario Inc. is a company controlled by Dr. Radu Leca.
(2)       Member of the Audit Committee and Compensation Committee.

            Suresh Kumar – Director

            Suresh Kumar is President and CEO of KaiZen Innovation a Management Consultancy firm. He
            serves as Distinguished Executive-in-Residence at Thunderbird, The Garvin School of
            International Management, and President and CEO of KaiZen Innovation and is a consultant to
            several leading organizations. Prior to founding KaiZen Innovation in 2004, Mr. Kumar served on
            Johnson & Johnson’s Group Operating Committee as International Vice President, Worldwide
            Consumer Pharmaceuticals from 1999 to 2003. From 1989 to 1999 Mr. Kumar was employed
            with Warner Lambert Company (now Pfizer) in various positions including Vice President,
            Consumer Products for Latin America and Asia. Mr. Kumar is actively engaged in a hands-on
            basis in Global Management, Social and Economic Development and Healthcare issues in the
                                          - 36 -

Americas, Europe, Asia and Africa. Mr. Kumar is an adjunct faculty member at Schulich School of
Business at York University, Toronto and at Bombay University, India. Mr. Kumar will devote the
amount of time to the business, operations and affairs of the Issuer as is required in connection
with his attendance at meetings of the board of directors from time to time and his consideration
of matters in connection therewith.

Dr. Radu Leca – Director, President and Chief Technology Officer

Dr. Radu Leca has been the President and Chief Technology Officer of Biosign since March,
2004. In 1995 Dr. Leca founded and incorporated Biosign Corporation which was involved in the
original development of the technology. From 1995 to December 2003, Dr. Leca worked for
Biosign Corporation and its successors holding various positions, including President and Chief
Technology Officer. Over the past 25 years, Dr. Leca has been engaged in medical practice and
biomedical research, with an emphasis on clinical monitoring and the metric framework for
biologic data interpretation. Dr. Leca holds a medical doctor diploma from the Medical School of
Timisoara, Romania. Dr. Leca will be employed by the Issuer and will devote 100% of his time to
the business, operations and affairs of the Issuer.

Richard A. Potts – Director, Chairman and Chief Executive Officer

Mr. Potts has been the Chairman and Chief Executive Officer of Biosign Technologies Inc. since
March 2004. From 1985 to present, Mr. Potts has been the President of KBI Capital Corp., a
private investment company assisting emerging businesses in finance, strategic and corporate
planning, mergers and acquisitions, human resource development and in developing investor
awareness. In 1986, Mr. Potts co-founded Imutec Pharma Inc. (now Lorus Therapeutics Inc.), a
biotechnology company listed on the TSX and AMEX, and served as its Chairman, President &
CEO until December, 1995. Mr. Potts will be employed by the Issuer and will devote 100% of his
time to the business, operations and affairs of the Issuer.

Jeffrey D. Puritt – Director

Jeffrey D. Puritt is Vice-President, Mergers and Acquisitions, TELUS Corporate Strategy. Since
joining TELUS in 2001, Mr. Puritt has held positions in Finance & Administration, IP Applications
Business Development, New Product & Service Development, Ventures and Mergers &
Acquisitions. Prior to Telus, Mr. Puritt was employed by Daedalian eSolutions Inc. as Vice
President, Corporate Development and General Counsel. From 1998 to August 2000, Mr. Puritt
was President and a Director of Astaware Technologies Inc., a TSXV listed company. In addition,
Mr. Puritt was counsel to a law firm, as well as to a health care company and to a software
company, from November 1994 to August 2000. Before that, and throughout the period following
his call to the Bar in Ontario in 1989, Mr. Puritt was an associate in the private practice of law.
Mr. Puritt is a member of the Law Society of Upper Canada and taught Business Law in the
Economics Department at York University from 1989 until 2000. He obtained his B.A. in Political
Science from York University in 1984 and is a 1987 graduate from Osgoode Hall Law School
holding a Bachelor of Laws degree. Mr. Puritt will devote the amount of time to the business,
operations and affairs of the Issuer as is required in connection with his attendance at meetings
of the board of directors from time to time and his consideration of matters in connection
therewith.

Dr. David Silver

Dr. David Silver is a Senior Scientist at the Milton S. Eisenhower Research and
Technology Development Center, Johns Hopkins University's Applied Physics Laboratory. He
joined the Laboratory in 1970. Currently, he is a member of the Principal Professional Staff,
the Laboratory's highest professional classification. The Applied Physics Laboratory is a not-for-
profit laboratory, an independent division of The Johns Hopkins University that conducts research
and development primarily for Unites States national security and other projects of national and
                                                    - 37 -

       global significance. Dr Silver will devote the amount of time to the business, operations and
       affairs of the Issuer as is required in connection with his attendance at meetings of the board of
       directors from time to time and his consideration of matters in connection therewith.

       Kevin Gilbride, CA – Chief Financial Officer and Corporate Secretary

       Kevin Gilbride has been the Chief Financial Officer of Biosign since March 2004; from January
       2003 to November 2003 he was Director of Finance and Administration for Biosign Corp. Mr.
       Gilbride was Manager, Finance & Administration at TELUS Enterprise Solutions from July 2001 to
       January 2003. From June 2000 to July 2001 he was Director, Finance & Administration at
       Daedalian eSolutions Inc., which was subsequently purchased by TELUS. From June 1998 to
       June 2000, Mr. Gilbride was Corporate Controller at InSystems Technologies Inc. From March
       1995 to June 1998, Mr. Gilbride was Director, Finance at The Goldfarb Corporation, following his
       tenure at KPMG Peat Marwick Thorne from September 1991 to February 1995. Mr. Gilbride is a
       Chartered Accountant and graduated from the University of Toronto with a Bachelor of Arts
       degree. Mr. Gilbride will be employed by the Issuer and will devote 100% of his time to the
       business, operations and affairs of the Issuer.

       Eva Kettle – Vice-President Research

       Eva Kettle has been Vice-President, Research of Biosign since March, 2004. From 1995 to
       November 2003 Ms. Kettle was employed by Biosign Corporation and its successors as Vice-
       President Research. Ms. Kettle has a master’s degree in computer science from Polytechnic
       Institute, Timisoara, Romania and has been engaged in various positions in the computer science
       field for over 20 years. Ms. Kettle will be employed by the Issuer and will devote 100% of her time
       to the business, operations and affairs of the Issuer.

13.6   Cease Trade Orders or Bankruptcies

       Except as set out below, no director, officer or promoter of the Issuer or a securityholder
       anticipated to hold a sufficient number of securities of the Issuer to affect materially the control of
       the Issuer, within 10 years of the date of this Listing Statement, has been a director, officer or
       promoter of any person or company that, while that person was acting in that capacity,

       (a)       was the subject of a cease trade or similar order, or an order that denied the other issuer
                 access to any exemptions under applicable securities law, for a period of more than 30
                 consecutive days; or

       (b)       became bankrupt, made a proposal under any legislation relating to bankruptcy or
                 insolvency or was subject to or instituted any proceedings, arrangement or compromise
                 with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

       Richard Potts:
       - Served as a Director, Chairman and Chief Operating Officer of Biosign Corp. On December
           22, 2003, Mr. Potts and Dr. Leca, operating in their capacity as Directors of Biosign Corp.
           filed an assignment in Bankruptcy in the Ontario Superior Court of Justice for Biosign Corp.
           and its subsidiary. On that date a trustee was appointed to manage the affairs of Biosign
           Corp. On March 9, 2004, the sale of the assets of Biosign Corp. and its subsidiary, to Mr.
           Potts in trust for himself and Dr. Leca, were approved by the Ontario Superior Court of
           Justice.

       -     Served as a Director of Brauch Database Systems Inc. (“Brauch”). On July 10, 2002, the
             British Columbia Securities Commission (the “BCSC”) issued a cease trade order against
             Brauch for its failure to file audited financial statements for the fiscal year ended January 31,
             2002 and interim financials statements for the period ended April 30, 2002 (collectively, the
                                                 - 38 -

           “Brauch Financial Statements”). In addition, the Alberta Securities Commission (the “ASC”)
           first issued an interim cease trade order dated August 30, 2002 and then a cease trade order
           dated September 13, 2002 against Brauch for its failure to file the Brauch Financial
           Statements. The cease trade orders issued by the BCSC and the ASC remain in effect. On
           August 26, 2002 a trustee was appointed by the Ontario Superior Court of Justice to manage
           the affairs of Brauch. On December 4, 2002 the Ontario Superior Court of Justice approved
           the sale of the assets of Brauch. On this same date Mr. Potts resigned from his position as a
           Director of Brauch.

       Dr. Radu Leca:
       - Served as a Director, President and Chief Technology Officer of Biosign Corp. On December
           22, 2003, Dr. Leca and Mr. Potts, operating in their capacity as Directors of Biosign Corp.
           filed an assignment in Bankruptcy in the Ontario Superior Court of Justice for Biosign Corp.
           and its subsidiary. On that date a trustee was appointed to manage the affairs of Biosign
           Corp. On March 9, 2004, the sale of the assets of Biosign Corp. and its subsidiary, to Mr.
           Potts in trust for himself and Dr. Leca, were approved by the Ontario Superior Court of
           Justice.


13.7   Penalties or Sanctions

       No director, officer or promoter of the Issuer, or a securityholder anticipated to hold sufficient
       securities of the Issuer to affect materially the control of the Issuer, has:

       (a) been subject to any penalties or sanctions imposed by a court relating to Canadian securities
           legislation or by a Canadian securities regulatory authority or has entered into a settlement
           agreement with a Canadian securities regulatory authority; or

       (b) been subject to any other penalties or sanctions imposed by a court or regulatory body that
           would be likely to be considered important to a reasonable investor making an investment
           decision.

13.8   Personal Bankruptcies
       No director, officer or promoter of the Issuer, or a securityholder anticipated to hold sufficient
       securities of the Issuer to affect materially the control of the Issuer, or a personal holding
       company of such persons has, within the 10 years before the date of this Listing Statement,
       become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or
       been subject to or instituted any proceedings, arrangement or compromise with creditors, or had
       a receiver, receiver manager or trustee appointed to holder the assets of the director, officer or
       promoter.

13.9   Conflicts of Interest
       Some of the directors and officers of the Issuer are also directors, officers and/or promoters of
       other reporting and non-reporting issuers. Accordingly, conflicts of interest may arise which could
       influence these persons in evaluating possible acquisitions or in generally acting on behalf of the
       Issuer, notwithstanding that they are bound by the provisions of the Business Corporations Act
       (Ontario) to act at all times in good faith in the best interests of the Issuer and to disclose such
       conflicts to the Issuer if and when they arise.


13.10 Information about Management
                                                     - 39 -

        Refer to section 13.1 for information about Management of the Issuer.


14.     Capitalization

14.1    Prepare and file the following chart for each class of securities to be listed:
                                            Number of               Number of        % of Issued         % of
                                             Securities             Securities      (non-diluted)       Issued
                                           (non-diluted)          (fully-diluted)                   (fully diluted)
 Public Float

 Total outstanding (A)                           57,497,373          60,797,269           100.0%            100.0%

 Held by Related Persons or                      39,189,172          41,874,172            68.2%              68.9%
 employees of the Issuer or
 Related Person of the Issuer, or
 by persons or companies who
 beneficially own or control,
 directly or indirectly, more than
 a 5% voting position in the
 Issuer (or who would
 beneficially own or control,
 directly or indirectly, more than
 a 5% voting position in the
 Issuer upon exercise or
 conversion of other securities
 held) (B)

 Total Public Float (A-B)                        18,308,201          18,923,097            31.8%              31.1%


 Freely-Tradeable Float
                                                            (1)
 Number of outstanding                         36,460,501          37,819,500(1)           63.4%              62.2%
 securities subject to resale
 restrictions, including
 restrictions imposed by pooling
 or other arrangements or in a
 shareholder agreement and
 securities held by control block
 holders (C)


 Total Tradeable Float (A-C)                     21,036,872          22,977,769            36.6%              37.8%

(1) Refer to section 11 re Escrowed Securities, amount above is less 10% of escrowed shares released on listing on
the CNQ.
                                                  - 40 -


Public Securityholders (Registered)
       To the best knowledge of the Issuer the following is the distribution of the “public securityholders”
       as at August 16, 2006.

Common Shares

Size of Holding                        Number of holders                Total number of securities

1 – 99 securities                                          161                                    8,025

100 – 499 securities                                        52                                    9,125

500 – 999 securities                                        26                                   14,550

1,000 – 1,999 securities                                    11                                   15,020

2,000 – 2,999 securities                                      9                                  20,175

3,000 – 3,999 securities                                      8                                  29,500

4,000 – 4,999 securities                                      1                                   4,600

5,000 or more securities                                   209                              18,207,206

                                                           477                              18,308,201

Public Securityholders (Beneficial)
       To the best knowledge of the Issuer the following is the distribution of the “public securityholders
       (beneficial)” as at August 16, 2006.

Common Shares

Size of Holding                        Number of holders                Total number of securities

1 – 99 securities                                             0                                        0

100 – 499 securities                                          0                                        0

500 – 999 securities                                          0                                        0

1,000 – 1,999 securities                                      1                                   1,470

2,000 – 2,999 securities                                      8                                  18,100

3,000 – 3,999 securities                                      8                                  29,500

4,000 – 4,999 securities                                      1                                   4,600

5,000 or more securities                                   195                              18,187,031

Unknown                                                    253                                   67,500

                                                           466                              18,308,201
                                                - 41 -


Non-Public Securityholders (Registered)
        For the purposes of this report, "non-public securityholders" are persons enumerated in section
        (B) of the issued capital chart.


 Amalco Common Shares

 Size of Holding                      Number of holders              Total number of securities

 1 – 99 securities                                        Nil                                     Nil

 100 – 499 securities                                     Nil                                     Nil

 500 – 999 securities                                     Nil                                     Nil

 1,000 – 1,999 securities                                 Nil                                     Nil

 2,000 – 2,999 securities                                 Nil                                     Nil

 3,000 – 3,999 securities                                 Nil                                     Nil

 4,000 – 4,999 securities                                 Nil                                     Nil

 5,000 or more securities                                 26                            39,189,172

                                                          26                            39,189,172

14.2    Details for any securities convertible or exchangeable into any class of
        listed securities

    Description of Security           Number of convertible /           Number of listed securities
                                      exchangeable securities           issuable upon conversion /
                                           outstanding                           exercise
Amalco Options – see section                3,030,000                            3,030,000
9.1 for description
Amalco Warrants see section                    269,896                            269,896
10.1 for description

14.3      Other than as disclosed in section 14.1 and 14.2 there are no other securities reserved for
          issuance
                                                           - 42 -


15.       Executive Compensation

          Management services for the Issuer are not, to any material degree, performed by persons other
          than the executive officers of the Issuer.

          The following disclosure sets out the compensation paid by the Issuer to each Chief Executive
          Officer (“CEO”), each Chief Financial Officer (“CFO”) and each of the Company’s three most
          highly compensated executive officers, other than the CEO or CFO (“Executive Officers”) who
          were paid, by way of salary and bonus, not less than $150,000 per year for the three most
          recently completed financial years of the Issuer.


                                                        Annual Compensation                       Long-Term Compensation
        Name and Position          Period        Salary      Bonus      Other Annual              Securities   All Other
                                   ended          ($)          ($)      Compensation             Under Stock Compensation
                                                                             ($)                   Options
 Richard Potts, Chairman            2005        275,000        Nil           -(1)                     Nil               Nil
 and Chief Executive Officer        2004          Nil          Nil        276,655(2)                  Nil               Nil

 Dr. Radu Leca, Director,           2005        275,000             Nil             -(1)              Nil               Nil
 President and Chief                2004        261,223             Nil          42,432(3)            Nil               Nil
 Technology Officer

 Eva Kettle, Vice-President         2005        135,000             Nil             -(1)              Nil               Nil
 Research                           2004        108,508             Nil             -(1)              Nil               Nil
 Kevin Gilbride, Chief              2005        135,000             Nil             -(1)              Nil               Nil
 Financial Officer                  2004        108,508             Nil             -(1)              Nil               Nil
 Sydney W.K. Au, (former            2005          N/A               N/A             N/A               N/A               N/A
 Chairman and Chief
 Executive Officer)(4) (5)
 Jack Miller(former                 2005           Nil              Nil             Nil               Nil               Nil
 President, CEO and                 2004           Nil              Nil             Nil               Nil               Nil
 Director) (4) (5)                  2003           Nil              Nil             Nil               Nil               Nil
 Dominique Borrelly                 2005           Nil              Nil             Nil               Nil               Nil
 Chief Financial Officer and        2004           Nil              Nil             Nil               Nil               Nil
 Director (5)                       2003           Nil              Nil             Nil               Nil               Nil

Notes:
  (1)     Other benefits do not exceed the lesser of $50,000 and 10% of the total annual salary for the Named Executive
          Officers.
  (2)     Compensation paid as fees under management contract with KBI Capital Corp. for the management services of Richard
          Potts. The management contract was replaced with an employment agreement with Mr. Potts effective January 1,
          2005. Compensation includes $261,223 in consulting fees and $15,432 for vehicle and home office allowance.
  (3)     Includes $15,432 for vehicle and home office allowance plus consulting fees and expenses of $27,000 paid to 2048703
          Ontario Inc., a company controlled by Dr. Radu Leca. Dr. Radu Leca and Ms. Eva Kettle, who may be considered
          Associates of each other, own on a combined basis 83% of 2048703 Ontario Inc.
  (4)     Effective May 10, 2006 Mr. Sydney W.K. Au was appointed Chairman and CEO of Karma and Mr. Jack Miller was
          appointed Vice-President Corporate Restructuring.
  (5)     Effective July 14, 2006 on the amalgamation of Karma and Biosign the former “Named Executive Officers” of Karma,
          Mr. Sydney W.K. Au, Mr. Jack Miller and Mr. Dominique (“Nick”) Borrelly resigned from the Issuer and were
          replaced by the management of Biosign.
                                            - 43 -

Biosign has a policy to enter into employment contracts with each of its senior consultants and
employees which include, among other things, non-competition, confidentiality, intellectual
property and non-solicitation clauses. Senior management contracts provide for an annual salary
and benefits together with performance bonuses payable upon the achievement of certain goals
and corporate objectives. These contracts were assumed by the Issuer on the Amalgamation.

Richard A. Potts

Richard A. Potts, the Chairman and Chief Executive Officer of the Issuer, is retained pursuant to
an employment contract. The contract provides for a base compensation of $275,000 plus
benefits and a performance bonus payable upon the achievement of certain goals and corporate
objectives. The agreement also contains certain non-competition and non-disclosure provisions
and is subject to certain termination provisions. In the event of termination, Mr. Potts is entitled to
a lump sum payment equal to eighteen months salary, bonus and pro-rata benefits, if such
termination is within the first twelve months of employment, and if it is thereafter then one
additional month of salary and pro-rata benefits for each additional completed six-month period of
employment to a maximum of 24 months.

Dr. Radu Leca

Dr. Radu Leca, the President and Chief Technology Officer of the Issuer, is retained pursuant to
an employment contract effective. The contract provides for a base compensation of $275,000
plus benefits and a performance bonus payable upon the achievement of certain goals and
corporate objectives. The agreement also contains certain non-competition and non-disclosure
provisions and is subject to certain termination provisions. In the event of termination, Dr. Leca is
entitled to a lump sum payment equal to eighteen months salary, bonus and pro-rata benefits, if
such termination is within the first twelve months of employment, and if it is thereafter then one
additional month of salary and pro-rata benefits for each additional completed six-month period of
employment to a maximum of 24 months.

Ms. Eva Kettle

Ms. Eva Kettle, the Vice-President Research of the Issuer, is retained pursuant to an employment
contract. The contract provides for a base compensation of $135,000 plus benefits and a
performance bonus payable upon the achievement of certain goals and corporate objectives.
The agreement also contains certain non-competition and non-disclosure provisions and is
subject to certain termination provisions. In the event of termination, Ms. Kettle is entitled to a
lump sum payment equal to twelve months salary, bonus and pro-rata benefits, if such
termination is within the first twelve months of employment, and if it is thereafter then one
additional month of salary and pro-rata benefits for each additional completed year of
employment to a maximum of 24 months.

Mr. Kevin Gilbride

Mr. Kevin Gilbride, the Chief Financial Officer and Corporate Secretary of the Issuer, is retained
pursuant to an employment contract effective. The contract provides for a base compensation of
$135,000 plus benefits and a performance bonus payable upon the achievement of certain goals
and corporate objectives. The agreement also contains certain non-competition and non-
disclosure provisions and is subject to certain termination provisions. In the event of termination,
Mr. Gilbride is entitled to a lump sum payment equal to twelve months salary, bonus and pro-rata
benefits, if such termination is within the first twelve months of employment, and if it is thereafter
then one additional month of salary and pro-rata benefits for each additional completed year of
employment to a maximum of 24 months.
                                                  - 44 -

      Compensation of Directors

      Prior to the amalgamation of Karma and Biosign the Issuer paid no cash compensation (including
      salaries, director’s fees, commissions, bonuses paid for services rendered, bonuses paid for
      services rendered in a previous year, and any compensation other than bonuses earned by the
      directors for services rendered) to the directors for services rendered in their capacities as
      directors or otherwise and the Issuer had no standard arrangement pursuant to which directors
      are compensated for their services.

      On completion of the Amalgamation non-management Directors of the Issuer will be paid a
      directors fee of $20,000 per annum in respect of services thereof. In addition Directors who are
      member of the audit committee will receive a per annum fee of $10,000 and Directors who are
      members of the compensation committee will receive a per annum fee of $5,000. In addition
      Directors will be reimbursed for out of pocket expenses in respect of meeting attendance.


16.   Indebtedness of Directors and Executive Officers
      None of the executive officers or directors of the Issuer, or associates or affiliates of such
      persons:
          (a)   are or have been indebted to the Issuer or Biosign at any time; or
          (b)   are or have been indebted to another entity at any time where that indebtedness was
                the subject of a guarantee, support agreement, letter of credit or other similar
                arrangement or understanding provided by the Issuer or Biosign.

17    Risk Factors

      Biosign’s common shares should be considered highly speculative due to the nature of the
      company’s business and the present stage of its development. In evaluating the company and its
      business, shareholders should carefully consider, in addition to the other information contained in
      this Listing Statement, the following risk factors. These risk factors are not a definitive list of all
      risk factors associated with Biosign or in connection with its operations.

      Technology companies in the commercialization stage are subject to a number of risks and
      uncertainties that are inherent to the development of any new technology. General business risks
      include, among other things, uncertainty in product development and related clinical trials and
      studies, the regulatory environment including delays or denial of approval to market products, the
      impact of technological change and competing technologies, the ability to protect and enforce
      intellectual property assets, the availability of capital to finance continued and new product
      development, the ability to secure strategic collaborators and reliance on these collaborators for
      the development, regulatory approval, testing, manufacturing and commercialization of products
      and the risk of product liability claims. In addition, market prices for securities of medical
      technology companies are generally volatile, and may or may not move in a manner consistent
      with the progress being made by such company. To the extent possible, Biosign’s management
      pursues and implements strategies to reduce or mitigate the risks and uncertainties associated
      with its business.

      An investment in the securities of the Issuer is speculative due to the proposed nature of
      Biosign’s business and the present stage of Biosign’s development. Consequently, an
      investment in the Issuer will be subject to certain risks and investors should not invest in
      securities of the Issuer unless they can afford to lose their entire investment. In addition to
      the factors disclosed elsewhere in this Listing Statement, investors should consider the
      following risk factors in assessing the investment merits of such securities and the
      business of Biosign.
                                           - 45 -

Biosign has a limited history and may not achieve or maintain profitability.

Biosign has a limited operating history on which to base an evaluation of its business and
prospects. As such, Biosign’s business is essentially dependent on, among other things, its
success in commercializing its technology. There is no assurance that there will be market
acceptance of any of Biosign's products. There is no significant historical basis to assess how
Biosign, as a company whose business involves new and rapidly developing technologies, will
respond to competitive, economic and technological challenges. If Biosign fails to meet any of
these challenges, its operating results could suffer.

Biosign has not generated any revenues and has not yet achieved profitability and there is no
guarantee that Biosign will be able to generate revenues or achieve profitability in the future.
Biosign has never paid a dividend on any class of its shares and does not expect to do so in the
foreseeable future. Biosign’s business and prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in new and rapidly evolving
markets such as healthcare.

Biosign cannot predict if profitability will ever be achieved and, if it is, whether or not it will be
sustainable on a quarterly or an annual basis. Biosign has limited financial resources. Biosign
may need to raise additional capital in the future and additional financing may not be available,
and even if available, may not be on acceptable terms. Biosign may seek to raise additional
capital though an offering of common shares, preference shares or debt, which may result in
dilution or the issuance of securities with rights senior to the rights, of the holders of common
shares.

Biosign may require regulatory approval for its products before they can be sold.

Medical Devices, such as Biosign’s UFIT-TEN series, must receive regulatory approval before
they can be sold in North America, the European Union, and other countries, which can take
significant time and be very costly.

The development, manufacture and sale of Medical Devices in Canada, the United States and
internationally is governed by a variety of statutes and regulations. These laws require, among
other things:

    -   approval of manufacturing facilities and practices;

    -   adequate and well-controlled research and testing of products in clinical tests;

    -   review and approval of submissions containing manufacturing and clinical test data in
        order to obtain marketing approval based on establishing the safety and efficacy of the
        product for each use sought, including adherence to good manufacturing practices during
        production and storage; and

    -   control of marketing activities, including advertising and labelling.

There is no assurance that regulatory clearances will be granted on a timely basis or if ever.
Biosign may incur significant costs in obtaining or maintaining regulatory clearances or approvals.
Failure to obtain regulatory approvals or clearances or significant costs incurred in connection
therewith could have a material adverse effect on Biosign's business.

Federal, state and foreign regulations regarding the manufacture and sale of healthcare products
and diagnostic devices are subject to future change. Biosign cannot predict what material impact,
if any, these changes might have on its business. Future changes in regulations or enforcement
policies could impose more stringent requirements on Biosign, compliance with which could
                                           - 46 -

adversely affect its business. These changes may relax some requirements, which could prove
beneficial to Biosign's competitors and thus adversely affect its business. In addition, these
regulations depend heavily on administrative interpretations. There is no assurance that future
interpretations made by any regulatory authorities, with possible retroactive effect, will not
adversely affect Biosign's business, financial condition and results of operations.

There is no assurance that Biosign will be able to obtain necessary regulatory clearances or
approvals on a timely basis, if at all. Delays in the receipt of, or failure to receive, these
clearances or approvals, or failure to comply with existing or future regulatory requirements would
have a material adverse effect on its business, financial condition and results of operations.

Biosign’s success depends on the successful commercialization of its technology.

The successful commercialization of Biosign’s technology is crucial for its success. The
technology is in various stages of commercial development and face a variety of risks and
uncertainties. Principally, these risks include the following:

    -   future clinical test results may show that some or all of Biosign’s products do not satisfy
        regulatory demands of a given market;

    -   even if Biosign’s products are regulatory approved for use in a given market, Biosign may
        face significant or unforeseen difficulties in manufacturing and distributing its products in
        that market;

    -   even if Biosign’s products are successfully developed, receive all necessary regulatory
        approvals and are commercially produced, there can be no guarantee regarding the
        commercial viability and profitability of any of the Biosign products or that they will not
        cause unanticipated side effects in patients. Biosign’s ability to achieve market
        acceptance for any of its products will depend on a number of factors, including whether
        or not competitors may develop products which are superior to, or less costly than,
        Biosign’s products, with the result that Biosign products, even if they are successfully
        developed, manufactured and approved, may not generate significant revenues.

If Biosign is unsuccessful in dealing with any of these risks, or if it is unable to successfully
commercialize its technology for some other reason, it would seriously harm Biosign’s ability to
generate revenue.

Biosign depends on its ability to develop new products.

New technological or product developments may render Biosign’s products obsolete or reduce
their value. Biosign’s future prospects are highly dependent on its ability to develop products that
better address needs and achieve market acceptance. There can be no assurance that Biosign
will be successful in these efforts.

There are significant risks, expenses and difficulties frequently encountered in developing and
maintaining products in the evolving medical devices industry, which is highly regulated and
competitive, with an increasing number of market entrants, and a high failure rate. Further there is
a significant risk in the early stage of product development that the product will fail to operate as
intended. There are no assurances that development of new products will be completed in time
or within budget. To date, Biosign's products have only been manufactured in limited quantities
and not on a large commercial scale. Although Biosign is confident that the production of its
existing commercial-stage product is feasible, significant challenges could be encountered in
shifting to commercial production and there can be no assurances that the products will be
commercially viable. Biosign lacks established distribution channels and an experienced sales
                                           - 47 -

force, both of which will be necessary to achieve commercial success. There is no assurance
Biosign will be able to establish either of these.

Biosign depends on its strategic collaborators for the development, regulatory approval, testing,
manufacturing and the potential commercialization of its products.

Biosign’s strategy will be to enter into various arrangements with third parties to support or
accelerate research, development, clinical testing, regulatory approval, manufacturing, and
marketing for the commercialization of its products. Those strategic collaborators are important
to the profitability of Biosign’s business and Biosign may have little control over the outcome of
such collaborations.

The conduct of manufacturing operations is subject to numerous risks, including unanticipated
technological problems and delays. The manufacture of Biosign’s hardware components is
subject to the current regulations prescribed by ISO 13485, the FDA and authorities in other
countries where such products or product components are manufactured. Although Biosign
believes it is currently in compliance with applicable regulations, there can be no assurance that
Biosign, or any entity manufacturing products or components on behalf of Biosign, will be able to
comply with such manufacturing regulations or satisfy regulatory inspections in connection with
the manufacture of Biosign’s products. Failure or delay by Biosign or any third-party
manufacturer of Biosign’s products or product components to comply with such regulations or to
satisfy regulatory inspections could have a material adverse effect on Biosign’s business and
operations.

Biosign has no experience in marketing and selling its products. In order to achieve commercial
success for its approved products, Biosign will have to develop an effective marketing and sales
force or enter into further arrangements with third parties to market and sell its products. If
Biosign develops its own marketing and sales capabilities, it will be competing with other
companies that currently have experienced and well-funded marketing and sales operations. To
the extent that Biosign enters into co-promotion or other marketing and sales arrangements with
other companies, any revenues received will be dependent on the efforts of others, and Biosign
does not know whether these efforts will be successful. Failure to develop a direct sales and
marketing force or enter into appropriate arrangements with other companies to market and sell
its products will reduce Biosign’s ability to generate revenues.

Failure to obtain and protect intellectual property could adversely affect Biosign’s business.

Biosign’s success will depend, in part, on its ability to obtain patents, or licenses to patents,
maintain trade secret protection and enforce its rights against others. Biosign may not be able to
obtain patent protection for its technology such as new mathematical formulations as they may
fall beyond the scope of patenting. The patent positions of pharmaceutical, biotechnology and
medical device companies are uncertain and involve complex legal and factual questions for
which important legal issues are largely unresolved. In addition, the coverage claimed in a patent
application can be significantly reduced before a patent is issued. There can be no assurance
that:

    -   patent applications will result in the issuance of patents;

    -   additional proprietary products developed will be patentable;

    -   patents issued will provide adequate protection or any competitive advantages;

    -   patents will not be successfully challenged by any third parties; or

    -   the patents of others will not impede Biosign’s ability to commercialize its technology.
                                            - 48 -

Patent protection may not be available based on prior art. The publication of discoveries in the
scientific or patent literature often lags behind actual discoveries. As a consequence, there may
be uncertainty as to whether Biosign was the first creator of inventions. Moreover, Biosign might
have to participate in interference proceedings or other proceedings, including oppositions, to
determine priority of invention or patentability. An unfavourable outcome in an interference or
opposition proceeding could preclude Biosign from making, using or selling products using the
technology or require Biosign to obtain license rights from prevailing third parties. Biosign does
not know whether any prevailing party would offer it a license on commercially acceptable terms,
if at all.

Biosign does not know whether the patents that it may be able to obtain in the future would be
held valid or enforceable by a court or whether a competitor’s technology or product would be
found to infringe such patents.

Biosign may need to obtain licenses for the development of its products. Licenses may not be
available on satisfactory terms or at all. If available, these licenses may obligate Biosign to
exercise diligence in bringing its technology to market and may obligate it to make minimum
guarantee or milestone payments. These diligence and milestone payments may be costly and
could seriously harm Biosign’s business. Biosign may also be obligated to make royalty
payments on the sales, if any, of products resulting from licensed technology and may be
responsible for the costs of filing and prosecuting patent applications. These costs could affect
Biosign’s results of operations and decrease its earnings.

Biosign’s intellectual property includes trade secrets and know-how that are not protected by
patents. There can be no assurance that Biosign will be able to protect its trade secrets. To help
protect its rights, Biosign requires employees, consultants, advisors and collaborators to enter
into confidentiality agreements. These agreements may not adequately protect Biosign’s trade
secrets, know-how or other proprietary information in the event of any unauthorized use or
disclosure.

Biosign may incur substantial costs as a result of litigation or other proceedings relating to patent
and other intellectual property rights.

Biosign’s future success and competitive position depends in part on its ability to obtain and
maintain certain proprietary intellectual property rights used in its principal product candidates.
Any such success may be achieved in part by prosecuting claims against others who Biosign
believes are infringing its rights and by defending claims of intellectual property infringement
brought by its competitors and others. Biosign’s involvement in intellectual property litigation
could result in significant expense, adversely affecting the development of product candidates or
sales of the challenged product or intellectual property and diverting the efforts of its technical
and management personnel, whether or not such litigation is resolved in its favour. Some of
Biosign’s competitors may be able to sustain the costs of complex litigation more effectively than
Biosign can because they have substantially greater resources. Uncertainties resulting from the
initiation and continuation of any litigation could affect Biosign’s ability to continue its operations.
In the event of an adverse outcome as a defendant in any such litigation, Biosign may, among
other things, be required to:

    -   pay substantial damages;

    -   cease the development, manufacture, use or sale of product candidates or products that
        infringe upon the intellectual property of others;

    -   expend significant resources to design around a patent or to develop or acquire non-
        infringing intellectual property;
                                            - 49 -


    -   discontinue processes incorporating infringing technology; or

    -   obtain licenses to the infringed intellectual property.

There is no guarantee that Biosign would be successful in developing or acquiring non-infringing
intellectual property or that necessary licenses would be available upon reasonable terms, if at
all. Any such development, acquisition or license could require the expenditure of substantial
time and other resources and could have a material adverse effect on Biosign’s business and
financial results. If Biosign does not obtain such licenses, it could encounter delays in any
introduction of products or could find that the development, manufacture or sale of products
requiring such licenses could be prohibited.

If third-parties file patent applications, or are issued patents claiming technology also claimed by
Biosign in pending applications, Biosign may be required to participate in interference
proceedings or other proceedings, including oppositions, to determine priority of invention or
patentability, which could result in substantial cost to Biosign even if the eventual outcome were
favourable.

Biosign’s ability to operate could be hindered by the proprietary rights of others.

A number of pharmaceutical, biotechnology and medical device companies and research and
academic institutions have developed technologies, filed patent applications or received patents
on various technologies that may be related to Biosign’s business. Some of these technologies,
applications or patents may conflict with or adversely affect Biosign’s technologies or intellectual
property rights. Biosign is not aware of other parties with intellectual property rights that may
represent prior art or other potentially conflicting intellectual property. Any conflicts with the
intellectual property of others could limit the scope of the patents, if any, that Biosign may be able
to obtain or result in the denial of its patent applications altogether.

If patents that cover its activities are issued to other persons or companies, Biosign could be
charged with infringement. In the event that other parties’ patents cover any portion of its
activities, Biosign may be forced to develop alternatives or negotiate a license for such
technology. Biosign does not know whether it will be successful in either developing alternative
technologies or acquiring licenses upon reasonable terms, if at all. Any such license could
require the expenditure of substantial time and other resources and could harm Biosign’s
business and decrease its earnings. If it does not obtain such licenses, Biosign could encounter
delays in the introduction of its products or could find that the development, manufacture or sale
of products requiring such licenses is prohibited.

Biosign’s development programs and products subject it to the risk of product liability claims for
which Biosign may not be able to obtain adequate insurance coverage.

Medical devices involve the risk of product liability claims and associated adverse publicity.
Biosign’s principal risks relate to the sales of its products and their future use in clinical trials.
Claims may be made by consumers, healthcare providers, third party strategic collaborators or
others selling Biosign’s products. There can be no assurance that Biosign will be able to obtain
or maintain sufficient and affordable insurance coverage for any of these claims. Without
sufficient coverage, any claim, any threat of such a claim or any product withdrawal could
seriously harm Biosign’s business.

Biosign could face significant competition.

Competition from pharmaceutical companies, medical device companies, biotechnology
companies and academic and research institutions is expected to increase. Many of Biosign’s
competitors and potential competitors have substantially greater capital resources, name
                                           - 50 -

recognition, research and product development capabilities, experience conducting clinical trials
and financial, scientific, manufacturing, sales and marketing resources and experience than it
has. Many of these competitors offer well-established, broad product lines and ancillary services
that Biosign does not offer.       Some competitors have long-term or preferential supply
arrangements with physicians, medical clinics and hospitals and other purchasing organizations
which may act as a barrier to market entry for Biosign's products. Other companies may:

    -   develop and patent products earlier than Biosign;

    -   obtain regulatory approvals for such products more rapidly;

    -   obtain patent protection for such products earlier than Biosign; or

    -   develop more effective or less expensive products.

While Biosign will seek to expand its technological capabilities in order to remain competitive,
there is a risk that research and development by others will render its technology or product
candidates obsolete or non-competitive.

The commercial potential of Biosign’s products and product candidates will be significantly limited
if Biosign is not able to obtain adequate levels of reimbursement or market acceptance for them.

Biosign’s ability to commercialize its technology will depend in part on the extent to which
reimbursement for the cost of such products will be available from government health
administration authorities, private health insurers and other organizations or supported by the
market for these products. There can be no assurance that third-party insurance coverage and
reimbursement will be available for the products Biosign might develop. Third-party payers are
increasingly challenging the price of medical products and services. In some countries in Europe,
significant uncertainty exists as to the reimbursement status of newly approved healthcare
products, and Biosign does not know whether adequate third party coverage will be available for
it to realize an appropriate return on its investment in product development, which could seriously
harm Biosign’s business. In the United States, while reimbursement amounts previously
approved appear to provide a reasonable rate of return, there can be no assurance that this will
continue to be the case due to proposed health care reforms. Efforts by governmental and third-
party payers to reduce health care costs or the announcement of legislative proposals or reforms
to implement government controls could cause a reduction in sales or in the selling price of
Biosign’s products, which could seriously harm its business. Further, Biosign cannot be certain
that its products will gain commercial acceptance among pharmaceutical and clinical research
organizations, physicians, patients and health care payers, even if necessary international and
U.S. marketing approvals are maintained. Acceptance among pharmaceutical and clinical
research organizations, physicians and other potential users may also depend upon the
willingness of such users to learn these relatively new techniques.

Even if some of Biosign’s products and manufacturing facilities receive regulatory approval, those
products and facilities may still face subsequent regulatory difficulties.

If Biosign receives regulatory approval to sell any of its products, regulatory agencies may limit
the approval to certain diseases, conditions or categories of patients who can use them. In
addition, regulatory agencies subject a marketed product, its manufacturer and the
manufacturer’s facilities to ongoing regulatory requirements. Regulatory agencies may also
require expensive post-approval studies. Any adverse effects associated with Biosign’s products
must also be reported to regulatory authorities. If new data are developed, previously unknown
adverse experiences with a product occur, deficiencies in Biosign’s manufacturing and laboratory
facilities are discovered, or it fails to comply with applicable post-market regulatory requirements,
a regulatory agency may impose restrictions on that product or on Biosign including the
                                           - 51 -

requirement to withdraw the product from the market, close the facility, suspend manufacturing,
change the product’s label or pay substantial fines.

Biosign may incur losses associated with foreign currency fluctuations.

Biosign’s operations are in some instances conducted in currencies other than the Canadian
dollar and fluctuations in the value of foreign currencies relative to the Canadian dollar could
cause Biosign to incur currency exchange losses. In addition to the Canadian dollar, Biosign
currently conducts some operations in U.S. dollars. Exchange rate fluctuations may reduce
Biosign’s future operating results.

Biosign may incur significant costs complying with environmental laws and regulations.

Biosign’s current research and development processes do not involve the use of hazardous or
radioactive materials but future research and development may involve the use of hazardous or
radioactive materials. Biosign is subject to federal, provincial, local and other laws and
regulations governing the use, manufacture, storage, handling and disposal of such materials and
certain waste products. The risk of accidental contamination or injury from these materials
cannot be completely eliminated. In the event of an accident, Biosign could be held liable for any
damages that result and any such liability could exceed its resources. Biosign is not specifically
insured with respect to this liability, and it does not know whether it will be required to incur
significant costs to comply with environmental laws and regulations in the future, or whether its
operations, business or assets will be harmed by current or future environmental laws or
regulations.

If Biosign fails to hire and retain key management, scientific and technical personnel, it may be
unable to successfully implement its business plan.

The success of Biosign is dependent upon the skills, experience and efforts of certain key
management and development personnel including Dr. Radu Leca, President and Chief
Technology Officer and Mr. Richard Potts, Chairman and Chief Executive Officer. The loss of
services of one or more of these individuals could have a material adverse effect on Biosign.
Currently, Biosign maintains a key-man life insurance policy on Mr. Potts and is seeking
insurance for Dr. Leca. Although certain key personnel have entered into agreements that
prohibit employment with a competitor for a period of 18 months following their employment with
the Biosign, there is no assurance that such agreements will be complied with or that such
personnel will not compete with Biosign at the end of the 18-month period. Any future
competition by key personnel could have a material adverse effect on Biosign.

Biosign will be highly dependent on its senior management and scientific and technical personnel.
The competition for qualified personnel in the healthcare field is intense, and Biosign relies
heavily on its ability to attract and retain qualified managerial, scientific and technical personnel.
Biosign’s ability to manage growth effectively will require continued implementation and
improvement of its management systems and the ability to recruit and train new employees.
Biosign may not be able to successfully attract and retain skilled and experienced personnel,
which could harm its ability to develop product candidates and generate revenues.

Environmental or Health Risks

Biosign’s products are subject to United States federal and state and Canadian federal and
provincial environmental and health and safety laws. Compliance with these laws has not had to
date any material effect upon the capital expenditures, net income or competitive position of
Biosign. Environmental health and safety laws and regulations and their interpretation, however,
have changed in recent years and may continue to do so in the future.
                                            - 52 -

Potential Volatility of Share Price

The market price of the common shares of Biosign after Completion of the Proposed Qualifying
Transaction could be subject to significant fluctuations in response to quarterly variations in
operating results of Biosign, announcements of technological innovations through new services or
products by Biosign or its competitors, changes in financial estimates by securities analysts or
other events or factors, many of which are beyond Biosign’s control. In addition, the stock
markets have experienced significant price and volume fluctuations that have particularly affected
the market prices of equity securities of many companies whose businesses are dependent on
technology and that often have been unrelated to the operating performance of such companies.
These broad market fluctuations may adversely affect the market price of the common shares of
Biosign. There can be no assurance that the holders or purchasers of the common shares of
Biosign will be able to resell shares at prices equal to or greater than their cost.

Foreign Business

Management expects that a significant portion of future revenues will be derived from foreign
markets. Operations in foreign markets are subject to certain risks, including political instability,
shipping delays, changes in foreign regulations and laws governing the sale of medical devices,
fluctuations in foreign currency exchange rates and various trade restrictions. Any of these
factors could significantly impair Biosign’s ability to deliver products on a competitive and timely
basis. Future imposition of, or significant increases in customs duties, export quotas, regulatory
or trade restrictions could adversely affect Biosign’s business and operating results.

Biosign’s common shares should be considered highly speculative due to the nature of the
company’s business and the present stage of its development. In evaluating the company and its
business, shareholders should carefully consider, in addition to the other information contained in
this Listing Statement, the following risk factors. These risk factors are not a definitive list of all
risk factors associated with Biosign or in connection with its operations.

Technology companies in the commercialization stage are subject to a number of risks and
uncertainties that are inherent to the development of any new technology. General business risks
include, among other things, uncertainty in product development and related clinical trials and
studies, the regulatory environment including delays or denial of approval to market products, the
impact of technological change and competing technologies, the ability to protect and enforce
intellectual property assets, the availability of capital to finance continued and new product
development, the ability to secure strategic collaborators and reliance on these collaborators for
the development, regulatory approval, testing, manufacturing and commercialization of products
and the risk of product liability claims. In addition, market prices for securities of medical
technology companies are generally volatile, and may or may not move in a manner consistent
with the progress being made by such company. To the extent possible, Biosign’s management
pursues and implements strategies to reduce or mitigate the risks and uncertainties associated
with its business.

An investment in the securities of Biosign is speculative due to the proposed nature of
Biosign’s business and the present stage of Biosign’s development. Consequently, an
investment in Biosign will be subject to certain risks and investors should not invest in
securities of Biosign unless they can afford to lose their entire investment. In addition to
the factors disclosed elsewhere in this Listing Statement, investors should consider the
following risk factors in assessing the investment merits of such securities.

Biosign has a limited history and may not achieve or maintain profitability.

Biosign has a limited operating history on which to base an evaluation of its business and
prospects. As such, Biosign’s business is essentially dependent on, among other things, its
success in commercializing its technology. There is no assurance that there will be market
                                           - 53 -

acceptance of any of Biosign's products. There is no significant historical basis to assess how
Biosign, as a company whose business involves new and rapidly developing technologies, will
respond to competitive, economic and technological challenges. If Biosign fails to meet any of
these challenges, its operating results could suffer.

Biosign has not generated any revenues and has not yet achieved profitability and there is no
guarantee that Biosign will be able to generate revenues or achieve profitability in the future.
Biosign has never paid a dividend on any class of its shares and does not expect to do so in the
foreseeable future. Biosign’s business and prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in new and rapidly evolving
markets such as healthcare.

Biosign cannot predict if profitability will ever be achieved and, if it is, whether or not it will be
sustainable on a quarterly or an annual basis. Biosign has limited financial resources. Biosign
may need to raise additional capital in the future and additional financing may not be available,
and even if available, may not be on acceptable terms. Biosign may seek to raise additional
capital though an offering of common shares, preference shares or debt, which may result in
dilution or the issuance of securities with rights senior to the rights, of the holders of common
shares.

Biosign may require regulatory approval for its products before they can be sold.

Medical Devices, such as Biosign’s UFIT-TEN series, must receive regulatory approval before
they can be sold in North America, the European Union, and other countries, which can take
significant time and be very costly.

The development, manufacture and sale of Medical Devices in Canada, the United States and
internationally is governed by a variety of statutes and regulations. These laws require, among
other things:

    -   approval of manufacturing facilities and practices;

    -   adequate and well-controlled research and testing of products in clinical tests;

    -   review and approval of submissions containing manufacturing and clinical test data in
        order to obtain marketing approval based on establishing the safety and efficacy of the
        product for each use sought, including adherence to good manufacturing practices during
        production and storage; and

    -   control of marketing activities, including advertising and labelling.

There is no assurance that regulatory clearances will be granted on a timely basis or if ever.
Biosign may incur significant costs in obtaining or maintaining regulatory clearances or approvals.
Failure to obtain regulatory approvals or clearances or significant costs incurred in connection
therewith could have a material adverse effect on Biosign's business.

Federal, state and foreign regulations regarding the manufacture and sale of healthcare products
and diagnostic devices are subject to future change. Biosign cannot predict what material impact,
if any, these changes might have on its business. Future changes in regulations or enforcement
policies could impose more stringent requirements on Biosign, compliance with which could
adversely affect its business. These changes may relax some requirements, which could prove
beneficial to Biosign's competitors and thus adversely affect its business. In addition, these
regulations depend heavily on administrative interpretations. There is no assurance that future
interpretations made by any regulatory authorities, with possible retroactive effect, will not
adversely affect Biosign's business, financial condition and results of operations.
                                           - 54 -


There is no assurance that Biosign will be able to obtain necessary regulatory clearances or
approvals on a timely basis, if at all. Delays in the receipt of, or failure to receive, these
clearances or approvals, or failure to comply with existing or future regulatory requirements would
have a material adverse effect on its business, financial condition and results of operations.

Biosign’s success depends on the successful commercialization of its technology.

The successful commercialization of Biosign’s technology is crucial for its success. The
technology is in various stages of commercial development and face a variety of risks and
uncertainties. Principally, these risks include the following:

    -   future clinical test results may show that some or all of Biosign’s products do not satisfy
        regulatory demands of a given market;

    -   even if Biosign’s products are regulatory approved for use in a given market, Biosign may
        face significant or unforeseen difficulties in manufacturing and distributing its products in
        that market;

    -   even if Biosign’s products are successfully developed, receive all necessary regulatory
        approvals and are commercially produced, there can be no guarantee regarding the
        commercial viability and profitability of any of the Biosign products or that they will not
        cause unanticipated side effects in patients. Biosign’s ability to achieve market
        acceptance for any of its products will depend on a number of factors, including whether
        or not competitors may develop products which are superior to, or less costly than,
        Biosign’s products, with the result that Biosign products, even if they are successfully
        developed, manufactured and approved, may not generate significant revenues.

If Biosign is unsuccessful in dealing with any of these risks, or if it is unable to successfully
commercialize its technology for some other reason, it would seriously harm Biosign’s ability to
generate revenue.

Biosign depends on its ability to develop new products.

New technological or product developments may render Biosign’s products obsolete or reduce
their value. Biosign’s future prospects are highly dependent on its ability to develop products that
better address needs and achieve market acceptance. There can be no assurance that Biosign
will be successful in these efforts.

There are significant risks, expenses and difficulties frequently encountered in developing and
maintaining products in the evolving medical devices industry, which is highly regulated and
competitive, with an increasing number of market entrants, and a high failure rate. Further there is
a significant risk in the early stage of product development that the product will fail to operate as
intended. There are no assurances that development of new products will be completed in time
or within budget. To date, Biosign's products have only been manufactured in limited quantities
and not on a large commercial scale. Although Biosign is confident that the production of its
existing commercial-stage product is feasible, significant challenges could be encountered in
shifting to commercial production and there can be no assurances that the products will be
commercially viable. Biosign lacks established distribution channels and an experienced sales
force, both of which will be necessary to achieve commercial success. There is no assurance
Biosign will be able to establish either of these.
                                           - 55 -

Biosign depends on its strategic collaborators for the development, regulatory approval, testing,
manufacturing and the potential commercialization of its products.

Biosign’s strategy will be to enter into various arrangements with third parties to support or
accelerate research, development, clinical testing, regulatory approval, manufacturing, and
marketing for the commercialization of its products. Those strategic collaborators are important
to the profitability of Biosign’s business and Biosign may have little control over the outcome of
such collaborations.

The conduct of manufacturing operations is subject to numerous risks, including unanticipated
technological problems and delays. The manufacture of Biosign’s hardware components is
subject to the current regulations prescribed by ISO 13485, the FDA and authorities in other
countries where such products or product components are manufactured. Although Biosign
believes it is currently in compliance with applicable regulations, there can be no assurance that
Biosign, or any entity manufacturing products or components on behalf of Biosign, will be able to
comply with such manufacturing regulations or satisfy regulatory inspections in connection with
the manufacture of Biosign’s products. Failure or delay by Biosign or any third-party
manufacturer of Biosign’s products or product components to comply with such regulations or to
satisfy regulatory inspections could have a material adverse effect on Biosign’s business and
operations.

Biosign has no experience in marketing and selling its products. In order to achieve commercial
success for its approved products, Biosign will have to develop an effective marketing and sales
force or enter into further arrangements with third parties to market and sell its products. If
Biosign develops its own marketing and sales capabilities, it will be competing with other
companies that currently have experienced and well-funded marketing and sales operations. To
the extent that Biosign enters into co-promotion or other marketing and sales arrangements with
other companies, any revenues received will be dependent on the efforts of others, and Biosign
does not know whether these efforts will be successful. Failure to develop a direct sales and
marketing force or enter into appropriate arrangements with other companies to market and sell
its products will reduce Biosign’s ability to generate revenues.

Failure to obtain and protect intellectual property could adversely affect Biosign’s business.

Biosign’s success will depend, in part, on its ability to obtain patents, or licenses to patents,
maintain trade secret protection and enforce its rights against others. Biosign may not be able to
obtain patent protection for its technology such as new mathematical formulations as they may
fall beyond the scope of patenting. The patent positions of pharmaceutical, biotechnology and
medical device companies are uncertain and involve complex legal and factual questions for
which important legal issues are largely unresolved. In addition, the coverage claimed in a patent
application can be significantly reduced before a patent is issued. There can be no assurance
that:

    -   patent applications will result in the issuance of patents;

    -   additional proprietary products developed will be patentable;

    -   patents issued will provide adequate protection or any competitive advantages;

    -   patents will not be successfully challenged by any third parties; or

    -   the patents of others will not impede Biosign’s ability to commercialize its technology.

Patent protection may not be available based on prior art. The publication of discoveries in the
scientific or patent literature often lags behind actual discoveries. As a consequence, there may
                                            - 56 -

be uncertainty as to whether Biosign was the first creator of inventions. Moreover, Biosign might
have to participate in interference proceedings or other proceedings, including oppositions, to
determine priority of invention or patentability. An unfavourable outcome in an interference or
opposition proceeding could preclude Biosign from making, using or selling products using the
technology or require Biosign to obtain license rights from prevailing third parties. Biosign does
not know whether any prevailing party would offer it a license on commercially acceptable terms,
if at all.

Biosign does not know whether the patents that it may be able to obtain in the future would be
held valid or enforceable by a court or whether a competitor’s technology or product would be
found to infringe such patents.

Biosign may need to obtain licenses for the development of its products. Licenses may not be
available on satisfactory terms or at all. If available, these licenses may obligate Biosign to
exercise diligence in bringing its technology to market and may obligate it to make minimum
guarantee or milestone payments. These diligence and milestone payments may be costly and
could seriously harm Biosign’s business. Biosign may also be obligated to make royalty
payments on the sales, if any, of products resulting from licensed technology and may be
responsible for the costs of filing and prosecuting patent applications. These costs could affect
Biosign’s results of operations and decrease its earnings.

Biosign’s intellectual property includes trade secrets and know-how that are not protected by
patents. There can be no assurance that Biosign will be able to protect its trade secrets. To help
protect its rights, Biosign requires employees, consultants, advisors and collaborators to enter
into confidentiality agreements. These agreements may not adequately protect Biosign’s trade
secrets, know-how or other proprietary information in the event of any unauthorized use or
disclosure.

Biosign may incur substantial costs as a result of litigation or other proceedings relating to patent
and other intellectual property rights.

Biosign’s future success and competitive position depends in part on its ability to obtain and
maintain certain proprietary intellectual property rights used in its principal product candidates.
Any such success may be achieved in part by prosecuting claims against others who Biosign
believes are infringing its rights and by defending claims of intellectual property infringement
brought by its competitors and others. Biosign’s involvement in intellectual property litigation
could result in significant expense, adversely affecting the development of product candidates or
sales of the challenged product or intellectual property and diverting the efforts of its technical
and management personnel, whether or not such litigation is resolved in its favour. Some of
Biosign’s competitors may be able to sustain the costs of complex litigation more effectively than
Biosign can because they have substantially greater resources. Uncertainties resulting from the
initiation and continuation of any litigation could affect Biosign’s ability to continue its operations.
In the event of an adverse outcome as a defendant in any such litigation, Biosign may, among
other things, be required to:

    -   pay substantial damages;

    -   cease the development, manufacture, use or sale of product candidates or products that
        infringe upon the intellectual property of others;

    -   expend significant resources to design around a patent or to develop or acquire non-
        infringing intellectual property;

    -   discontinue processes incorporating infringing technology; or
                                            - 57 -


    -   obtain licenses to the infringed intellectual property.

There is no guarantee that Biosign would be successful in developing or acquiring non-infringing
intellectual property or that necessary licenses would be available upon reasonable terms, if at
all. Any such development, acquisition or license could require the expenditure of substantial
time and other resources and could have a material adverse effect on Biosign’s business and
financial results. If Biosign does not obtain such licenses, it could encounter delays in any
introduction of products or could find that the development, manufacture or sale of products
requiring such licenses could be prohibited.

If third-parties file patent applications, or are issued patents claiming technology also claimed by
Biosign in pending applications, Biosign may be required to participate in interference
proceedings or other proceedings, including oppositions, to determine priority of invention or
patentability, which could result in substantial cost to Biosign even if the eventual outcome were
favourable.

Biosign’s ability to operate could be hindered by the proprietary rights of others.

A number of pharmaceutical, biotechnology and medical device companies and research and
academic institutions have developed technologies, filed patent applications or received patents
on various technologies that may be related to Biosign’s business. Some of these technologies,
applications or patents may conflict with or adversely affect Biosign’s technologies or intellectual
property rights. Biosign is not aware of other parties with intellectual property rights that may
represent prior art or other potentially conflicting intellectual property. Any conflicts with the
intellectual property of others could limit the scope of the patents, if any, that Biosign may be able
to obtain or result in the denial of its patent applications altogether.

If patents that cover its activities are issued to other persons or companies, Biosign could be
charged with infringement. In the event that other parties’ patents cover any portion of its
activities, Biosign may be forced to develop alternatives or negotiate a license for such
technology. Biosign does not know whether it will be successful in either developing alternative
technologies or acquiring licenses upon reasonable terms, if at all. Any such license could
require the expenditure of substantial time and other resources and could harm Biosign’s
business and decrease its earnings. If it does not obtain such licenses, Biosign could encounter
delays in the introduction of its products or could find that the development, manufacture or sale
of products requiring such licenses is prohibited.

Biosign’s development programs and products subject it to the risk of product liability claims for
which Biosign may not be able to obtain adequate insurance coverage.

Medical devices involve the risk of product liability claims and associated adverse publicity.
Biosign’s principal risks relate to the sales of its products and their future use in clinical trials.
Claims may be made by consumers, healthcare providers, third party strategic collaborators or
others selling Biosign’s products. There can be no assurance that Biosign will be able to obtain
or maintain sufficient and affordable insurance coverage for any of these claims. Without
sufficient coverage, any claim, any threat of such a claim or any product withdrawal could
seriously harm Biosign’s business.

Biosign could face significant competition.

Competition from pharmaceutical companies, medical device companies, biotechnology
companies and academic and research institutions is expected to increase. Many of Biosign’s
competitors and potential competitors have substantially greater capital resources, name
recognition, research and product development capabilities, experience conducting clinical trials
and financial, scientific, manufacturing, sales and marketing resources and experience than it
                                           - 58 -

has. Many of these competitors offer well-established, broad product lines and ancillary services
that Biosign does not offer.      Some competitors have long-term or preferential supply
arrangements with physicians, medical clinics and hospitals and other purchasing organizations
which may act as a barrier to market entry for Biosign's products. Other companies may:

    -   develop and patent products earlier than Biosign;

    -   obtain regulatory approvals for such products more rapidly;

    -   obtain patent protection for such products earlier than Biosign; or

    -   develop more effective or less expensive products.

While Biosign will seek to expand its technological capabilities in order to remain competitive,
there is a risk that research and development by others will render its technology or product
candidates obsolete or non-competitive.

The commercial potential of Biosign’s products and product candidates will be significantly limited
if Biosign is not able to obtain adequate levels of reimbursement or market acceptance for them.

Biosign’s ability to commercialize its technology will depend in part on the extent to which
reimbursement for the cost of such products will be available from government health
administration authorities, private health insurers and other organizations or supported by the
market for these products. There can be no assurance that third-party insurance coverage and
reimbursement will be available for the products Biosign might develop. Third-party payers are
increasingly challenging the price of medical products and services. In some countries in Europe,
significant uncertainty exists as to the reimbursement status of newly approved healthcare
products, and Biosign does not know whether adequate third party coverage will be available for
it to realize an appropriate return on its investment in product development, which could seriously
harm Biosign’s business. In the United States, while reimbursement amounts previously
approved appear to provide a reasonable rate of return, there can be no assurance that this will
continue to be the case due to proposed health care reforms. Efforts by governmental and third-
party payers to reduce health care costs or the announcement of legislative proposals or reforms
to implement government controls could cause a reduction in sales or in the selling price of
Biosign’s products, which could seriously harm its business. Further, Biosign cannot be certain
that its products will gain commercial acceptance among pharmaceutical and clinical research
organizations, physicians, patients and health care payers, even if necessary international and
U.S. marketing approvals are maintained. Acceptance among pharmaceutical and clinical
research organizations, physicians and other potential users may also depend upon the
willingness of such users to learn these relatively new techniques.

Even if some of Biosign’s products and manufacturing facilities receive regulatory approval, those
products and facilities may still face subsequent regulatory difficulties.

If Biosign receives regulatory approval to sell any of its products, regulatory agencies may limit
the approval to certain diseases, conditions or categories of patients who can use them. In
addition, regulatory agencies subject a marketed product, its manufacturer and the
manufacturer’s facilities to ongoing regulatory requirements. Regulatory agencies may also
require expensive post-approval studies. Any adverse effects associated with Biosign’s products
must also be reported to regulatory authorities. If new data are developed, previously unknown
adverse experiences with a product occur, deficiencies in Biosign’s manufacturing and laboratory
facilities are discovered, or it fails to comply with applicable post-market regulatory requirements,
a regulatory agency may impose restrictions on that product or on Biosign including the
requirement to withdraw the product from the market, close the facility, suspend manufacturing,
change the product’s label or pay substantial fines.
                                           - 59 -

Biosign may incur losses associated with foreign currency fluctuations.

Biosign’s operations are in some instances conducted in currencies other than the Canadian
dollar and fluctuations in the value of foreign currencies relative to the Canadian dollar could
cause Biosign to incur currency exchange losses. In addition to the Canadian dollar, Biosign
currently conducts some operations in U.S. dollars. Exchange rate fluctuations may reduce
Biosign’s future operating results.

Biosign may incur significant costs complying with environmental laws and regulations.

Biosign’s current research and development processes do not involve the use of hazardous or
radioactive materials but future research and development may involve the use of hazardous or
radioactive materials. Biosign is subject to federal, provincial, local and other laws and
regulations governing the use, manufacture, storage, handling and disposal of such materials and
certain waste products. The risk of accidental contamination or injury from these materials
cannot be completely eliminated. In the event of an accident, Biosign could be held liable for any
damages that result and any such liability could exceed its resources. Biosign is not specifically
insured with respect to this liability, and it does not know whether it will be required to incur
significant costs to comply with environmental laws and regulations in the future, or whether its
operations, business or assets will be harmed by current or future environmental laws or
regulations.

If Biosign fails to hire and retain key management, scientific and technical personnel, it may be
unable to successfully implement its business plan.

The success of Biosign is dependent upon the skills, experience and efforts of certain key
management and development personnel including Dr. Radu Leca, President and Chief
Technology Officer and Mr. Richard Potts, Chairman and Chief Executive Officer. The loss of
services of one or more of these individuals could have a material adverse effect on Biosign.
Currently, Biosign maintains a key-man life insurance policy on Mr. Potts and is seeking
insurance for Dr. Leca. Although certain key personnel have entered into agreements that
prohibit employment with a competitor for a period of 18 months following their employment with
the Biosign, there is no assurance that such agreements will be complied with or that such
personnel will not compete with Biosign at the end of the 18-month period. Any future
competition by key personnel could have a material adverse effect on Biosign.

Biosign will be highly dependent on its senior management and scientific and technical personnel.
The competition for qualified personnel in the healthcare field is intense, and Biosign relies
heavily on its ability to attract and retain qualified managerial, scientific and technical personnel.
Biosign’s ability to manage growth effectively will require continued implementation and
improvement of its management systems and the ability to recruit and train new employees.
Biosign may not be able to successfully attract and retain skilled and experienced personnel,
which could harm its ability to develop product candidates and generate revenues.

Environmental or Health Risks

Biosign’s products are subject to United States federal and state and Canadian federal and
provincial environmental and health and safety laws. Compliance with these laws has not had to
date any material effect upon the capital expenditures, net income or competitive position of
Biosign. Environmental health and safety laws and regulations and their interpretation, however,
have changed in recent years and may continue to do so in the future.

Potential Volatility of Share Price

The market price of the common shares of Biosign after Completion of the Proposed Qualifying
                                                  - 60 -

       Transaction could be subject to significant fluctuations in response to quarterly variations in
       operating results of Biosign, announcements of technological innovations through new services or
       products by Biosign or its competitors, changes in financial estimates by securities analysts or
       other events or factors, many of which are beyond Biosign’s control. In addition, the stock
       markets have experienced significant price and volume fluctuations that have particularly affected
       the market prices of equity securities of many companies whose businesses are dependent on
       technology and that often have been unrelated to the operating performance of such companies.
       These broad market fluctuations may adversely affect the market price of the common shares of
       Biosign. There can be no assurance that the holders or purchasers of the common shares of
       Biosign will be able to resell shares at prices equal to or greater than their cost.

       Foreign Business

       Management expects that a significant portion of future revenues will be derived from foreign
       markets. Operations in foreign markets are subject to certain risks, including political instability,
       shipping delays, changes in foreign regulations and laws governing the sale of medical devices,
       fluctuations in foreign currency exchange rates and various trade restrictions. Any of these
       factors could significantly impair Biosign’s ability to deliver products on a competitive and timely
       basis. Future imposition of, or significant increases in customs duties, export quotas, regulatory
       or trade restrictions could adversely affect Biosign’s business and operating results.

18.    Promoters

       Mr. Richard Potts and Dr. Radu Leca may be considered to be the promoters of Biosign and the
       Issuer in that they took the initiative in founding and organizing Biosign.

       Refer to section 13 for disclosure concerning the histories Mr. Potts and Dr. Leca.

19.    Legal Proceedings

       Management of the Issuer is not aware of any legal proceedings, contemplated or actual,
       involving the Issuer, Karma or Biosign.

20.    Interest of Management and Others in Material Transactions

       Refer to section 3.2


21.    Auditors, Transfer Agents and Registrars

21.1   Auditor

       The auditor of the Issuer is Cookson Walker LLP, Chartered Accountants, 48 Yonge Street, Suite
       1010, Toronto, Ontario, M5E 1G6. .

21.2   Transfer Agent and Registrar

       Karma’s transfer agent and registrar is Pacific Corporate Trust Company at its principal office
       located at 510 Burrard Street, 3rd Floor, Vancouver, B.C. V6C 3B9

22.    Material Contracts
                                                   - 61 -

       Except for contracts entered into in the ordinary course of business, the only contracts entered
       into by Biosign since it was incorporated which may reasonably be regarded as material are the
       following:
       1.       Agreement of Lease with 25 Sheppard Portfolio Inc., dated November 1, 2005 and which
                was extended under the Lease Extension Offer dated May 16, 2006 to expire on
                December 31, 2006.

       2.      The Amalgamation Agreement dated March 21, 2005 between Arrabbiata Capital Corp.
               and Biosign which was cancelled on March 15, 2006 by Arrabbiata Capital Corp.

       3.      The Letter of Intent dated May 1, 2006 between Karma and Biosign concerning the
               Amalgamation.

       4.      The Amalgamation Agreement dated July 5, 2006 between Karma and Biosign
               concerning the Amalgamation and any amendments to this agreement.

       5.      The Proprietary Rights Agreement between Dr. Leca, Mr. Potts and Biosign dated April
               15, 2004 whereby Biosign acquired the intellectual and other property rights related to
               UFIT.

       6.      The management employment contracts dated January 1, 2005 between Biosign and Mr.
               Richard Potts, Dr. Radu Leca, Ms. Eva Kettle, and Mr. Kevin Gilbride and any
               amendments to these agreements.

       7.      The Escrow Agreement among Biosign, Pacific Corporate Trust Company and the
               principals of Biosign respecting an aggregate of 40,511,667 common shares of the
               Issuer.


23     Interest of Experts

       No person or company named in this Listing Statement as having prepared or certified a part of
       the Listing Statement or a report described in this Listing Statement and no responsible solicitor
       or any partner of a responsible solicitor’s firm, holds any beneficial interest, direct or indirect, in
       any securities or property of the Issuer or of an associate or affiliate of the Issuer.


24.    Other Material Facts

       There are no other material facts about Karma, Biosign or the Issuer that are not elsewhere
       disclosed herein and which are necessary in order for this Listing Statement to contain full, true
       and plain disclosure of all material facts relating to the Karma, Biosign and the Issuer

25.    Financial Statements

25.1   Audited financial statements of Karma for the years ended December 31, 2005, 2004 and 2003
       are attached in Appendix C.

25.2   Audited financial statements of Biosign for the years ended December 31, 2005, and 2004 are
       attached in Appendix B.

       The opening balance sheet for the Issuer is attached in Appendix A.
                                          - 62 -


CERTIFICATE OF THE ISSUER

Pursuant to a resolution duly passed by its Board of Directors, Biosign Technologies
Inc. hereby applies for the listing of the above mentioned securities on CNQ. The
foregoing contains full, true and plain disclosure of all material information relating to
Biosign Technologies Inc. It contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that is necessary to
prevent a statement that is made from being false or misleading in light of the
circumstances in which it was made.

Dated at Toronto, Ontario

this 16th day of August, 2006.




Signed “Richard Potts”                             Signed “Kevin Gilbride”

Richard Potts – Chairman and Chief                 Kevin Gilbride - Chief Financial Officer
Executive Officer                                  and Corporate Secretary
                                                                - 63 -



                                     APPENDIX “A” - Opening Balance Sheet

Biosign Technologies Inc.
Opening Balance Sheet
As at July 14, 2006
                                                                         Biosign
                                                                      Technologies
                                                                        (BC) Inc.
                                                  Biosign           (formerly Karma
                                              Technologies            Capital Corp.)
                                              Inc. as at July         as at July 14,   Amalgamation          Issuer Opening
                                                 14, 2006                 2006          Adjustments           Balance Sheet
                                                (unaudited)            (unaudited)       (unaudited)            (unaudited)
Assets
Current
Cash and cash equivalents                    $     4,859,231         $     447,419                           $    5,306,650
Accounts and other receivable                            128                   697                                      825
Deposits and prepaid expenses                         95,329                   -                                     95,329
Investment tax credits receivable                    257,000                   -                                    257,000
Total current assets                               5,211,688               448,116                -               5,659,804

Capital assets                                        34,939                    -                                    34,939
Total long-term assets                                34,939                    -                 -                  34,939

                                             $     5,246,627         $     448,116     $          -          $    5,694,743

Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities     $       322,477         $      78,256                           $      400,733
Notes payable                                             -                     -                                        -
Interest payable                                          -                     -                                        -
Total current liabilities                             322,477                78,256               -                  400,733

Shareholders' Equity
         Share Capital                             9,318,972               851,712           (306,312)   1   $    9,864,372

           Deficit                                (4,394,822)              (481,852)          306,312    1        (4,570,362)

Total shareholders' equity                         4,924,150               369,860                -               5,294,010

                                             $     5,246,627         $     448,116     $          -          $    5,694,743
See accompanying notes to the unaudited opening balance sheet
                                                   64

1. BASIS OF PRESENTATION

The unaudited opening balance sheet (the “Opening Balance Sheet”) has been prepared to reflect the
amalgamation of Karma and Biosign.

Management has prepared the Opening Balance Sheet in accordance with Canadian generally accepted
accounting principles. The Opening Balance Sheet has been prepared from information derived from the
unaudited financial statements of Karma and the unaudited financial statements of Biosign as at July 14,
2006, together with other information available to the corporation. Management believes the Opening
Balance Sheet includes all adjustments necessary for fair presentation of the Amalgamation as described
in this Listing Statement.

The Opening Balance Sheet should be read in conjunction with the unaudited financial statements of
Karma and Biosign included in Appendix B and Appendix C. The substance Karma’s common share
issuances and the reorganization is a transaction which results in Biosign becoming a listed public entity
through Biosign’s acquisition of all of Karma’s net assets and Karma’s recapitalization. Future Karma
financial statements will present a continuation of Biosign’s business.

2. OPENING ADJUSTMENTS

The Opening Balance Sheet includes the following adjustments to reflect the Amalgamation.
[1]     To credit the book value of Karma share capital as at June 30, 2006 to deficit. Pursuant to the
        terms of the Amalgamation Agreement dated July 5, 2006 Karma closed a private placement
        financing and completed a debt conversion at a pre-amalgamation price of $0.05 per common
        share on July 12, 2006. On a post-amalgamation value these transactions were completed at a
        price equal to the pricing of the Biosign private placement. As the Karma private placement was
        undertaken in full expectation of completing the amalgamation with Biosign on July 14, 2006 only
        the Karma common share equity which existed prior to these transactions has been eliminated.

3. SHARE CAPITAL CONTINUITY

A continuity of the issued common share capital and related recorded values after giving effect to the
opening transactions described in note 2 above is set out below:


Authorized – 1,000,000,000 Common Shares                                   Number of          Amount
Issued Common Shares (Pre-Amalgamation)                                      Shares
Karma’s shares issued and outstanding at July 14, 2006                      13,054,000           $851,712
                                                                            13,054,000           $851,712

Authorized – Unlimited Common Shares
Issued Common Shares (Post-amalgamation)
Consolidation of Karma common shares on a 20 pre-amalgamation                  652,700           $851,712
shares for 1 post-amalgamation share of the Issuer

Eliminate Karma common share equity prior to completion of the                                   (306,312)
Karma private placement (see note 2)

Common shares issued in exchange for Biosign common shares                  56,844,673           9,318,972

Total                                                                       57,497,373         $9,864,372
                                     65



   APPENDIX “B” - Financial Statements of Biosign Technologies Inc.




                   BIOSIGN TECHNOLOGIES INC.

                    INTERIM FINANCIAL STATEMENTS


                         March 31, 2006 AND 2005
                       (Expressed in Canadian Dollars)


The Company’s independent auditor has not performed a review of these interim
                           financial statements.
                                                 66


    The Company’s independent auditor has not performed a review of these interim
                               financial statements.

Biosign Technologies Inc.
Balance Sheet                                            March 31, 2006    December 31, 2005
                                                          (unaudited)          (audited)
Assets
Current
Cash                                                     $    295,236       $      438,568
Accounts receivable                                             1,341                5,865
Deposits and prepaid expenses                                  47,285               41,240
Investment tax credits receivable                             257,000              257,000
                                                              600,862              742,673
Non-current
Deferred charges (note 6)                                                          168,576
Property, plant and equipment (note 3)                         32,506               37,696
                                                               32,506              206,272


                                                         $    633,368       $      948,945
Liabilities
Current
Accounts payable and accrued liabilities                 $    490,922       $      335,668
Notes payable (note 4)                                       1,711,577           1,711,577
Interest payable                                              238,931              192,532
                                                             2,441,430           2,239,777
Shareholders’ Deficit
Capital stock (note 5)                                       1,821,720           1,650,730
Deficit                                                  (3,629,782)            (2,941,562)
                                                             1,808,062          (1,290,832)


                                                         $    633,368       $      948,945


       “Richard Potts”         Director                 “Radu Leca”               Director
              The accompanying notes are an integral part of these financial statements.
                                                67

    The Company’s independent auditor has not performed a review of these interim
                               financial statements.

Biosign Technologies Inc.                            Three months ended Three months ended
Statement of Loss and Deficit                          March 31, 2006     March 31, 2005
Period Ended March 31                                      (unaudited)      (unaudited)

Operating expenses
Salaries and benefits                                  $     348,017      $ 349,235
Professional fees                                               5,381          14,944
Product Testing and Registration Fees                          17,370             -
Occupancy                                                      26,760          19,944
Insurance                                                      33,586           3,083
Travel and entertainment                                        6,094           5,218
Office and general                                             11,057           7,416
Telecommunications                                              2,287           3,092
Amortization of property, plant and equipment                   5,190           3,068
Research                                                       18,685           5,592
                                                             474,427         411,592


Loss from operations                                         474,427         411,592


Other income (expense)
Interest income                                                 1,182           5,290
Deferred charges (note 6)                                   (168,576)
Interest on convertible notes payable                        (46,399)         (42,394)
                                                            (213,793)         (37,104)


Net loss for the period                                      688,220         448,696
Deficit, beginning of period                               2,941,562       1,145,642
Deficit, end of period                                 $ 3,629,782        $1,594,338



            The accompanying notes are an integral part of these financial statements.
                                                  68

    The Company’s independent auditor has not performed a review of these interim
                               financial statements.


Biosign Technologies Inc.                              Three months ended Three months ended
Statement of Cash Flows                                  March 31, 2006     March 31, 2005
Period Ended March 31                                       (unaudited)         (unaudited)

Operating activities
Net loss for the period                                 $    (688,220)      $ (448,696)
Items not requiring an outlay of cash:
Interest on conversion of certain notes payable                                       851
Amortization of property, plant and equipment                   5,190               3,068

                                                             (683,030)          (444,777)
Net change in non-cash working
    capital balances consists of:
Accounts receivable                                              4,524            (17,817)
Deposits and prepaid expenses                                  (6,045)            (47,093)
Deferred charges                                              168,576             (26,877)
Accounts payable and accrued liabilities                      155,254             (78,081)
Interest payable                                               46,399               41,543
                                                              368,708            (128,325)

Cash applied in operating activities                         (314,322)           (573,102)

Financing activities
Issuance of notes payable                                           -            100,000
Issuance of common stock, net of fees                         170,990               -

Cash provided by financing activities                         170,990            100,000

Investing activities
Purchase of property, plant and equipment                               -        (12,322)

Cash applied in investing activities                                    -        (12,322)

Decrease in cash during the period                           (143,332)          (485,424)

Cash, beginning of period                                     438,568           1,377,136

Cash, end of period                                     $     295,236       $    891,712



          The accompanying notes are an integral part of these financial statements.
                                                69

    The Company’s independent auditor has not performed a review of these interim
                               financial statements.



Biosign Technologies Inc.
Notes to the Financial Statements
March 31, 2006 and 2005
1. Organization
 Biosign Technologies Inc. (the “company”) was incorporated under the Business Corporations
 Act (Ontario) on March 11, 2004. The company is developing an easy-to-use non-invasive
 technology to improve the relevance, availability, and timeliness of health measurements to
 ultimately improve the standard of patient care.

2. Significant accounting policies

  Interim period basis of presentation
  These unaudited financial statements have been prepared by management in accordance with
  Canadian generally accepted accounting principles and the accounting policies used in the
  preparation of these interim financial statements conform to those used in the company’s
  annual financial statements. These interim financial statements do not include all of the
  disclosures included in the annual financial statements. Accordingly, these interim financial
  statements should be read in conjunction with the company’s audited financial statements and
  notes for the period ended December 31, 2005.

  Investment tax credits
  The company accrues investment tax credits for qualifying research and development costs
  when there is reasonable assurance that the amounts are recoverable. The company accounts
  for the investment tax credits relating to research and development expenses as a deduction in
  the statement of loss and deficit, and those relating to capital expenditures as a reduction of the
  cost of the assets acquired.

  Property, plant and equipment
  Property, plant and equipment are recorded at acquisition cost. Amortization is provided at the
  following rates which are formulated to charge operations with the cost of the property, plant
  and equipment over their estimated useful lives as follows:

       Computer hardware                                     3 years straight line
       Furniture and fixtures                                3 years straight line

  Financial instruments
  Unless otherwise noted, it is management's opinion that the company is not exposed to
  significant interest, currency or credit risks arising from these financial instruments. The fair
  value of these financial instruments approximates their carrying values, unless otherwise
  noted.
                                                 70

    The Company’s independent auditor has not performed a review of these interim
                               financial statements.



Biosign Technologies Inc.
Notes to the Financial Statements
March 31, 2006 and 2005
2. Significant accounting policies (con’t)

  Income taxes
  The company follows the asset and liability method of accounting for income taxes. Under the
  asset and liability method, the change in the net future tax asset or liability is to be included in
  income. Future tax assets and liabilities are measured using enacted tax rates expected to apply
  to taxable income in the years in which temporary differences are expected to be recovered or
  settled.

  Management estimates
  The preparation of financial statements in accordance with Canadian generally accepted
  accounting principles requires management to make estimates and assumptions that affect the
  reported amount of assets and liabilities and disclosure of contingent assets and liabilities at
  the date of the financial statements and the reported amount of revenue and expenses during
  the reporting period. These estimates are reviewed periodically, and, as adjustments become
  necessary, they are reported in earnings in the period in which they become known.

3. Property, plant and equipment

Property, plant and equipment as at March 31, 2006 consist of:

                                                      Accumulated                      Net Book
                                        Cost          Amortization                      Value

Computer hardware                     $ 48,279             $ 20,440                    $ 27,839
Furniture and fixtures                  14,000                 9,333                      4,667
                                      $ 62,279             $ 29,773                    $ 32,506
                                                   71

     The Company’s independent auditor has not performed a review of these interim
                                financial statements.


Biosign Technologies Inc.
Notes to the Financial Statements
March 31, 2006 and 2005
4. Notes payable

Notes payable consists of:

Promissory notes payable bearing interest at 10% per annum, with principal and accrued interest
convertible to common shares of the company or any successor entity at $0.2667 per common share.

                                                           March 31                December 31
                                                            2006                      2005

Notes payable                                             $ 1,711,577                 $ 1,711,577

The notes are convertible into common shares at the option of the holder, at a price of $0.2667 per
common share and are automatically convertible into common shares at a price of $0.2667 per common
share in connection with a ‘going public’ transaction or other ‘liquidity’ event. No value has been
attributed to the convertible nature of the notes payable, as on issuance the company believed the amount
is not significant.

As security for the notes payable the company has provided a subordinated floating charge on all assets
which is subordinated to other loans or encumbrances to a maximum of $3,000,000.
                                                   72

     The Company’s independent auditor has not performed a review of these interim
                                financial statements.


Biosign Technologies Inc.
Notes to the Financial Statements
March 31, 2006 and 2005
5. Capital stock

Capital stock consists of:

        Authorized - An unlimited number of common shares.
        Issued common shares.                                     Number      Amount
        Balance as at March 11, 2004 (date of incorporation)                            2

        Issued June, 2004 for cash                              149,999,998    $     1,500

        Issued November/December, 2004 for cash                   2,718,410        725,000

        Balance as at December 31, 2004                         152,718,410        726,500

        Issued January, 2005 on conversion of certain
        notes payable and related interest                         241,000          64,274

        Issued May, 2005 for cash                                 1,463,935        550,000

        Issued October, 2005 for nominal consideration            7,025,633

        Issued November, 2005 for cash (less fees of $7,500)       199,628          67,500

        Issued December, 2005 for cash (less fees of $26,939)      717,051      242,456

        Balance as at December 31, 2005                         162,365,657   $1,650,730

        Issued January, 2006 for cash (less fees of $14,000)       372,608      125,990

        Issued February, 2006 for cash (less fees of $5,000)       133,087          45,000

        Balance as at March 31, 2006                            162,871,352   $1,821,720
                                                  73

     The Company’s independent auditor has not performed a review of these interim
                                financial statements.


Biosign Technologies Inc.
Notes to the Financial Statements
March 31, 2006 and 2005

6. Proposed Reverse Take-over

Proposed amalgamation with Arrabbiata Capital Corp.

Arrabbiata Capital Corp. and Biosign Technologies Inc. proposed to amalgamate to form “Biosign
Technologies Inc.” pursuant to the terms and conditions of the Amalgamation Agreement dated March
21, 2005, as amended. Closing of the amalgamation was conditionally approved subject to certain
conditions, including, among other things, that the transaction be completed by March 15, 2006. On
March 15, 2006 the companies were not able to satisfy this condition and the transaction was terminated
by Arrabbiata Capital Corp. and the deferred charges were written-off.

Proposed amalgamation with Karma Capital Corp.

Karma Capital Corp. (“Karma”) and Biosign Technologies Inc. entered into a letter of intent dated May 1,
2006 whereby the companies propose to amalgamate to form “Biosign Technologies Inc.”..Karma Capital
Corp. is a public company which was incorporated on September 1, 1999 under the laws of the Province
of British Columbia.

Pursuant to the Letter of Intent (“LOI”) entered into between Karma and Biosign, each one (1) Biosign
common share issued and outstanding on the Amalgamation Date, other than those held by dissenting
holders of Biosign common shares, shall be exchanged for 0.3 Amalco common shares and each one (1)
Karma common share issued and outstanding on the Amalgamation Date, other than those held by
dissenting holders of Karma common shares, shall be exchanged for 0.05 of one (1) Amalco common
share. In conjunction with the proposed amalgamation, Biosign and Karma intend to complete, together,
a total private placement of a minimum of $3,000,000, through the issuance of a combination of
convertible notes and common shares of the respective companies.
              74




BIOSIGN TECHNOLOGIES INC.

   FINANCIAL STATEMENTS


  December 31, 2005 and 2004
CW                 Cookson Walker L L P        Brian C. Cookson.
                                                     75
                                                               C.A.
                                               Eric J. Walker. CAoC.B.V.,
                                                                        M.B.A.,
                                                                         C.F.E.
                                               H. Steven Frye, CA, M.B.A.,
                                                                                    48 Yonge
                                                                                           Stree.t,
                                                                                                  Suite1010
                                                                              C.F.E. Toronto, Ontario M5E 1G6
                                                                                    Telephone: (416] 368-7990
                                               John J. Campbell, C.A.               Facsimile: (416J368-0886




Auditors'   Report




To the shareholders of
         Biosign Technologies Inc.:


We have audited the balancesheets of Biosign Technologies Inc. as at December31, 2005
and 2004 and the statements of loss and deficit and cash flows for the year ended December 31,
2005 and the period from March 11, 2004 (date of incorporation) to December 31, 2004. These
financial statements are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial
position of the company as at December 31, 2005 and 2004 and the results of its operations and
its cash flows for the year ended 2005 and for the period from March 11, 2004 (date of
incorporation) to December 31, 2004 in accordance with Canadian generally accepted accounting
principles


   Coik       5 YV'     WrJ114            L{   f
Chartered Accountants

Toronto, Ontario
May 11, 2006




                         I
.

                                                             76

    Biosign  Technologies   Inc.
    Balance Sheets
    December    31, 2005 and 2004



                                                                                 2005                 2004

    Assets
    Current
    Cash                                                                   $     438,568         $ 1,377,136
    Accounts receivable                                                            5,865               3,881
    Deposits and prepaid expenses                                                 41,240              18,527
    Investment tax credits receivable (note 3)                                   257.000
                                                                                  742.673            1.399.544
    Non-current
    Deferred charges (notes 4 and 10)                                             168,576
    Property, plant and equipment (note 5)                                         37.696               26.983
                                                                                  206.272               26.983

                                                                            $     948,945        $ 1.426.527

    Liabilities
    Current
    Accounts payable and accrued liabilities                                $     335,668        $     150,544
    Interest payable                                                              192,532               20,125
    Notes payable (note 6)                                                      1.711.577            1.675.000
                                                                                2.239.777            1.845,669

    Shareholders'     Deficiency
    Capital stock (note 7)                                                       1,650,730              726,500
    Deficit                                                                     (2.941.562)          (1.145,642)
                                                                                (1.290.832)           (419.142)

                                                                            $     948.945        $ 1,426,527




                   "Richard Potts"                     Director                  "Radu Leca"                       Director



                                     See accompanying notes to the financial statements


      CW
                                                      -,.~                              "*-~'"
                                                      77

Biosign Technologies Inc.
Statements of Loss and Deficit
For the Year EndedDecember 2005 and for the Periodfrom March 11, 2004 (Date of
                              31,
Incorporation) to December 31,2004

                                                                                        March   11, 2004to
                                                                                      December31,2004
                                                                           2005            2004

Operating expenses
Salaries and benefits (note 3)                                       $ 1,381,825          $      929,165
Insurance                                                                 91,611                   1,205
Occupancy                                                                 82,231                  35,172
Professional and consulting fees                                          81,555                  35,479
Product testing and registration fees                                     77,555
Travel and entertainment                                                  72,301                  33,816
Office and general                                                        46,243                  26,345
Telecommunications                                                        22,890                  22,564
Research                                                                  18,617                  30,869
               of
Amortization property,plant and equipment                                 17,333                   7,250
Security filing fees                                                       1.100                   5.100
                                                                          1.893.261             1.126,965
Loss from operations                                                      (1.893.261)         (1.126.965)
Other income (expense)
Interest income                                                              13,600                 1,448
Interest on convertible notes payable                                      (173,259)              (20,125)
Investment tax credits (note 3)                                             257.000
                                                                             97.341               (18.677)
Net loss for the year                                                     (1,795,920)         (1,145,642)
Deficit,beginningof year                                                  (1.145.642)

Deficit, end of year                                                  $ (2.941.562)       $ (1.145.642)

Basic and fully diluted loss per share                                $        (0.01)     $         (0,01)




                               See accompanying notes to the financial statements


 CW

                               I                            ~c
                                                     "
                                                          78

Biosign Technologies Inc.
Statements of Cash Flows
For the Year EndedDecember 2005 and for the Periodfrom March 11, 2004 (Date of
                            31,
Incorporation)to December 31, 2004

                                                                                       March 11, 2004 to
                                                                                       December 31, 2004
                                                                             2005            2004

Operating activities
Net loss for the year                                                 $ (1,795,920)      $ (1,145,642)
Item not requiring an outlay of cash:
   Amortization of property, plant and equipment                              17,333              7,250
   Interest on conversion of certain notes payable (note 7)                      851

                                                                           (1.777.736)        (1.138.392)

Net change in non-cash working capital balances consists of:
  Accounts receivable                                                         (1,984)             (3,881)
  Deposits and prepaid expenses                                              (22,713)            (18,527)
  Investment tax credits receivable                                         (257,000)
  Deferred charges                                                          (168,576)
  Accounts payable and accrued liabilities                                   185,124            150,544
  Interest payable                                                           172.407             20,125
                                                                              (92.742)          148,261
Cash applied in operating activities                                       (1.870.478)          (990,131)

Financing activities
  Issuance of notes payable                                                  100,000           1,675,000
  Issuance of common stock for cash, net of fees                             859.956             726.500

Cash provided by financing activities                                        959.956           2.401.500

Investing activities
   Purchase of property, plant & equipment                                    (28.046)           (34,233)
Cash   appliedin investingactivities                                          (28.046)           (34.233)

Increase (decrease) in cash during the year                                  (938,568)         1,377,136
Cash, beginning of year                                                     1.377.136

Cash, end of year                                                      $      438,568     $    1,377,136


Supplemental cash flow information:
Interestreceived                                                       $       13,600     $        1,448




                                See accompanying notes to the financial statements


 CW
         .


                                                                        79

             Biosign Technologies Inc.
             Notes to the Financial Statements
             For the Year EndedDecember 2005 and for the Periodfrom March 11, 2004 (Dateof
                                      31,
             Incorporation) to December 31, 2004

             1.    Description of Business

                   Biosign Technologies Inc. (the "company") was incorporated under the Business Corporations Act
                   (Ontario) on March 11, 2004. The company is developing an easy-to-use non-invasive technology
                   to improve the relevance, availability, and timeliness of health measurements to ultimately improve
                   the standard of patient care.

             2.    Significant accounting policies

                   Going concern basis of presentation

                   These audited financial statements have been prepared in accordance with generally accepted
                                                      to
                   accountingprinciplesapplicable a going concern that contemplates the realization of assets and
                   the payment of liabilities in the ordinary course of business. Accordingly, they do not give effect to
                   adjustments that would be necessary should the company be unable to continue as a going
                   concern. In other than the normal course of business, the company may be required to realize its
                   assets and liquidate its liabilities and commitments at amounts different from those in the
                   accompanying financial statements. Because of the operating losses since incorporation and the
                   working capital deficiency as at December 31, 2005, the company's continuance as a going
                   concern is dependent upon its ability to obtain adequate financing or to reach profitable levels of
                   operation.

                   Investment tax credits

                   The companyaccruesinvestment tax credits (lTC's) for qualifying research and development costs
                   when there is reasonable assurance that the amounts are recoverable. The company accounts for
                   lTC's relating to research and development expenses as a deduction in the statement of loss and
                   deficit and those relating to capital expenditures as a reduction of the cost of the asset acquired.

                   Property, plant and equipment

                   Property,plant and equipment are recorded at acquisition cost. Amortization is provided at the
                   following rates which are formulated to charge operations with the cost of the property, plant and
                   equipment over their estimated useful lives as follows:
                                       Computer hardware                               3 years straight line
                                       Furniture and fixtures                          3 years straight line

                   Financial instruments

                   The company'sfinancial instrumentsconsist of cash, accounts receivable, accounts payable and
                   accrued liabilities, interest payable and notes payable. Unless otherwise noted, it is management's
                   opinion that the company is not exposed to significant interest, currency or credit risks arising from
                   financial instruments. The fair value of financial instruments approximates their carrying values,
                   unless otherwise noted.




                  CW
.. ,".
                                                           80

Biosign   Technologies        Inc.
Notes to the Financial Statements
For the Year Ended December     31, 2005 and for the Period from March 11, 2004 (Date of
Incorporation)      to December 31, 2004



2.   Significant accounting policies (continued)

     Income taxes

     The companyfollows the asset and liability method of accounting for income taxes. Under the
     asset and liability method, the change in the net future tax asset or liability is to be included in
     income. Future tax assets and liabilities are measured using enacted tax rates expected to apply
     to taxable income in the years in which temporary differences are expected to be recovered or
     settled.
     Future tax assets are recorded only if they are likely to be realized.

     Management estimates

     The preparation of financial statements in accordance with Canadian generally accepted
     accounting principles requires management to make estimates and assumptions that affect the
     reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the
     date of the financial statements and the reported amount of revenue and expenses during the
     reporting period. These estimates are reviewed periodically, and, as adjustments become
     necessary, they are reported in earnings in the period in which they become known.

3.   Investment tax credits receivable

     The company will make a claim in respect of scientific research and experimental development
     (SR&ED) expenditures for income taxes purposes for the current, and prior taxation years. At year
     end approximately $257,000 of these investment tax credits (lTC's) are recoverable. lTC's are
     based on approximately $767,000 of salary expenses incurred in 2004 and 2005 associated with
     research and development activity. The company may be subject to an audit of its SR&ED claim
     by Canada Revenue Agency prior to approval of the lTC's. The outcome of an audit is unknown at
     this time.

4.   Deferred charges

     Deferred charges include legal, accounting and other costs related to the proposed amalgamation
     with Arrabbiata Capital Corp. and related private placement.




 CW

                                 ""~
                                                         81

Biosign Technologies Inc.
Notes to the Financial Statements
For the Year Ended December 31, 2005 and for the Period from March 11, 2004 (Date of
Incorporation) to December 31, 2004


5.   Property, plant and equipment

     Property, plant and equipment as at December 31,2005 consist of:

                                                                         Accumulated             Net Book
                                                              Cost       Amortization             Value
     Computer hardware                                  $     48,279     $          16,416   $      31,863
     Furniture and fixtures                                   14.000                 8,167           5,833
                                                        $     62,279      $         24,583   $      37,696

     Property, plant and equipment as at December 31, 2004 consist of:

                                                                         Accumulated             Net Book
                                                              Cost       Amortization             Value
     Computer hardware                                  $     20,233      $          3,750   $      16,483
     Furniture and fixtures                                   14,000                 3.500          10.500
                                                        $      34.233     $          7,250   $      26,983

6.    Notes payable

      Notes payable consist of:
                                                                                   2005            2004
     Promissory notes bearing interest at 10% per annum, with
     principal and accrued interest convertible to common shares of
     the company or any successor entity at $0.2667 per common
     share.                                                               $ 1,711,577        $ 1,675,000

      The notes are convertible to common shares at the option of the holder, at a price of $0.2667 per
      common share and are automatically convertible into common shares at a price of $0.2667 per
      common share in connection with a going public' transaction or other 'liquidity' event. No value has
      been attributed to the convertible nature of the notes payable, as the company believes the amount
      is not significant.
      As security for the notes payable the company has provided a subordinated floating charge on all
      assets which is subordinated to other loans or encumbrances to a maximum of $3,000,000. As of
      December 31, 2005 the company had not entered into any other debt agreements.
      Since Biosign failed to complete an amalgamation, or such other transaction, with a company that
      had status of a reporting issuer in a province in Canada and whose shares were listed on a
      recognized stock exchange in Canada, on or before October 30, 2005, the note subscribers were
      issued an additional common share for each $0.2667 of outstanding notes and accrued interest
      outstanding, by such subscriber for nominal consideration as further described in Note 7.




 CW

     """'"                        I                                           .,
.

                                                            82

    Biosign Technologies Inc.
    Notes to the Financial Statements
    For the Year Ended December 31,2005               and for the Period from March 11, 2004 (Date of
    Incorporation) to December 31, 2004



    7.   Capital stock
         Capital stock consists of:
            Authorized -

              An unlimited number of common shares.
                                                                          Number           Amount
            Issued -
              Balance as at March 11, 2004 (date of incorporation)                2
              Issued June, 2004 for cash                                149,999,998    $      1,500
              Issued November/December, 2004 for cash                     2.718.410         725.000
              Balance as at December 31,2004                            152.718.410         726.500

              Issued January, 2005 on a conversion of certain
              notes payable and related interest                             241,000         64,274
              Issued May, 2005 for cash                                    1,463,935        550,000
              Issued October, 2005 for nominal consideration (note 6)     7,025,633             -
              Issued November, 2005 for cash (less fees of $7,500)          199,628          67,500
              Issued December, 2005 for cash (less fees of $26,939)         717.051         242.456
              Balance as at December 31,2005                            162.365,657    $ 1,650,730

    8.   Commitments

         The company is committed to premise leases with monthly payments of $9,169 to June 30, 2006,
         when the leases expire.




     CW
                                                     83

Biosign Technologies Inc.
Notes to the Financial Statements
For the Year Ended December 31, 2005 and for the Period from March 11, 2004 (Date of
Incorporation) to December 31, 2004


9.   Income tax
     The company'sfuture tax asset as of December31, 2005 and 2004 is as follows:
                                                                          2005             2004
     Non-capitallossesfor tax purposes,carriedforward               $ 2,574,510 $ 1,115,068
                 tax
     Investment credits                                                (218,651)
     Scientificresearchand experimentaldevelopment  expenses            325,046
     Timingdifferencesbetweenthe book and tax valuesof
     assetsand liabilities                                                 14.561           23.941
                                                                        2.695.466         1.139.009

     Future tax asset                                                   (1,014,034)       (413,802)
     Valuation allowance                                                 1.014.034         413.802
     Netfuturetax asset                                             $                 $
     At December31, 2005 the companyhad net operatinglosses availableto be carried forward of
     $2,574,510for incometax purposesthat expire in 2014 and 2015. For financialreportingpurposes
     no net future tax asset has been recognizedin respect of this carryforwardas the likelihoodof
     future taxable incomecan not be reasonablyassessed.
     A reconciliationbetweenthe company'sstatutoryand effectivetax rates is presentedbelow:
                                                                          2005             2004
                                                                           %                %
     Statutorytax rate                                                       36.12            36.12
     Impactof expensesnot deductiblefor tax purposes                          1.50             0.21
     Unrecognized  benefitof currentyear'stax loss                          (37.62)          (36.33)
                                                                              -                -

10. Subsequent    events

      Proposed amalgamation with Arrabbiata Capital Corp.
      Arrabbiata Capital Corp. ("ABC") and Biosign Technologies Inc. ("Biosign") proposed to
      amalgamate to form "Biosign Technologies Inc." pursuant to the terms and conditions of the
      Amalgamation Agreement dated March 21, 2005, as amended. ABC is a Capital Pool Corporation
      incorporated on June 23, 2000 under the laws of the Province of British Columbia.




 CW
                                                             84

      Biosign Technologies Inc.
      Notes to the Financial Statements
      For the Year Ended December 31, 2005 and for the Period from March 11, 2004 (Date of
      Incorporation) to December 31, 2004


      10. Subsequent events (continued)

            The Amalgamation Agreement
            Pursuant to the Amalgamation Agreement entered into between ABC and Biosign, each one (1)
            Biosign common share issued and outstanding on the Amalgamation Date, other than those held
            by dissenting holders of Biosign common shares, would be exchanged for 1.231803 Amalco
            common shares; each one (1) Biosign Private Placement Warrant issued and outstanding on the
            Amalgamation Date would be exchanged for 1.231803 Amalco Warrants; and, each one (1) ABC
            common share issued and outstanding on the Amalgamation Date, other than those held by
            dissenting holders of ABC common shares, would be exchanged for one-half (1/2) of one (1)
            Amalco common share.

            Biosign Private Placement
            In conjunction with the proposed amalgamation, Biosign intended to complete the Biosign Private
            Placement in the aggregate principal amount of $13,600,000 through the issuance and sale of
            Biosign Private Placement Shares. The Biosign Private Placement Shares would be sold at a price
            of $0.3757 per share; 36,199,097 Biosign Private Placement Shares would be issuable pursuant to
            the Biosign Private Placement.

            Subsequent to December 31,2005
            Closing of the amalgamation was conditionally approved subject to certain conditions, including,
            among other things, that the transaction be completed by March 15, 2006. On March 15, 2006 the
            companies were not able to satisfy this condition and the transaction was terminated and the
            deferred charges were written-off.

            Proposed amalgamation with Karma Capital Corp.
            Karma Capital Corp. ("Karma") and Biosign Technologies Inc. ("Biosign") entered into a letter of
            intent dated May 1, 2006 whereby the companies propose to amalgamate to form "Biosign
            Technologies Inc.". As of May 11, 2006 the companies had not yet entered into a formal
            amalgamation agreement but anticipate that such an agreement will be completed and on
            completion of the amalgamation the new company will be listed on the Canadian Trading and
            Quotation System Inc. exchange ("CNQ"). Karma Capital Corp. is a public company which was
            incorporated on September 1, 1999 under the laws of the Province of British Columbia.

            The Letter of Intent
            Pursuant to the Letter of Intent ("LOI") entered into between Karma and Biosign, each one (1)
            Biosign common share issued and outstanding on the Amalgamation Date, other than those held
            by dissenting holders of Biosign common shares, shall be exchanged for 0.3 Amalco common
            shares and each one (1) Karma common share issued and outstanding on the Amalgamation
            Date, other than those held by dissenting holders of Karma common shares, shall be exchanged
            for 0.05 of one (1) Amalco common share.

            Private Placement
            In conjunction with the proposed amalgamation, Biosign and Karma intend to complete, together, a
            total private placement of a minimum of $3,000,000, through the issuance of a combination of
            convertible notes and common shares of the respective companies.




       CW

,-~
.   ,.

                                                            85

         Biosign Technologies   Inc.
         Notes to the Financial Statements
         For the Year Ended December 31, 2005 and for the Period from March 11, 2004 (Date of
         Incorporation) to December 31,2004



         11. Comparative figures
             Certainbalancesfor the prior periodhave been regroupedto conformwith the financialstatement
             presentationadoptedin the currentyear.




          CW
                                     I                                                                     "'~"..-
                            86



APPENDIX “C” - Financial Statements of Karma Capital Corp.
                                                87




      BIOSIGN TECHNOLOGIES (BC) INC. (FORMERLY KARMA CAPITAL CORP.)
                                 INTERIM FINANCIAL STATEMENTS
                                           June 30, 2006
                                            (Unaudited)

The Company's independent auditor has not performed a review of these interim financial statements.
                                                            88


       The Company's independent auditor has not performed a review of these interim financial statements.


Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)
Incorporated under the laws of British Columbia

                                                   BALANCE SHEETS
                                            (See Note 1 - Basis of Presentation)

As at June 30, 2006 and December 31, 2005                                            (Expressed in Canadian dollars)


                                                                                   June 30, 2006     December 31,
                                                                                    (Unaudited)      2004 (Audited)
                                                                                         $                 $

ASSETS
Current
Cash                                                                                         393                 533
GST recoverable                                                                              322               8,025
                                                                                             715               8,558




LIABILITIES
Current
Accounts payable and accrued liabilities                                                 118,874             111,425
Advances payable                                                                          47,506
                                                                                         166,380             111,425

SHAREHOLDERS' DEFICIENCY
Share capital                                                                              306,312           306,312
Deficit                                                                                  (471,977)         (409,179)
Total shareholders' deficit                                                              (165,665)         (102,867)
                                                                                              715             8,558

The accompanying notes are an integral part of these financial statements

Approved on behalf of the Board:

              "Dominique F. Borrelly"               , Director

                   "Sydney Au"                      , Director
                                                            89


       The Company's independent auditor has not performed a review of these interim financial statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                                        STATEMENTS OF LOSS AND DEFICIT
                                            (See Note 1 - Basis of Presentation)

For the six month period ended June 30, 2006 and June 30, 2005                              (Expressed in Canadian dollars)

                                                        Three months ended June 30           Six months ended June 30
                                                           2006            2005               2006             2005
                                                       (Unaudited)     (Unaudited)         (Unaudited)      (Unaudited)
                                                            $                $                   $               $

REVENUE
Interest income                                                   -                   1              -                    5

EXPENSES
Accounting and audit                                           7,850                -              7,850                -
Consulting                                                     1,250                -              9,750                -
Transfer agent fees                                           24,928                200           25,118             3,230
Legal                                                         20,000                -             20,000                -
Travel                                                            -                 -                 -                427
Office and miscellaneous                                            50                47                80             795
                                                               54,078                247           62,798             4,452
Loss for the period                                          (54,078)              (246)         (62,798)           (4,447)

Deficit, beginning of period                                (417,899)         (408,383)        (409,179)         (404,182)
Deficit, end of period                                      (471,977)         (408,629)        (471,977)         (408,629)

Loss per common share                                            (0.04)            0.00            (0.05)             0.00

Weighted average number of common shares
outstanding                                                 1,350,000         1,350,000        1,350,000         1,350,000

The accompanying notes are an integral part of these financial statements
                                                            90


       The Company's independent auditor has not performed a review of these interim financial statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                                           STATEMENTS OF CASH FLOWS
                                            (See Note 1 - Basis of Presentation)

For the six month period ended June 30, 2006 and June 30, 2005                              (Expressed in Canadian dollars)

                                                        Three months ended June 30           Six months ended June 30
                                                           2006            2005               2006             2005
                                                       (Unaudited)     (Unaudited)         (Unaudited)      (Unaudited)
                                                            $                $                   $               $

OPERATING ACTIVITIES
Loss for the period                                          (54,078)              (246)         (62,798)           (4,447)
Changes in non-cash working capital
  GST recoverable                                               (318)               (13)           7,703              (308)
  Advances payable                                            47,506                -            47,506                 -
Accounts payable and accrued liabilities                        6,722               214            7,449              3,479
Cash provided by/(used in) operating activities                 (168)               (45)           (140)            (1,276)

Increase in cash during the period                               (168)              (45)            (140)           (1,276)
Cash, beginning of the period                                      561              708               533             1,939
Cash, end of the period                                            393              663               393               663

The accompanying notes are an integral part of these financial statements
                                             91

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                  NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                        (Expressed in Canadian dollars)


1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.) (to be referred to as “Karma”)
was incorporated on September 1, 1999 under the laws of the Province of British Columbia and is
classified as a Capital Pool Company as defined in the Canadian Venture Exchange Policy 2.4.
Pursuant to a Notice of Alteration dated June 30, 2006 filed pursuant to section 257 of the British
Columbia Business Corporations Act the company changed its name to Biosign Technologies
(BC) Inc. The principal business of the Company is to identify and evaluate opportunities for the
acquisition of an interest in assets or businesses and, once identified, to negotiate an acquisition or
participation within 18 months of listing on the Exchange (“Qualifying Transaction”).

The Company did not complete its Qualifying Transaction within the specified time [see note 4]
and accordingly, the Company’s shares were suspended from trading on February 21, 2003 and
will remain suspended until the completion of a Qualifying Transaction. On March 25, 2005, the
Canadian Venture Exchange delisted the securities of Karma in accordance with Canadian
Venture Exchange Policy 2.4 for failure to complete a Qualifying Transaction. The Company’s
ability to continue as a going concern is dependent upon obtaining additional financing and the
completion of a Qualifying Transaction. The outcome of these matters cannot be predicted at this
time.

By letter of intent dated May 1, 2006, Karma proposed to merge with Biosign Technologies Inc.
(“Biosign”) by way of statutory amalgamation pursuant to which all of the outstanding securities
of Karma and Biosign would be exchanged for securities of the continuing amalgamated entity
under the name “Biosign Technologies Inc.”.

In June, 2006 Karma applied to the British Columbia Securities Commission (the “BCSC”), the
Alberta Securities Commission (the “ASC”) and the Autorite des Marches Financiers (the
“AMF”) for an order (the “Revocation Order”) lifting the outstanding cease trade orders
(collectively the “Cease Trade Orders”) against the securities of Karma to allow Karma to hold an
Annual and Special Meeting of the shareholders of Karma to approve the continuance of Karma
into Ontario and the proposed Amalgamation. On June 29, 2006 the BCSC and on June 30, 2006
the ASC provided a Partial Revocation Order to permit Karma to:
     1. hold the annual and special meeting of the shareholders of Karma to approve the
          Amalgamation;
     2. complete the Amalgamation;
     3. issue common shares in connection with the settlement of outstanding debt; and
     4. issue common shares in connection with the Private Placement.

On July 3, 2006 the AMF approved the Revocation Order as well as approved the Revocation of
reporting issuer status of Karma in Quebec.




                                                                                                     1
                                           92

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                 NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                     (Expressed in Canadian dollars)


Pursuant to the Annual and Special Meeting of the shareholders of Biosign held on June 28, 2006
the shareholders of Biosign voted in favour of the proposed amalgamation with Karma to form a
new company. Pursuant to the Annual and Special Meeting of the shareholders of Karma held on
June 30, 2006 and reconvened on July 10, 2006 the shareholders of Karma voted in favour to
continue Karma under the Business Corporations Act (Ontario) and amalgamate with Biosign to
form the Issuer. A summary of the proposed transaction and the business of Biosign is included
below and full details of the proposed transaction, including a full description of the business of
Biosign, can be found in Karma’s Management Information Circular (the “Circular”) dated May
31, 2006 which can be found on SEDAR (www.sedar.com).

Proposed Transaction
Introduction

Karma and Biosign have entered into the Letter of Intent pursuant to which Karma and Biosign
intend to combine by way of statutory amalgamation (the “Amalgamation”) under the provisions
of the Business Corporations Act (Ontario) (“OBCA”). Pursuant to the Amalgamation, all of the
outstanding securities in the capital stock of Karma and Biosign will be converted into common
shares (“Amalco Shares”) and share purchase warrants (“Amalco Warrants”) in the amalgamated
entity (“Amalco”) which shall carry on with the name of “Biosign Technologies Inc.”.

Prior to the completion of the Amalgamation Biosign and Karma will be seeking to carry out a
non-brokered private placement of at least $3,000,000 (the “Private Placement”) through a
combination of Karma Shares and Biosign Shares and/or Biosign Financing Notes (which will be
automatically converted into Biosign Shares immediately prior to the Amalgamation) to fund the
ongoing business of Biosign and the costs of the Amalgamation. The Karma Shares will be issued
at a price of $0.05 per share and the Biosign Shares (including any Biosign Shares issued upon
conversion of Biosign Financing Notes) will be issued at a price of $0.30 per share such that upon
completion of the amalgamation such Karma Shares and Biosign Shares, respectively, will be
exchanged for Amalco Shares at a deemed price of $1.00 per share. It is anticipated that
$2,500,000 of the Private Placement will be completed by Biosign and $500,000 will be
completed by Karma, provided that either party may, with the consent of the other party, increase
or decrease the size of its portion of the Private Placement.

The Amalgamation

Karma is proposing to amalgamate with Biosign with Biosign’s business being the continuing
business of the amalgamated company on substantially the terms and conditions set out in the
form of amalgamation agreement (the “Amalgamation Agreement”) attached to the Circular.
Subject to the continuance of Karma under the OBCA becoming effective Karma intends to
immediately enter into the Amalgamation Agreement with Biosign pursuant to which:



                                                                                                 2
                                          93

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                 NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                    (Expressed in Canadian dollars)


(a)     each one (1) Biosign Share issued and outstanding on the amalgamation date, other than
        those held by dissenting holders of Biosign Shares, shall be exchanged for 0.30 of one
        Amalco Share;

(b)     each one (1) Karma Share issued and outstanding on the amalgamation date, other than
        those held by dissenting holders of Karma Shares, shall be exchanged for 0.05 of one
        Amalco Share;

(c)     each one (1) Biosign Warrant issued and outstanding on the amalgamation date shall be
        exchanged for 0.30 of one Amalco Warrant; and

(d)     each one (1) Karma Warrant issued and outstanding on the amalgamation date shall be
        exchanged for 0.05 of one Amalco Warrant.

All of the Amalco Shares to be issued pursuant to the Amalgamation will be issued to the then
holders of shares of Karma and Biosign at a deemed price of $1.00 per share. Immediately prior to
closing of the Amalgamation, it is anticipated that there will be:

(a)      1,350,000 Karma Shares issued and outstanding;

(b)      Up to 2,200,000 Karma Shares issued and outstanding on settlement of outstanding debt;

(c)      163,938,020 Biosign Shares issued and outstanding;

(d)      $1,711,576.82 in principal amount of Biosign Notes outstanding, plus accrued interest to
         May 31, 2006 of $270,412, which are automatically convertible into Biosign Shares on
         the basis of one Biosign Share for every $0.2667 principal and accrued interest
         immediately prior to the completion of the Amalgamation. Based on principal and
         accrued interest to May 31, 2006, the Biosign Notes are convertible into approximately
         7,431,540 Biosign Shares; and

(e)      Assuming the completion of the Private Placement additional Karma Shares and/or
         Biosign Shares which would be exchanged for a further 3,000,000 Amalco Shares.


On completion of the Amalgamation the continuing business of Karma will be the business of
Biosign

THERE ARE NO ASSURANCES THAT THE REVOCATION ORDER WILL BE GRANTED TO
KARMA ON THE TERMS AND CONDITIONS APPLIED FOR OR AT ALL. IN THE EVENT THAT
THE PARTIAL REVOCATION AND, OR FULL REVOCATION OF THE CEASE TRADE ORDERS
CANNOT BE LIFTED PRIOR TO THE MEETING AND, OR AMALGAMATION DATE (or such other

                                                                                               3
                                           94

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                 NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                     (Expressed in Canadian dollars)


date as Karma and Biosign may agree) ON TERMS SATISFACTORY TO KARMA AND BIOSIGN OR
AT ALL, THE AMALGAMATION, MAY NOT BE COMPLETED.

2. INTERIM REPORTING

While the information presented in the accompanying interim financial statements is unaudited, it
includes all adjustments which are, in the opinion of management, necessary to present fairly the
financial position, results of operations and changes in the financial position for the interim
periods presented. It is suggested that these interim financial statements be read in conjunction
with the company’s December 31, 2005 annual financial statements. These financial statements
follow the same accounting policies and methods as the company’s December 31, 2005 annual
financial statements.


3.. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies used in the preparation of these
financial statements:

Use of estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts
recorded in the financial statements. Actual results could differ from these estimates.

Short-term investments
The Company considers all highly liquid financial investments with an original maturity greater
than three months to be short-term investments. Short-term investments are recorded at the lower
of cost and market.

Income taxes
Income taxes are accounted for using the liability method of tax allocation. Future income taxes
reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used for income tax purposes.

Stock-based compensation
The Company uses the fair value method for valuing stock option grants. Compensation costs
attributable to share options granted are measured at fair value at the grant date and are expensed


                                                                                                 4
                                           95

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                 NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                     (Expressed in Canadian dollars)


over vesting periods with a corresponding increase to contributed surplus. Upon exercise of the
stock options, consideration paid by the option holder, together with the amount previously
recognized in contributed surplus, is recorded as an increase to share capital.

Loss per common share
Loss per common share has been determined by dividing net loss by the weighted average number
of common shares outstanding during the year, excluding common shares subject to the escrow
agreement. Since the Company’s stock options are anti-dilutive, fully diluted loss is equivalent to
basic loss per common share.

Financial instruments
The carrying amounts of the Company’s financial instruments represented by short-term
investments, accounts receivable and accounts payable, approximate fair value due to their current
nature.


4. SHARE CAPITAL

[a] Authorized
       1,000,000,000 common shares, without par value

[b] Issued and outstanding
                                                                     Number
                                                                     of shares            Amount
                                                                         #                  $

Balance, December 31, 2005                                           3,756,667            306,312
Cancelled pursuant to the escrow agreement [ii]                      2,406,667                 -
Balance, December 31, 2004 and June 30, 2005                         1,350,000            306,312

[i]   Pursuant to an initial public offering in May 2001, the Company issued 1,350,000 common
      shares at $0.15 per share for gross proceeds of $202,500. In connection with the initial
      public offering, the Company incurred an agent’s commission of $14,175 and other share
      issue costs of $61,111. In addition, the Company granted to the agent, warrants to purchase
      108,000 common shares with an exercise price of $0.15 which expired unexercised on
      November 11, 2002.



                                                                                                 5
                                              96

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                   NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                        (Expressed in Canadian dollars)


[ii]   Pursuant to various subscription agreements, the Company issued 2,406,667 common shares
       at $0.075 per share for total consideration of $180,500 to its directors, officers and founders.
       The shares are subject to an escrow agreement. The shares will be released pro rata to the
       shareholders as to 10% on the date the Company completes the Qualifying Transaction, and
       15% on each six month period thereafter. The release of escrow shares is also subject to the
       direction and determination of the Exchange. Any shares not released within ten years of the
       date of the escrow agreement will be cancelled. In addition, 2,406,667 shares held in escrow
       will be cancelled should the Company fail to complete its Qualifying Transaction or is
       delisted. On March 25, 2005, the Exchange delisted the securities of Karma in accordance
       with Exchange Policy 2.4 for failure to complete a Qualifying Transaction. On March 25,
       2005, the Exchange delisted the securities of Karma in accordance with Exchange Policy 2.4
       for failure to complete a Qualifying Transaction.

       The net proceeds from the financings have certain limitations placed on them until
       completion of the Qualifying Transaction.

       On April 16 2006, 2,406,667 shares held in escrow were returned to treasury and cancelled
       for no consideration as a result of the Company not meeting the qualifying transaction
       requirements and being delisted.
[c] Stock options
During the year ended December 31, 2000, the Company granted options to directors and officers
to purchase 370,000 common shares at $0.15 per share exercisable through May 11, 2006. Shares
issued upon the exercise of these options will be placed in escrow. As at June 30, 2006 none of
these options remain outstanding.

[d] Loss per share
                                                                              2006               2005

Numerator
Net loss for the six month period                                         $62,798              $4,447

Denominator
Weighted average number of common shares
  outstanding                                                           3,756,667           3,756,667
Less: weighted average number of escrowed shares
  outstanding                                                          (2,406,667)         (2,406,667)
Weighted average number of common shares
  outstanding                                                           1,350,000           1,350,000

Loss per common share                                                       $(0.05)           $(0.00)


                                                                                                     6
                                          97

 The Company's independent auditor has not performed a review of these interim financial
                                     statements.

Biosign Technologies (BC) Inc. (formerly Karma Capital Corp.)


                 NOTES TO FINANCIAL STATEMENTS

June 30, 2006                                                   (Expressed in Canadian dollars)




5. RELATED PARTY TRANSACTIONS
In the six months ended June 30, 2006, the Company was advanced funds totaling $47,506 from
Mr. Sydney Au, the Chairman and CEO, in order to bring itself back into good standing with the
various commissions. Included in advances payable $47,506 related to these amounts. This
transaction was recorded at its exchange amount.

No compensation has been paid or is owing to officers and directors of the Company in respect of
services rendered to date and pursuant to Capital Pool Company policy no such remuneration may
be paid to officers and directors for services incurred prior to completion of the Qualifying
Transaction.




                                                                                              7
              98




KARMA CAPITAL CORP.

  FINANCIAL STATEMENTS


DECEMBER 31, 2005 AND 2004
(Expressed in Canadian Dollars)
                                               99




                                  AUDITORS' REPORT



To the Shareholders of
Karma Capital Corp.


We have audited the balance sheet of Karma Capital Corp. as at December 31, 2005 and 2004,
and the statements of loss and deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2005 and 2004, and the results of its operations and
its cash flows for the years then ended in accordance with Canadian generally accepted
accounting principles.




Vancouver, Canada                                                          “Morgan & Company”

May 9, 2006                                                               Chartered Accountants
                                                 100

                                KARMA CAPITAL CORP.
                                       BALANCE SHEETS
                                    (Expressed in Canadian Dollars)




                                                                              DECEMBER 31
                                                                            2005      2004

ASSETS

Current
   Cash                                                               $        533    $       1,939
   GST recoverable                                                           8,025            7,686

                                                                      $      8,558    $       9,625

LIABILITIES

Current
   Accounts payable and accrued liabilities                           $   111,425     $    107,495

SHAREHOLDERS’ DEFICIENCY

Share Capital                                                             306,312          306,312

Deficit                                                                   (409,179)        (404,182)
                                                                          (102,867)         (97,870)

                                                                      $      8,558    $       9,625



Approved on Behalf of the Board:


          “Dominique F. Borrelly”                                         “Ilan Hofmann”
                 Director                                                     Director




           The accompanying notes are an integral part of these financial statements.
                                            101

                              KARMA CAPITAL CORP.
                       STATEMENTS OF LOSS AND DEFICIT
                               (Expressed in Canadian Dollars)




                                                                         YEARS ENDED
                                                                         DECEMBER 31
                                                                       2005        2004

Revenue
   Interest income                                               $           5    $         18

Expenses
   Accounting and audit                                                   -              1,100
   Transfer agent fees                                                   3,650           4,636
   Legal                                                                  -             33,432
   Travel                                                                   427           -
   Office and miscellaneous                                                 925          3,676
                                                                         5,002          42,844

Loss For The Year                                                       (4,997)         (42,826)

Deficit, Beginning Of Year                                            (404,182)        (361,356)

Deficit, End Of Year                                             $    (409,179)   $    (404,182)


Loss Per Common Share                                            $       (0.00)   $       (0.03)


Weighted Average Number Of Common Shares
 Outstanding                                                         1,350,000        1,350,000




         The accompanying notes are an integral part of these financial statements.
                                             102

                             KARMA CAPITAL CORP.
                           STATEMENTS OF CASH FLOWS
                                (Expressed in Canadian Dollars)




                                                                        YEARS ENDED
                                                                        DECEMBER 31
                                                                        2005     2004

Cash Flows From Operating Activities
   Loss for the year                                               $   (4,997)   $ (42,826)
   Changes in non-cash working capital items:
      GST receivable                                                     (339)        (2,893)
      Accounts payable and accrued liabilities                          3,930         44,045

Increase (Decrease) In Cash During The Year                            (1,406)        (1,674)

Cash, Beginning Of Year                                                 1,939          3,613

Cash, End Of Year                                                  $      533    $     1,939




         The accompanying notes are an integral part of these financial statements.
                                              103

                              KARMA CAPITAL CORP.
                         NOTES TO FINANCIAL STATEMENTS

                             DECEMBER 31, 2005 AND 2004
                                 (Expressed in Canadian Dollars)




1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Karma Capital Corp. was incorporated on September 1, 1999 under the laws of the Province
  of British Columbia and is classified as a Capital Pool Company as defined in the TSX
  Venture Exchange (the “Exchange”) Policy 2.4. The principal business of the Company is to
  identify and evaluate opportunities for the acquisition of an interest in assets or businesses
  and, once identified, to negotiate an acquisition or participation within 18 months of listing on
  the Exchange (“Qualifying Transaction”).

  The Company did not complete its Qualifying Transaction within the specified time and
  accordingly, the Company’s shares were suspended from trading on February 21, 2003 and
  will remain suspended until the completion of a Qualifying Transaction. The Company’s
  ability to continue as a going concern is dependent upon obtaining additional financing and
  the completion of a Qualifying Transaction. The outcome of these matters cannot be
  predicted at this time.


2. SIGNIFICANT ACCOUNTING POLICIES

  The following is a summary of significant accounting policies used in the preparation of
  these financial statements:

  Use of Estimates

  The preparation of financial statements in conformity with Canadian generally accepted
  accounting principles requires management to make estimates and assumptions that affect
  the amounts recorded in the financial statements. Actual results could differ from these
  estimates.

  Income Taxes

  Income taxes are accounted for using the liability method of tax allocation. Future income
  taxes reflect the net tax effects of temporary differences between the carrying amounts of
  assets and liabilities for financial reporting purposes and the amount used for income tax
  purposes.

  Stock-Based Compensation

  The Company uses the fair value method for valuing stock option grants. Compensation
  costs attributable to share options granted are measured at fair value at the grant date and
  are expensed over vesting periods with a corresponding increase to contributed surplus.
  Upon exercise of the stock options, consideration paid by the option holder, together with
  the amount previously recognized in contributed surplus, is recorded as an increase to
  share capital.
                                             104

                             KARMA CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2005 AND 2004
                                (Expressed in Canadian Dollars)




2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Loss Per Common Share

  Loss per common share has been determined by dividing net loss by the weighted average
  number of common shares outstanding during the year, excluding common shares subject
  to the escrow agreement. Since the Company’s stock options are anti-dilutive, fully diluted
  loss is equivalent to basic loss per common share.

  Financial Instruments

  The carrying amounts of the Company’s financial instruments represented by cash, GST
  recoverable, and accounts payable and accrued liabilities, approximate fair value due to
  their current nature.


3. SHARE CAPITAL

  a) Authorized

     1,000,000,000 common shares, without par value

  b) Issued and Outstanding

                                                                  NUMBER OF
                                                                   SHARES        AMOUNT

      Balance, December 31, 2003, 2004 and 2005                   3,756,667    $ 306,312

     i)   Pursuant to an initial public offering in May 2001, the Company issued 1,350,000
          common shares at $0.15 per share for gross proceeds of $202,500. In connection
          with the initial public offering, the Company incurred an agent’s commission of
          $14,175 and other share issue costs of $61,111. In addition, the Company granted to
          the agent, warrants to purchase 108,000 common shares with an exercise price of
          $0.15 which expired unexercised.
                                            105

                             KARMA CAPITAL CORP.
                        NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2004 AND 2003
                               (Expressed in Canadian Dollars)




3. SHARE CAPITAL (Continued)

   b) Issued and Outstanding (Continued)

      ii) Pursuant to various subscription agreements, the Company issued 2,406,667
          common shares at $0.075 per share for total consideration of $180,500 to its
          directors, officers and founders. The shares are subject to an escrow agreement.
          The shares will be released pro rata to the shareholders as to 10% on the date the
          Company completes the Qualifying Transaction, and 15% on each six month period
          thereafter. The release of escrow shares is also subject to the direction and
          determination of the Exchange. Any shares not released within ten years of the date
          of the escrow agreement will be cancelled. In addition, 2,406,667 shares held in
          escrow will be cancelled should the Company fail to complete its Qualifying
          Transaction or is delisted.

         The net proceeds from the financings have certain limitations placed on them until
         completion of the Qualifying Transaction.

         Subsequent to December 31, 2005, 2,406,667 shares held in escrow were returned
         to treasury and cancelled for no consideration as a result of the Company not
         meeting the qualifying transaction requirements.

   c) Stock Options

      During the year ended December 31, 2000, the Company granted options to directors
      and officers to purchase 370,000 common shares at $0.15 per share exercisable
      through May 11, 2006. Shares issued upon the exercise of these options will be placed
      in escrow. As at December 31, 2005, these options remain outstanding. Subsequent to
      December 31, 2005, all stock options expired unexercised. No additional stock options
      were granted in 2004 and 2005.
                                               106

                                 KARMA CAPITAL CORP.
                         NOTES TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2005 AND 2004
                                  (Expressed in Canadian Dollars)




3. SHARE CAPITAL (Continued)

   d) Loss Per Share
                                                                         2005              2004

      Numerator
         Net loss for the year                                      $       4,997     $      42,826

      Denominator
         Weighted average number of common shares
           outstanding                                                  3,756,667         3,756,667
         Less: Weighted average number of escrowed
           shares outstanding                                           (2,406,667)       (2,406,667)

          Weighted average number of common shares
           outstanding                                                  1,350,000         1,350,000

          Loss per common share                                     $       (0.00)    $       (0.03)


4. RELATED PARTY TRANSACTIONS

   Accounts payable and accrued liabilities include $54,241 (2004 - $54,241) due to a law firm
   in which one of the partners is an officer of the Company.

   No compensation has been paid or is owing to officers and directors of the Company in
   respect of services rendered to date and pursuant to Capital Pool Company policy no such
   remuneration may be paid to officers and directors for services incurred prior to completion
   of the Qualifying Transaction.


5. INCOME TAXES

   As at December 31, 2005, the Company has approximately $475,000 of non-capital loss
   carryforwards available to reduce taxable income for future years. These losses expire as
   follows:

                                     2007       $     2,000
                                     2008            67,000
                                     2009           273,000
                                     2010            55,000
                                     2014            58,000
                                     2015            20,000

                                                $ 475,000
                                              107

                               KARMA CAPITAL CORP.
                            NOTES TO FINANCIAL STATEMENTS

                              DECEMBER 31, 2005 AND 2004
                                 (Expressed in Canadian Dollars)




5. INCOME TAXES (Continued)

  Significant components of the Company’s future tax assets are shown below:

                                                                       2005                     2004

  Future tax assets:
      Non-capital loss carryforwards                               $   164,000          $       162,000
      Share issue costs                                                   -                       5,000

  Total future tax assets                                               164,000               167,000
  Valuation allowance                                                  (164,000)             (167,000)

  Total future tax assets                                          $         -          $          -

  The potential income tax benefits relating to these net future tax assets have not been
  recognized in the accounts as their realization did not meet the requirements of “more likely
  than not” under the liability method of tax allocation. Accordingly, no future tax assets have
  been recognized as at December 31, 2005 and December 31, 2004.

  Income taxes vary from the amount that would be computed by applying the combined
  statutory income tax rate of 35% [2004 – 36%] for the following reasons:

                                                                                 2005            2004

  Income tax recovery based on loss                                      $ (2,000)          $ (21,000)
  (Increase) Decrease in recovery resulting from:
      Share issue costs                                                      (6,000)             (6,000)
      Unrecognized current year income tax losses                             8,000              27,000

  Income tax (recovery)                                                  $         -        $          -


6. SUBSEQUENT EVENT

  On May 1, 2006, the Company signed a letter agreement with a private company located in
  Ontario, Canada, to enter into a proposed amalgamation or business combination. The
  letter agreement is subject to due diligence by each company, regulatory approvals,
  execution of a formal agreement and approval of the board of directors of both companies.
                                              108

                               KARMA CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                             DECEMBER 31, 2005 AND 2004
                                 (Expressed in Canadian Dollars)




6. SUBSEQUENT EVENT (Continued)

Proposed Amalgamation

Karma Capital Corp. (“Karma”) and Biosign Technologies Inc. (“Biosign”) entered into a letter of
intent dated May 1, 2006 whereby the companies propose to amalgamate to form “Biosign
Technologies Inc.”. On completion of the amalgamation the new company will seek listing on
the Canadian Trading and Quotation System Inc. exchange (“CNQ”). Biosign is a private
company which was incorporated on March 11, 2004 under the laws of the Province of Ontario.

The Letter of Intent

Pursuant to the letter of Intent (“LOI”) entered into between Karma and Biosign, each one (1)
Biosign common share issued and outstanding on the Amalgamation Date, other than those
held by dissenting holders of Biosign common shares, shall be exchanged for 0.3 Amalco
common shares and each one (1) Karma common share issued and outstanding on the
Amalgamation Date, other than those held by dissenting holders of Karma common shares,
shall be exchanged for 0.05 of one (1) Amalco common share. Completion of the
amalgamation is subject to due diligence by each company, regulatory approvals, execution of a
formal agreement and approval of the board of directors of both companies.

Karma is required ot pay a fee of $250,000 in the event a formal agreement is not entered into
by May 30, 2006, or such later date as agreed, or should Karma not be able to meet its listing
requirements after performing all reasonable acts and remedies, or if Karma terminated the
agreement as a result of the due diligence review.
             109




KARMA CAPITAL CORP.

  FINANCIAL STATEMENTS


DECEMBER 31, 2004 AND 2003
(Expressed in Canadian Dollars)
                                               110




                                  AUDITORS' REPORT



To the Shareholders of
Karma Capital Corp.


We have audited the balance sheet of Karma Capital Corp. as at December 31, 2004 and 2003,
and the statements of loss and deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2004 and 2003, and the results of its operations and
its cash flows for the years then ended in accordance with Canadian generally accepted
accounting principles.




Vancouver, Canada                                                         “Morgan & Company”

May 9, 2006                                                               Chartered Accountants
                                                 111

                                KARMA CAPITAL CORP.
                                       BALANCE SHEETS
                                    (Expressed in Canadian Dollars)




                                                                               DECEMBER 31
                                                                             2004      2003

ASSETS

Current
   Cash                                                               $       1,939    $      3,613
   GST recoverable                                                            7,686           4,793

                                                                      $       9,625    $      8,406

LIABILITIES

Current
   Accounts payable and accrued liabilities                           $     107,495    $     63,450

SHAREHOLDERS’ DEFICIENCY

Share Capital                                                               306,312         306,312

Deficit                                                                    (404,182)       (361,356)
                                                                            (97,870)        (55,044)

                                                                      $       9,625    $      8,406



Approved on Behalf of the Board:


          “Dominique F. Borrelly”                                         “Ilan Hofmann”
                 Director                                                     Director




           The accompanying notes are an integral part of these financial statements.
                                            112

                              KARMA CAPITAL CORP.
                       STATEMENTS OF LOSS AND DEFICIT
                               (Expressed in Canadian Dollars)




                                                                         YEARS ENDED
                                                                         DECEMBER 31
                                                                       2004        2003

Revenue
   Interest income                                               $         18     $       1,127

Expenses
   Accounting and audit                                                 1,100           13,609
   Consulting (recovery)                                                 -              (8,000)
   Transfer agent fees                                                  4,636            5,619
   Legal                                                               33,432           10,438
   Travel                                                                -                 730
   Office and miscellaneous                                             3,676             (988)
   Write off of advances                                                 -              19,509
                                                                       42,844           40,917

Loss For The Year                                                      (42,826)         (39,790)

Deficit, Beginning Of Year                                            (361,356)        (321,566)

Deficit, End Of Year                                             $    (404,182)   $    (361,356)


Loss Per Common Share                                            $       (0.03)   $       (0.03)


Weighted Average Number Of Common Shares
 Outstanding                                                         1,350,000        1,350,000




         The accompanying notes are an integral part of these financial statements.
                                            113

                             KARMA CAPITAL CORP.
                           STATEMENTS OF CASH FLOWS
                               (Expressed in Canadian Dollars)




                                                                       YEARS ENDED
                                                                       DECEMBER 31
                                                                       2004     2003

Cash Flows From Operating Activities
   Loss for the year                                              $ (42,826)    $ (39,790)
   Add: Non-cash item:
      Write off of advances                                              -            19,509

   Changes in non-cash working capital items:
      GST receivable                                                  (2,893)           8,663
      Prepaid expenses                                                   -               -
      Accounts payable and accrued liabilities                        44,045          (29,722)
                                                                      (1,674)         (41,340)

Cash Flows From Investing Activities
   Advances                                                              -            (19,509)
   Redemption of short term investments                                  -             55,571
                                                                         -             36,062

Decrease In Cash During The Year                                      (1,674)          (5,278)

Cash, Beginning Of Year                                                3,613           8,891

Cash, End Of Year                                                 $    1,939    $      3,613




         The accompanying notes are an integral part of these financial statements.
                                              114

                              KARMA CAPITAL CORP.
                         NOTES TO FINANCIAL STATEMENTS

                             DECEMBER 31, 2004 AND 2003
                                 (Expressed in Canadian Dollars)




1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Karma Capital Corp. was incorporated on September 1, 1999 under the laws of the Province
  of British Columbia and is classified as a Capital Pool Company as defined in the TSX
  Venture Exchange (the “Exchange”) Policy 2.4. The principal business of the Company is to
  identify and evaluate opportunities for the acquisition of an interest in assets or businesses
  and, once identified, to negotiate an acquisition or participation within 18 months of listing on
  the Exchange (“Qualifying Transaction”).

  The Company did not complete its Qualifying Transaction within the specified time and
  accordingly, the Company’s shares were suspended from trading on February 21, 2003 and
  will remain suspended until the completion of a Qualifying Transaction. The Company’s
  ability to continue as a going concern is dependent upon obtaining additional financing and
  the completion of a Qualifying Transaction. The outcome of these matters cannot be
  predicted at this time.


2. SIGNIFICANT ACCOUNTING POLICIES

  The following is a summary of significant accounting policies used in the preparation of
  these financial statements:

  Use of Estimates

  The preparation of financial statements in conformity with generally accepted accounting
  principles requires management to make estimates and assumptions that affect the
  amounts recorded in the financial statements. Actual results could differ from these
  estimates.

  Income Taxes

  Income taxes are accounted for using the liability method of tax allocation. Future income
  taxes reflect the net tax effects of temporary differences between the carrying amounts of
  assets and liabilities for financial reporting purposes and the amount used for income tax
  purposes.

  Stock-Based Compensation

  The Company uses the fair value method for valuing stock option grants. Compensation
  costs attributable to share options granted are measured at fair value at the grant date and
  are expensed over vesting periods with a corresponding increase to contributed surplus.
  Upon exercise of the stock options, consideration paid by the option holder, together with
  the amount previously recognized in contributed surplus, is recorded as an increase to
  share capital.
                                             115

                             KARMA CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2004 AND 2003
                                (Expressed in Canadian Dollars)




2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Loss Per Common Share

  Loss per common share has been determined by dividing net loss by the weighted average
  number of common shares outstanding during the year, excluding common shares subject
  to the escrow agreement. Since the Company’s stock options are anti-dilutive, fully diluted
  loss is equivalent to basic loss per common share.

  Financial Instruments

  The carrying amounts of the Company’s financial instruments represented by cash, GST
  recoverable, and accounts payable and accrued liabilities, approximate fair value due to
  their current nature.


3. ADVANCES

  In June 2003, the Company entered into an amalgamation agreement whereby the
  Company would amalgamate with Bortec Biomedical Ltd. (“Bortec”), a private Calgary based
  company. The acquisition was subject to regulatory and other approvals and the completion
  of certain financings. It was expected the acquisition would constitute a Qualifying
  Transaction.

  Pursuant to the proposed amalgamation with Bortec, the Company advanced $19,509 to the
  sponsor of the Qualifying Transaction to be applied against their account for their services.
  The agreement with Bortec was terminated in June 2004. The advance of $19,509 was
  charged to operations in 2003.


4. SHARE CAPITAL

  a) Authorized

     1,000,000,000 common shares, without par value

  b) Issued and Outstanding

                                                                   NUMBER OF
                                                                    SHARES         AMOUNT

      Balance, December 31, 2002, 2003 and 2004                    3,756,667     $ 306,312
                                              116

                              KARMA CAPITAL CORP.
                         NOTES TO FINANCIAL STATEMENTS

                             DECEMBER 31, 2004 AND 2003
                                 (Expressed in Canadian Dollars)




4. SHARE CAPITAL (Continued)

   b) Issued and Outstanding (Continued)

      i)   Pursuant to an initial public offering in May 2001, the Company issued 1,350,000
           common shares at $0.15 per share for gross proceeds of $202,500. In connection
           with the initial public offering, the Company incurred an agent’s commission of
           $14,175 and other share issue costs of $61,111. In addition, the Company granted to
           the agent, warrants to purchase 108,000 common shares with an exercise price of
           $0.15 which expired unexercised.

      ii) Pursuant to various subscription agreements, the Company issued 2,406,667
          common shares at $0.075 per share for total consideration of $180,500 to its
          directors, officers and founders. The shares are subject to an escrow agreement.
          The shares will be released pro rata to the shareholders as to 10% on the date the
          Company completes the Qualifying Transaction, and 15% on each six month period
          thereafter. The release of escrow shares is also subject to the direction and
          determination of the Exchange. Any shares not released within ten years of the date
          of the escrow agreement will be cancelled. In addition, 2,406,667 shares held in
          escrow will be cancelled should the Company fail to complete its Qualifying
          Transaction or is delisted.

           The net proceeds from the financings have certain limitations placed on them until
           completion of the Qualifying Transaction.

           In 2006, 2,406,667 shares held in escrow were returned to treasury and cancelled for
           no consideration as a result of the Company not meeting the qualifying transaction
           requirements.

   c) Stock Options

      During the year ended December 31, 2000, the Company granted options to directors
      and officers to purchase 370,000 common shares at $0.15 per share exercisable
      through May 11, 2006. Shares issued upon the exercise of these options will be placed
      in escrow. As at December 31, 2004, these options remain outstanding. No additional
      stock options were granted in 2003 and 2004.
                                               117

                                 KARMA CAPITAL CORP.
                         NOTES TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2004 AND 2003
                                  (Expressed in Canadian Dollars)




4. SHARE CAPITAL (Continued)

   d) Loss Per Share
                                                                         2004              2003

      Numerator
         Net loss for the year                                      $      42,826     $      39,790

      Denominator
         Weighted average number of common shares
           outstanding                                                  3,756,667         3,756,667
         Less: Weighted average number of escrowed
           shares outstanding                                           (2,406,667)       (2,406,667)

          Weighted average number of common shares
           outstanding                                                  1,350,000         1,350,000

          Loss per common share                                     $       (0.03)    $       (0.03)


5. RELATED PARTY TRANSACTIONS

   During the year ended December 31, 2004, the Company incurred no professional fees
   [2003 - $10,438] with a law firm in which one of the partners is an officer of the Company.
   Included in accounts payable and accrued liabilities is $54,241 [2003 - $54,241] related to
   these amounts. This transaction was recorded at its exchange amount.

   No compensation has been paid or is owing to officers and directors of the Company in
   respect of services rendered to date and pursuant to Capital Pool Company policy no such
   remuneration may be paid to officers and directors for services incurred prior to completion
   of the Qualifying Transaction.


6. INCOME TAXES

   As at December 31, 2004, the Company has approximately $455,000 of non-capital loss
   carryforwards available to reduce taxable income for future years. These losses expire as
   follows:
                                   2007      $    2,000
                                   2008          67,000
                                   2009         273,000
                                   2010          55,000
                                   2014          58,000

                                                $ 455,000
                                              118

                               KARMA CAPITAL CORP.
                            NOTES TO FINANCIAL STATEMENTS

                              DECEMBER 31, 2004 AND 2003
                                 (Expressed in Canadian Dollars)




6. INCOME TAXES (Continued)

  Significant components of the Company’s future tax assets are shown below:

                                                                           2004            2003

  Future tax assets:
      Non-capital loss carryforwards                               $       162,000     $   141,000
      Share issue costs                                                      5,000          11,000

  Total future tax assets                                               167,000             152,000
  Valuation allowance                                                  (167,000)           (152,000)

  Total future tax assets                                          $          -        $       -

  The potential income tax benefits relating to these net future tax assets have not been
  recognized in the accounts as their realization did not meet the requirements of “more likely
  than not” under the liability method of tax allocation. Accordingly, no future tax assets have
  been recognized as at December 31, 2004 and December 31, 2003.

  Income taxes vary from the amount that would be computed by applying the combined
  statutory income tax rate of 36% [2003 – 37%] for the following reasons:

                                                                            2004            2003

  Income tax recovery based on loss                                    $    (15,000)   $    (14,000)
  (Increase) Decrease in recovery resulting from:
      Share issue costs                                                      (6,000)        (6,000)
      Unrecognized current year income tax losses                            21,000         20,000

  Income tax (recovery)                                                $          -    $       -

								
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