¨	No fee required.

o
¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) (1) Title of each class of securities to which transaction applies:

2) (2) Aggregate number of securities to which transaction applies:

3) (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule ~~0-11:~~0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction: $5,906,000
(5) Total fee paid: $1,182

4) ~~Proposed maximum aggregate value of transaction:~~

5) ~~Total fee paid:~~

o
ý
Fee paid previously with preliminary materials.

o
¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1) ~~Amount Previously Paid:~~

2) ~~Form, Schedule or Registration Statement No.:~~

3) ~~Filing Party:~~

4) ~~Date Filed:~~

~~MEDICAL DISCOVERIES, INC.~~

~~738 Aspenwood Lane~~

~~Twin Falls, Idaho 83301~~

~~NOTICE OF ANNUAL MEETING OF SHAREHOLDERS~~

~~TO BE HELD MAY 21, 2004~~

~~To the Shareholders of Medical Discoveries, Inc.:~~

You are cordially invited to attend the Annual Meeting of Shareholders (the “Meeting”) of Medical Discoveries, Inc. (the “Company”) to be held at the Little America Hotel, 500 S. Main Street, Salt Lake City, Utah, on Friday, May 21, 2004, at 1:00 p.m., for the following purposes:

     ~~1. To elect three directors of the Company.~~
     ~~2. To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the financial statements of the Company for the year ending December 31, 2004.~~
     3. To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.
     ~~4. To approve the Company’s 2002 Stock Incentive Plan.~~
     ~~5. To transact such other business as may properly come before the Meeting.~~

Shareholders of record at the close of business on April 12, 2004 are entitled to notice of and to vote at the Meeting and at any and all adjournments of the Meeting. If you are unable to attend the Meeting in person, you are urged to sign, date and return the enclosed proxy as it is necessary that holders of a majority of the outstanding shares be present, in person or by proxy, in order to obtain a quorum for the Meeting. The proxy may be returned in the accompanying, self-addressed envelope, which requires no postage if mailed in the United States.

~~BY ORDER OF THE BOARD OF DIRECTORS~~
~~/s/ STEPHEN R. DRAKE~~
~~Stephen R. Drake,~~
~~Secretary~~

~~Dated: April 12, 2004~~

~~TABLE OF CONTENTS~~


~~PROXY STATEMENT Annual Meeting of Shareholders To Be Held May 21, 2004~~
~~INTRODUCTION~~
~~THE MEETING~~
~~PROPOSAL NO. 1 ELECTION OF DIRECTORS~~
~~INFORMATION CONCERNING THE BOARD OF DIRECTORS, BOARD COMMITTEES AND DIRECTOR COMPENSATION~~
~~DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT~~
~~EXECUTIVE COMPENSATION~~
~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT~~
~~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE~~
~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS~~
~~CODE OF ETHICS~~
~~AUDIT COMMITTEE REPORT~~
~~PROPOSAL NO. 2 RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS~~
~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~
~~PROPOSAL NO. 3 PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION~~
~~PROPOSAL NO. 4 PROPOSAL TO APPROVE 2002 STOCK INCENTIVE PLAN~~
~~OTHER MATTERS~~
~~ANNUAL REPORT~~
~~SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING~~
~~ANNEX A~~
~~ANNEX B~~
~~ANNEX C~~

~~MEDICAL DISCOVERIES, INC.~~

~~738 Aspenwood Lane~~

~~Twin Falls, Idaho 83301~~

~~PROXY STATEMENT~~

~~Annual Meeting of Shareholders~~

~~To Be Held May 21, 2004~~

~~INTRODUCTION~~

This Proxy Statement is being furnished to the shareholders of Medical Discoveries, Inc., a Utah corporation (“MDI” or the “Company”), in connection with the solicitation of proxies by the Board of Directors for use at the Annual Meeting of Shareholders of the Company (the “Meeting”) to be held on May 21, 2004 and at any adjournments thereof.

~~At the Meeting, shareholders will be asked:~~

     ~~(1) To elect three directors of the Company.~~
     (2) To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the consolidated financial statements of the Company and its subsidiaries for the year ending December 31, 2004.
     (3) To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.
     ~~(4) To approve the Company’s 2002 Stock Incentive Plan.~~
     ~~(5) To transact such other business as may properly come before the Meeting or any adjournments of the Meeting.~~

The Board of Directors has fixed the close of business on April 12, 2004 as the record date (the “Record Date”) for the determination of the holders of common stock, no par value (“Common Stock”), entitled to notice of and to vote at the Meeting. Each such shareholder will be entitled to one vote for each share of Common Stock held on all matters to come before the Meeting and may vote in person or by proxy authorized in writing. At the close of business on April 12, 2004, there were 88,654,007 shares of Common Stock entitled to vote.

~~This Proxy Statement and the accompanying form of proxy are first being sent to holders of the Common Stock on or about April 26, 2004.~~

~~THE MEETING~~

~~Date, Time and Place~~

~~The Meeting will be held on May 21, 2004, at 1:00 p.m. local time, at the Little America Hotel, 500 S. Main Street, Salt Lake City, Utah.~~

~~Matters to be Considered~~

At the Meeting, shareholders will be asked to consider, and to vote with respect to, the election of three directors, the ratification of the selection of independent accountants, the proposal to amend the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock, and the approval of the Company’s 2002 Stock Incentive Plan. See “ELECTION OF DIRECTORS,” “RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS,” “PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION” and “APPROVAL OF THE 2002 STOCK INCENTIVE PLAN.” The Board of Directors knows of no matters that are to be brought before the Meeting other than as set forth in the Notice of Meeting. If any other matters properly come before the Meeting, the persons named in the enclosed form of proxy or their substitutes will vote in accordance with their best judgment on such matters.

~~Record Date; Shares Outstanding and Entitled to Vote~~

Shareholders as of the close of business on the Record Date (i.e., April 12, 2004) are entitled to notice of and to vote at the Meeting. As of the Record Date, there were 88,654,007 shares of Common Stock outstanding and entitled to be voted. Each share of Common Stock entitles its holder to one vote.

~~Voting Procedures~~

~~Quorum.~~ ~~The presence at the Meeting, in person or by proxy, of the holders of a majority of the shares of Common Stock outstanding at the close of business on the Record Date will constitute a quorum.~~

~~Election of Directors.~~ The Company does not have cumulative voting for directors. Under the Utah Revised Business Corporation Act, for each share of Common Stock held, each shareholder is entitled to cast one vote for each of the three directorships to be filled. The three nominees for director receiving the highest number of votes cast will be elected whether or not any one of them receives the vote of a majority of the shares represented and entitled to vote at the Meeting.

~~Ratification of Selection of Independent Accountants.~~ The ratification of the selection of Balukoff Lindstrom & Co., P.A. as independent accountants is being submitted to the shareholders because the Board of Directors believes that such action follows sound corporate practice and is in the best interests of the shareholders. If the shareholders do not ratify the selection of Balukoff Lindstrom & Co., P.A. by the affirmative vote of a majority of the shares of Common Stock represented and entitled to vote at the Meeting, the Audit Committee of the Board of Directors will reconsider this selection, although such a vote will not be binding on the Audit Committee. If the shareholders ratify the selection, the Audit Committee, in its discretion, may nevertheless direct the appointment of new independent accountants at any time if the Audit Committee believes that such a change would be in the interests of the Company and the shareholders.

~~Approval of Proposal to Amend Articles of Incorporation.~~ Under the Utah Revised Business Corporation Act, approval of the proposal to amend the Articles of Incorporation will require the vote of a majority of the shares of Common Stock that actually vote on the proposal.

~~Approval of 2002 Stock Incentive Plan.~~ Under the Utah Revised Business Corporation Act, approval of the proposal to amend the Articles of Incorporation will require the vote of a majority of the shares of Common Stock that actually vote on the proposal.

~~Abstentions and Broker Non-votes.~~ ~~Abstentions and broker non-votes are counted for purposes of determining the number of shares represented and entitled to vote at the Meeting. However, abstentions and~~

~~broker non-votes are not counted in determining the number of shares voted and do not represent a vote either FOR or AGAINST an item of business.~~

~~Voting and Revocation of Proxies~~

Shareholders are requested to complete, date, sign and promptly return the accompanying form of proxy in the enclosed envelope. Shares of Common Stock represented by properly executed proxies received by the Company and not revoked will be voted at the Meeting in accordance with the instructions contained therein. If instructions are not given, proxies will be voted FOR election of each nominee for director named herein, FOR ratification of the selection of independent accountants, FOR the approval of the proposal to amend and restate the Articles of Incorporation and FOR the approval of the Company’s 2002 Stock Incentive Plan.

Any proxy signed and returned by a shareholder may be revoked at any time before it is voted by filing with the Secretary of the Company, at the address of the Company set forth herein, written notice of such revocation or a duly executed proxy bearing a later date, or by attending the Meeting and voting in person. Attendance at the Meeting will not in and of itself constitute revocation of a proxy.

~~Proxy Solicitation~~

The Company will bear the costs of solicitation of proxies for the Meeting. In addition to solicitation by mail, directors, officers and regular employees of the Company may solicit proxies from shareholders by telephone, telegram, personal interview or otherwise. Such directors, officers and employees will not receive additional compensation but may be reimbursed for out-of-pocket expenses in connection with such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of shares of Common Stock held of record by them, and such custodians will be reimbursed for their reasonable expenses.

~~Independent Accountants~~

The Company has been advised that representatives of Balukoff Lindstrom & Co., P.A., the Company’s independent accountants for 2003, will attend the Meeting, will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

~~PROPOSAL NO. 1~~

~~ELECTION OF DIRECTORS~~

At the Meeting, three directors of the Company constituting the entire Board of Directors are to be elected to serve until the next annual meeting of shareholders and until their successors shall be duly elected and qualified. If any of the nominees should be unavailable to serve, which is not now anticipated, the proxies solicited hereby will be voted for such other persons as shall be designated by the present Board of Directors. Certain information with respect to each nominee for director is set forth below.


~~Name~~	(1)	~~Age~~		~~Position~~		~~Director Since~~

~~David R. Walker~~			59		~~Chairman of the Board of~~		~~May 1996~~
Amount Previously Paid:
~~Directors~~	(2)	Form, Schedule or Registration Statement No.:
~~Judy M. Robinett~~	(3)		51		~~President and Chief~~		~~November 2000~~
					~~Executive Officer, Director~~
~~Larry Anderson~~			55		~~Director~~		~~Nominee~~

~~The following paragraphs sets forth certain biographical information about each of the foregoing:~~

onion growing and packing entity in the State of Washington with annual revenues in excess of $50 million. In the capacity of General Manager, Mr. Walker performs the functions of a traditional chief financial officer. Mr. Walker holds a Bachelor of Arts degree in economics from Brigham Young University with minors in accounting and finance.

Judy M. Robinett has held the office of President and Chief Executive Officer since November, 2000, and joined the Board of Directors on February 9, 2001. Since 1994, she has owned and operated an international consulting company focused on strategic planning, finance, marketing, and distribution for entrepreneurs and established companies. Prior to that, Ms. Robinett’s employment positions included Vice President for Quality Improvement for a regional hospital, Division Manager for Universal Foods, Group Manager for EG&G’s Nuclear Training Facility in Idaho, and a Planner for the State of Idaho. Ms. Robinett has published more than 50 articles on business finance and operations and is a recognized authority on quality control. Ms. Robinett holds a Bachelors of Sciences degree in psychology and a Masters degree in labor economics from Utah State University.

Larry Anderson has a wide range of investment banking, sales and entrepreneurial experience. He has held investment banking and stock broker positions with Merrill Lynch, Oppenheimer and Kidder Peabody, managing up to $300 million in accounts. Mr. Anderson has significant sales experience including holding national sales leader awards while at Automated Data Processing and Qantel. Mr. Anderson is an entrepreneur with numerous start-ups and turn-arounds to his credit. He currently owns and operates, among other companies, C Innovation, a leading K-12 educational software company. Mr. Anderson currently lives in Salt Lake City, Utah, and attended college at Brigham Young University.

~~The three nominees receiving the highest number of votes at the Meeting will be elected.~~~~The Board of Directors recommends a vote FOR each of the director nominees.~~

~~INFORMATION CONCERNING THE BOARD OF DIRECTORS,~~

~~BOARD COMMITTEES AND DIRECTOR COMPENSATION~~

~~Board Committees and Meetings~~

~~Audit Committee.~~ The Company has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The functions of the Audit Committee are to assist the Board of Directors in fulfilling its responsibility to oversee the quality and integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent accountants, and significant financial matters. In discharging its duties, the Audit Committee is expected to:

• have the ultimate authority to select (subject to shareholder ratification, which ratification is not binding on the Audit Committee), compensate, evaluate and replace the Company’s independent accountants;
• ~~review and approve the scope of the annual external audit;~~
• ~~review and pre-approve the engagement of the Company’s independent accountants to perform audit and permitted non-audit services and the related fees;~~

• ~~meet independently with the Company’s accounting staff, independent accountants and senior management;~~
• ~~review the integrity of the Company’s financial reporting process; and~~
• ~~review the Company’s financial statements and disclosures and certain Securities and Exchange Commission filings.~~

The current members of the Audit Committee are David R. Walker (Chairman) and Alvin Zidell, each of whom is independent as defined in Rule 4200(a)(14) of the National Association of Securities Dealers’ listing standards. There is currently one vacancy on the Audit Committee. The Board of Directors has adopted a written charter for the Audit Committee, which is attached as Annex A to this proxy statement. The Audit Committee meets at such times as may be deemed necessary by the Board of Directors or the Committee. The Audit Committee held four meetings during 2003. At each meeting, the Audit Committee met with management and the Company’s independent accountants, and with the independent accountants without management present.

~~Audit Committee Financial Expert.~~ ~~The Board of Directors has determined that David R. Walker is an audit committee financial expert as defined by Item 401(h) of Regulation S-K under the Securities Exchange Act of 1934.~~

The Board of Directors held a total of five meetings during 2003. During 2003, each incumbent director attended 75% or more of the total number of meetings of the Board and the committees of the Board on which the director served.

~~Directors are encouraged to attend the Company’s annual meetings of shareholders.~~

The Company does not have a standing executive committee or compensation committee. The compensation of the President and Chief Executive Officer is determined by the Company’s independent directors.

The Company does not have a standing nominating committee and the Board of Directors has not adopted a nominating committee charter. The Company is not required to have a compensation committee. However, the Board of Directors intends to establish a standing nominating committee prior to the 2005 Annual Meeting of shareholders. Currently, all members of the Board of Directors participate in the director nomination process. All members of the Board of Directors other than Judy M. Robinett are independent as defined in Rule 4200(a)(14) of the National Association of Securities Dealers’ listing standards. The Board of Directors has an informal policy to consider any director nominee nominated by a security holder. The Board of Directors has no written policy concerning qualifications to serve as a director of the Company, but the Board of Directors considers numerous factors when nominating directors, including the nominee’s public company experience, the nominee’s biotechnology industry experience, the nominee’s ability through experience and existing relationships to further the goals of the Company, the nominee’s willingness and ability to participate actively on the Board, the nominee’s willingness and ability to serve on the Company’s Audit Committee and other future committees, the nominee’s ability to satisfy the independence standards for the Audit Committee and future expected nominating committee, and the nominee’s educational background. The current nominees for director were nominated by the President and Chief Executive Officer and were approved by the Board of Directors as nominees.

~~Director Compensation~~

Directors who are not officers of the Company do not receive any regular compensation for their service on the board of directors, and directors who are officers of the Company receive no additional compensation for their service as a director of the Company. Directors are entitled to receive compensation for services unrelated to their service as a director to the extent that they provide such unrelated services to the Company. See “Certain Relationships and Related Transactions.”

Directors of the Company and its subsidiaries are entitled to participate in the Company’s 2002 Stock Incentive Plan. During the year ended December 31, 2003, the Company granted options to purchase

~~300,000 shares of its Common Stock to its independent directors and granted options to purchase 14,500,000 shares of its Common Stock to its director who is also an officer of the Company.~~

~~DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT~~

~~Following is a schedule of names and certain information regarding all of the directors and executive officers of the Company, as of April 2, 2004:~~

Filing Party:
~~Name~~	(4)	~~Age~~		~~Position~~

~~David R. Walker~~			59		~~Chairman of the Board of Directors~~
~~Judy M. Robinett~~			51		~~President and Chief Executive Officer~~
~~Alvin Zidell~~			73		~~Director~~
~~Nilesh Desai, M.D.~~			54		~~Director~~
~~Stephen R. Drake~~			35		~~Secretary~~

David R. Walker joined the Board of Directors on May 2, 1996, and was appointed Chairman of the Board of Directors on May 10, 1998. He has served as Chairman of the Audit Committee since its inception in 2001. For over 20 years, Mr. Walker has held the office of General Manager of Sunheaven Farms, the largest onion growing and packing entity in the State of Washington with annual revenues in excess of $50 million. In the capacity of General Manager, Mr. Walker performs the functions of a traditional chief financial officer. Mr. Walker holds a Bachelors of Arts degree in economics from Brigham Young University with minors in accounting and finance.

Alvin Zidell has been a Director of the Company since December 1, 1993. In the past five years, he has served as a Vice President of Zidell Properties, a building company in Dallas, Texas, President of Siding for Less, a siding installation company, and the owner of an investment company, Alvin Zidell Investments.

Neal Desai, M.D., has served as a Director of the Company since January of 1999. Dr. Desai is a Diplomat of the American Board of Internal Medicine, and is the owner of Victory Olive Medical Group in Burbank, California, where he has practiced internal medicine since 1980.

Stephen R. Drake was elected Secretary of the Company effective as of April 1, 2004. He has served as legal counsel to the Company since November 2000. Mr. Drake is an attorney in private practice with Stoel Rives LLP in Boise, Idaho, where he practices corporate and securities law. Mr. Drake received a Bachelors of Arts degree,~~cum laude,~~ ~~from Albertson College in 1991 and a Juris Doctor degree,~~~~cum laude,~~ ~~from Willamette University College of Law in 1996.~~

~~The executive officers of the Company serve at the pleasure of the Board of Directors. None of the officers are currently employees of the Company.~~

~~EXECUTIVE COMPENSATION~~

The following table sets forth certain summary information concerning compensation paid by the Company to the President and Chief Executive Officer (the “Named Executive Officer”) for the years ended

~~December 31, 2003, 2002, and 2001. No other executive officer of the Company received a total annual salary and bonus in excess of $100,000 during the year ended December 31, 2003.~~

~~Summary Compensation Table~~

Securities
Underlying
Salary Options
Name and Principal Position(s) Year ($)(a) Bonus ($) (#)
Judy M. Robinett 2003 220,000 — 14,500,000
President and Chief 2002 193,336 300,000 500,000
Executive Officer 2001 180,000 4,500 (b) 1,000,000


~~(a)~~		Represents total amounts accrued for the period, whether or not actually paid. As of December 31, 2003, the Company had a total payable to Ms. Robinett of $785,000. During the year ended December 31, 2003, Ms. Robinett was actually paid $60,000 by the Company.

~~(b)~~		~~Represents value of 30,000 shares of common stock of the Company granted on April 20, 2001, based on the closing price of the stock that day ($0.15).~~

~~The following table sets forth certain summary information concerning options granted to the Named Executive Officer for the year ended December 31, 2003.~~

~~Options Granted in Last Fiscal Year~~

Market
Percent of Total Price on
Number of Options Granted to Exercise Date of
Securities Employees in Price Grant Expiration
Name and Principal Position(s) Underlying Options Fiscal Year ($/sh) ($/sh) Date
Judy M. Robinett 500,000 100 % .01 .05 12/31/12
President and Chief Executive Officer 14,000,000 100 % .02 .075 10/27/13

The following table sets forth certain summary information concerning options exercised by the Named Executive Officer during 2003, and the value of options held by such person at December 31, 2003 measured in terms of the average sale price reported for Common Stock on December 31, 2003 ($.1475, as reported by OTC Bulletin Board).

~~Aggregate Option Exercises in 2003 and Option Values at 12/31/2003~~

Date Filed:

The following table sets forth information regarding persons known by ~~the Company~~us to beneficially own, as defined by Rule 13d-3 under the Securities Exchange Act of 1934, more than 5% of Common Stock as of ~~April 12, 2004,~~December 30, 2007, based solely on information regarding such ownership available ~~to the Company~~ in filings by such beneficial owners with the SEC on Schedules 13D and 13G. The following table also sets forth

information regarding beneficial ownership of Common Stock as of ~~April 12, 2004, except as noted below,~~December 30, 2007, by our Directors and Judy Robinett, our Chief Executive Officer until December 26, 2007 (our sole named executive officer), and by the Directors and the ~~Named Executive Officer and by the Directors and Named Executive Officer~~named executive officer as a group.

Number of Shares
and Nature of Percent
Beneficial of
Name and Address of Beneficial Owner(a) Ownership(b) Class
Certain Beneficial Owners:

Harvest Group, L.L.C 17,116,337 19.5
2985 North 935 East, Suite 9
Layton, UT 84041
Judy M. Robinett 16,030,000 (c) 15.4
Directors/ Named Executive Officer:

David R. Walker 1,153,539 (d) 1.3
Judy M. Robinett 16,030,000 (c) 15.4
Alvin Zidell 882,062 (e) *
Nilesh Desai, M.D. 567,415 (f) *
All Directors and Executive Officers as a Group (4 persons)
18,633,016 (g) 17.6

~~Less than 1%~~

~~(a)~~

~~Unless otherwise indicated, the business address of each person listed is c/o Medical Discoveries, Inc., 738 Aspenwood Lane, Twin Falls, ID 83301.~~

~~(b)~~

For purposes of this table, shares are considered to be beneficially owned if the person directly or indirectly has the sole or shared power to vote or direct the voting of the securities or the sole or shared power to dispose of or direct the disposition of the securities. Shares are also considered beneficially owned if a person has the right to acquire the beneficial ownership of the shares within 60 days of April 12, 2004. Unless otherwise indicated in these footnotes, each shareholder has sole voting and investment power with respect to the shares beneficially owned.

~~(c)~~

~~Includes 16,000,000~~

Name and Address of Beneficial Owner (1)	Shares Beneficially Owned (2)	Percent of Class
Certain Beneficial Owners:

Mercator Momentum Fund, LP 555 S. Flower St., Suite 4500 Los Angeles, CA 90071	47,572,974 (3)(13)	20.4%
Mercator Momentum Fund III, LP 555 S. Flower St., Suite 4500 Los Angeles, CA 90071	39,910,011 (4)(13)	17.1%
Monarch Pointe Fund, Ltd. 555 S. Flower St., Suite 4500 Los Angeles, CA 90071	34,002,509 (5)(13)	14.9%
David Firestone 555 S. Flower St., Suite 4500 Los Angeles, CA 90071	121,485,494 (6)(13)	40.5%
Mobius Risk Group, LLC Three Riverway, Suite 1700 Houston, Texas 77056	54,810,220 (7)	27.7%

Directors/Named Executive Officers:

Judy M. Robinett	2,030,000 (8)	1.0%
Richard Palmer	9,135,037 (9)	4.6%
David R. Walker	1,153,539 (10)	*
Eric J. Melvin Three Riverway, Suite 1700 Houston, Texas 77056	54,810,220 (11)	27.7%
Martin Schroeder 92 Natoma Street, Suite 200 San Francisco, California 94105	5,000,000 (12)	2.5%

All Named Executive Officers and Directors as a group (5 persons)	72,128,796	35.1%

* Less than 1%

(1) Unless otherwise indicated, the business address of each person listed is c/o Medical Discoveries, Inc., 6033 W. Century Blvd, Suite 1090, Los Angeles, California.

(2) For purposes of this table, shares are considered beneficially owned if the person directly or indirectly has the sole or shared power to vote or direct the voting of the securities or the sole or shared power to dispose of or direct the disposition of the securities. Shares are also considered beneficially owned if a person has the right to acquire beneficial ownership of the shares within 60 days of September 30, 2007.

(3) Includes 18,638,877 shares that may be acquired ~~upon the exercise of currently exercisable stock options.~~

~~(d)~~

~~Includes 750,000 shares that may be acquired upon the exercise of currently exercisable stock options.~~

~~(e)~~

~~Includes 750,000 shares that may be acquired upon the exercise of currently exercisable stock options.~~

~~(f)~~

Includes 175,000 shares that may be acquired upon the exercise of currently exercisable stock options, 133,334 shares that may be acquired by the Desai Family Trust upon the exercise of currently exercisable warrants, and 197,081 shares of common stock owned by the Desai Family Trust.

~~(g)~~

~~Includes 17,808,334 shares that may be acquired upon the exercise of currently exercisable stock options and warrants.~~

~~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE~~

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Executive Officers and Directors, and persons who beneficially own more than 10% of the outstanding shares of Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and furnish the Company with copies. Based solely upon a review of the copies of such forms furnished to the Company and written representations from certain reporting persons, the Company believes that for the year ended December 31, 2003 all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis, except as follows: In 2004, each of the directors of the Company filed a Form 3 because the Company’s records did not indicate whether or not they were previously filed. Following such filings, each of the directors also filed a Form 4 to report all transactions subsequent to the date they became subject to Section 16(a).

~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS~~

The Company entered into an employment agreement with Judy M. Robinett as of May 15, 2002, pursuant to which Ms. Robinett serves as President and Chief Executive Officer of the Company. The term of the agreement is three years. The agreement provides for a signing bonus of $200,000 and an annual salary of $220,000. The agreement also provides for bonuses pursuant to which performance by Ms. Robinett at the target level established by the Board of directors for an annual bonus performance period will result in an incentive payment equal to 50% of her annual salary for the period. Pursuant to the agreement, Ms. Robinett is eligible to participate in all employee benefit programs of the Company applicable to management personnel and is also provided with the use of a Company-owned vehicle. However, the Company currently does not provide benefits or own a vehicle. In the event of termination for cause, death or disability, Ms. Robinett will be entitled to accrued compensation through the date of such event. In the event of termination otherwise than for cause, Ms. Robinett will be entitled, as severance pay, to a cash payment equal to her annual salary then in effect for the longer of two years or the unexpired portion of the term of the agreement. The agreement also contains customary provisions relating to confidentiality and ownership of intellectual property. The agreement does not, however, contain a non-compete provision.

~~CODE OF ETHICS~~

The Company is not required to adopt a code of ethics and has not adopted a formal code of ethics. The directors intend to do so during the upcoming fiscal year following election of the new Board of Directors.

~~AUDIT COMMITTEE REPORT~~

~~The following is the report of the Audit Committee with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2003.~~

~~Review with Management~~

~~The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2003 with management.~~

~~Review and Discussion with Independent Accountants~~

The Audit Committee has also discussed with Balukoff Lindstrom & Co., P.A., the Company’s independent accountants, the matters required to be discussed by Statement on Auditing Standards No. 90 (Communication with Audit Committees) regarding the auditor’s judgments about the quality of the Company’s accounting principles as applied in its financial reporting. The Audit Committee has also received the written disclosures and the letter from Balukoff Lindstrom & Co., P.A. required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Balukoff Lindstrom & Co., P.A. the matter of its independence.

~~Conclusion~~

Based on the review and discussions described in the preceding paragraphs, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements for the fiscal year ended December 31, 2003 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 for filing with the Securities and Exchange Commission.

~~Submitted by the Audit Committee~~

~~David R. Walker, Chairman~~

~~Alvin Zidell~~

The information contained in this Audit Committee Report is not deemed to be soliciting material or to be filed with the Securities and Exchange Commission, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. Such information is not incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.

~~PROPOSAL NO. 2~~

~~RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS~~

The Audit Committee of the Board of Directors has selected Balukoff Lindstrom & Co., P.A. as independent accountants to audit the consolidated financial statements of the Company for the year ending December 31, 2004. Balukoff Lindstrom & Co., P.A. currently serves as the Company’s independent accountants.~~The Board of Directors recommends a vote FOR the ratification of the selection of Balukoff Lindstrom & Co., P.A. as the Company’s independent accountants for the year ending December 31, 2004.~~

~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~

~~Audit Fees~~

The aggregate fees for professional services rendered by Balukoff Lindstrom & Co., P.A. for the audit of the Company’s annual financial statements for 2003 and 2002, the review of the financial statements included in the Company’s Forms 10-Q for 2003 and 2002 totaled $27,250 and $28,175, respectively.

~~Tax Fees~~

~~The aggregate fees for professional services rendered by Balukoff Lindstrom & Co., P.A. for tax preparation and consultation, for the years ended 2003 and 2002, were $475 and $365, respectively.~~

The engagement of Balukoff Lindstrom & Co., P.A. to render audit and non-audit services for the periods described above was approved in advance by the Company’s audit committee. Any additional audit-related or permitted non-audit services proposed by management to be performed by Balukoff Lindstrom & Co., P.A. will be submitted to the Audit Committee for consideration and approval in advance of any engagement to perform such services.

~~PROPOSAL NO. 3~~

~~PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION~~

The Company will require significant additional funding to continue to develop, research and seek regulatory approval of its technologies. In addition, the Company cannot survive, even in the near term, without immediate additional funding for operations. The Company does not currently generate any cash from operations and has no credit facilities in place or available. The Board of Directors believes it can raise capital

through private stock offerings and/or secondary public offerings. Effective April 1, 2004, the Board of Directors unanimously adopted a resolution to amend and restate the Articles of Incorporation of the Company in the form substantially as set forth in Annex B attached to this proxy statement to increase the number of authorized shares of Common Stock from 100 million to 250 million and to provide for 50 million shares of undesignated Preferred Stock. The Board’s resolution cannot be implemented without shareholder approval.

~~As of April 12, 2004, the Company had outstanding 88,654,007 shares of Common Stock. Taking into consideration the shares of Common Stock reserved for issuance~~ upon the exercise of ~~stock options,~~currently exercisable warrants, and ~~convertible notes, there are no shares of Common Stock currently available for issuance.~~

The proposed amendment will provide the Company with additional authorized and unissued shares of Common Stock and a new undesignated class of Preferred Stock, either of which may be used for various corporate purposes, including financing, business combination and acquisition transactions; stock splits and stock dividends; stock incentive and compensation plans or programs; and other business purposes. The Company has no commitment, arrangement, understanding or agreement, written or oral, regarding the issuance of common stock or preferred stock subsequent to the increase of authorized shares. Furthermore, the Company has no specific plan at this time for such an issuance.

If the proposed Amended and Restated Articles of Incorporation are approved, the increased number of authorized shares of Common Stock will be available for issuance from time to time for such purposes and for such consideration as the Board of Directors may approve and no further vote of the shareholders of the Company will be required for such issuance, except as may be provided for under applicable law or the rules of any stock exchange or other market system on which the Common Stock may then be listed or traded. In addition, the newly created Preferred Stock will be available for designation and issuance from time to time by the Board of Directors without further vote of the shareholders of the Company, except as may be provided for under applicable law or the rules of any stock exchange or other market system on which the Common Stock or Preferred Stock may then be listed or traded.

The rights of the Board of Directors to designate and issue specific series of Preferred Stock will include, without limitation, the right to determine or designate the following with respect to each series:

• The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board of Directors;
• The dividend rate of such series, the conditions and times upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of stock or series thereof, or on the other series of the same class, and whether dividends shall be cumulative or noncumulative;
• The conditions upon which the shares of such series shall be subject to redemption by the Company and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;
• Whether or not the shares of the series shall be subject to the operation of retirement or sinking fund provisions to be applied to the purchase or redemption of such shares and, if such retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
• Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class and, if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange;
• ~~Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;~~

• ~~The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or upon distribution of assets of the Company; and~~
• ~~Any other designations, preferences, limitations and relative rights of the shares of such series, as the Board of Directors may deem advisable.~~

~~Shareholders should refer to Annex B for the complete proposed Amended and Restated Articles of Incorporation.~~

While the Company believes that equity offerings are a viable option to raise capital, there can be no assurance that the Company will actually commence any type of equity offering, or that if commenced, such an offering will be successful.

The shares of Common Stock authorized pursuant to the proposed Amended and Restated Articles of Incorporation would be identical to the shares of Common Stock currently authorized. Holders of Common Stock do not have preemptive rights to subscribe for additional securities that may be issued by the Company. The authorization of additional shares of Common Stock pursuant to the proposed amendment will not, by itself, have any effect on the rights of existing shareholders. The issuance of such shares, however, could dilute the rights of existing shareholders.

Because the proposed amendment would allow the Company to issue a significant number of shares of Common Stock and Preferred Stock in connection with future transactions, it is possible that a change in control of the Company could occur. However, no such transactions are contemplated at this time.

~~The proposed amendment is not intended to have any anti-takeover effect and is not part of any series of anti-takeover measures.~~~~The Board of Directors recommends a vote FOR the proposal to amend and restate the Articles of Incorporation.~~

~~PROPOSAL NO. 4~~

~~PROPOSAL TO APPROVE 2002 STOCK INCENTIVE PLAN~~

As of July 11, 2002, the Board of Directors adopted the 2002 Stock Incentive Plan (the “Plan”), which was amended on March 6, 2003 to increase the number of shares of Common Stock subject to the Plan to 20 million. The Plan is submitted to the shareholders for approval at this Meeting. While the Company is not required to obtain shareholder approval of the Plan, the Company believes it is good corporate practice to seek shareholder approval of all stock option and incentive plans. This Meeting was the first convenient opportunity for the Company to seek such approval.

The Board of Directors of the Company believes that the availability of stock options and other stock incentives is an important factor in the Company’s ability to attract and retain qualified employees and to provide an incentive for them to exert their best efforts on behalf of the Company. In addition, in light of the limited amount of working capital available to it, the Company has, and may periodically continue to, use stock options and other incentive awards to compensate consultants that provide services to the Company.

~~Description of the 2002 Stock Incentive Plan~~

~~The following summary of the Plan is qualified in its entirety by reference to the full text of the Plan , a copy of which attached as Annex C to this proxy statement.~~


	*~~Purpose of the Plan~~*

The purpose of the Plan is to enable the Company to attract and retain the services of (1) selected employees, officers and directors and (2) selected nonemployee agents, consultants, advisers and independent contractors. For purposes of the Plan, a person is considered to be employed by the Company or in the Company’s service if the person is employed by the Company or in the service of the Company or any parent or subsidiary of the Company.


	*~~Administration~~*

The Company’s Board of Directors administers the Plan. Subject to the provisions of the Plan, the Board of Directors may adopt and amend rules and regulations relating to the administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares not imposed by law and make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan.

The Board of Directors may delegate to a committee of the Board of Directors or specified officers of the Company, or both any or all authority for administration of the Plan except that only the Board of Directors may amend or terminate the Plan. The Board of Directors may delegate to any officer or officers of the Company authority to grant awards under the Plan, subject to any restrictions the Board of Directors may impose.

The interpretation and construction of the provisions of the Plan and related agreements by the Board of Directors is final and conclusive. The Board of Directors may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it deems expedient to carry the Plan into effect, and the Board of Directors shall be the sole and final judge of such expediency.


	*~~Eligibility and types of awards under the Plan~~*

Grants under the Plan may be awarded to select directors, officers, employees, non-employee agents, consultants, advisers, and independent contractors of the Company or any parent or subsidiary of the Company. The Plan permits the Board of Directors to grant Incentive Stock Options, Nonstatutory Stock Options, stock bonus awards and to sell shares subject to any terms, conditions and restrictions they determine.


	*~~Shares Reserved for Issuance Under the 2002 Incentive Plan~~*

The Board of Directors has reserved a total of 20,000,000 shares of the Company’s common stock for issuance under the Plan. The number and kind of shares available for grants under the Plan and all other share amounts set forth in the Plan shall be appropriately adjusted by the Board of Directors if the outstanding common stock is increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares, dividend payable in shares, recapitalization or reclassification. In addition, the Board of Directors shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or unexercised portions thereof, shall be exercisable so that the optionee’s proportionate interest before and after the occurrence of the event is maintained. Any such adjustments by the Board of Directors shall be conclusive.

If an option granted under the Plan expires, terminates or is canceled, any unissued shares become available under the Plan. If shares awarded as a bonus or sold as restricted stock are forfeited to the Company or repurchased by the Company, the shares forfeited or repurchased shall again become available for issuance under the Plan.


	*~~Amendment and Termination of the Plan~~*

The Board of Directors may amend the Plan at any time. Except as specified in the Plan with respect to treatment of options in case of a merger or reorganization and changes in outstanding options in connection with changes in capital structure, no change in an option already granted may be made without the consent of the holder of the option.

The Plan will continue until all shares available for issuance under the Plan have been issued and all restrictions on such shares have lapsed or when earlier terminated by the Board of Directors. The Board of Directors may suspend or terminate the Plan at any time. Early termination of the Plan shall not affect any outstanding options or shares subject to restrictions, any right of the Company to repurchase shares or the forfeitability of shares issued under the Plan.


	*~~Stock Options~~*

With respect to each grant, the Board of Directors determines the persons to whom options are granted, the option price, the number of shares subject to each option, the period of each option and the time or times at which the options may be exercised and whether the option is an Incentive Stock Option or a Nonstatutory Stock Option. At the time of grant of an option or at any time thereafter, the Board of Directors may provide that an optionee who exercised an option with Common Stock of the Company shall automatically receive a new option to purchase additional shares equal to the number of shares surrendered and may specify the terms and conditions of the new options.

Only employees are eligible to receive Incentive Stock Options. The aggregate amount of shares for which Incentive Stock Options may become exercisable under the Plan and other stock incentive plans of the Company for the first time in any calendar year for an optionee may not exceed $100,000 measured on the fair market value of the stock on the date of grant. If the aggregate fair market value exceeds $100,000 in any year, that portion of the option or options that do not exceed $100,000, to the extent of whole shares, shall be treated as an Incentive Stock Option and the remaining portion shall be treated as a Nonstatutory Stock Option. This treatment will be applied to multiple options in the order in which they were granted. The Company will treat an exercise of all or any portion of an Incentive Stock Option below the $100,000 limitation as an Incentive Stock Option to the full extent permitted under the $100,000 limitation unless the optionee designates the option otherwise. The Board of Directors may at any time without the consent of the optionee convert an Incentive Stock Option into a Nonstatutory Stock Option.

~~Option Price.~~ The Board of Directors shall determine the exercise price per share for an option at the time it is granted subject to certain restrictions. If the option is an Incentive Stock Option, the option price cannot be less than the fair market value of the common stock on the date of grant. If an optionee of an Incentive Stock Option at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price may not be less than 110% of the fair market value of the common stock on the date of grant. For this purpose, fair market value shall be the closing price of the common stock last reported before the time the option is granted, if the stock is publicly traded, or any other value of the common stock as specified by the Board of Directors.

~~Nontransferability.~~ Incentive Stock Options and, unless otherwise determined by the Board of Directors, Nonstatutory Stock Options under the Plan shall not be assignable or transferable by an optionee, either voluntarily or by operation of law, other than by the optionee’s will or the laws of descent or distribution of the state or country of domicile at the time of death of an optionee. During an optionee’s lifetime, an option may be exercised only by the optionee.

~~Duration and Exercise of Options.~~ Options may be exercised in amounts and at times determined by the Board of Directors. Unless otherwise determined by the Board of Directors, if the optionee does not exercise an option in any one year for the full number of shares to which the optionee is entitled in that year, the optionee may purchase those shares in any subsequent year during the term of the option.

~~Incentive Stock Options granted under the Plan expire on the date fixed by the Board of Directors subject to two restrictions:~~

~~(i) no Incentive Stock Option may be exercised after the expiration of 10 years from the date it is granted, and~~
(ii) if the recipient of an Incentive Stock Option owns stock possessing more than 10 percent of the combined voting power of all classes of our stock at the time of grant, the expiration date of the option may not be more than five years after the date of grant.

~~If an optionee sells or otherwise disposes of the~~17,430,000 shares of common stock issuable upon conversion of 8,715 shares of Series A convertible preferred stock based on an assumed conversion price of $0.05, which is the minimum price at which such shares of Series A convertible preferred stock can be converted.

Under the Plan, the Board of Directors may grant performance-based awards. These awards are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and regulations thereunder (“Performance-based Awards”). Performance-based Awards shall be denominated at the time of grant either in common stock of the Company or in dollar amounts. Performance-based Awards may be granted in whole or in part if the Company achieves written objective goals established by the Board of Directors over a designated period of time. Payment of an award earned may be in cash or stock or both as determined by the Board of Directors. In addition to the requirement that participants satisfy certain performance goals, the Board of Directors may impose additional restrictions to payment under a Performance-based Award.

The following is a general discussion of certain federal income tax considerations concerning Incentive Stock Options and Nonstatutory Stock Options. The discussion does not describe any tax consequences of stock bonuses, stock appreciation rights, restricted stock or cash bonus rights, nor does the discussion describe any tax consequences under the tax laws of any state, locality or foreign jurisdiction. Furthermore, the discussion is based on the provisions of the Code and regulations, and rulings and judicial decisions thereunder, as of the date hereof, and such authorities may be repealed or modified retroactively so as to result in federal income tax consequences different from those discussed below.~~The discussion below does not discuss all federal income tax consequences~~(10) Includes 750,000 shares that may be ~~relevant to a particular optionee, and is not intended as tax advice. Each optionee is urged to consult his or her individual tax adviser.~~

~~Incentive Stock Options.~~ ~~Certain options authorized to be granted under~~acquired upon the Plan are intended to qualify as Incentive Stock Options for federal income tax purposes. Under federal income tax law currently in effect, the optionee will recognize no income upon grant or upon a proper exercise of the Incentive Stock Option, although such exercise may produce alternative minimum tax liability for the optionee. If an employee exercises an Incentive Stock Option and does not dispose of any of the optioncurrently exercisable options.


	By Order of the Board of Directors,

	~~/s/ STEPHEN R. DRAKE~~

	~~Stephen R. Drake,~~
	~~Secretary~~

~~Dated: April 12, 2004~~

~~ANNEX A~~

~~CHARTER~~

~~OF THE~~

~~AUDIT COMMITTEE OF THE BOARD OF DIRECTORS~~

~~MEDICAL DISCOVERIES, INC.~~

~~PURPOSE~~

The primary function of the Audit Committee (the “Committee”) is to assist the Board of Directors of Medical Discoveries, Inc., (the “Corporation”) in fulfilling its oversight responsibilities with respect to (i) the financial reports and other financial information provided by the Corporation to its shareholders and others, (ii) the Corporation’s system of internal control, and (iii) the Corporation’s audit, accounting, and financial reporting processes generally.

In particular, and without limiting the generality of the foregoing, a purpose of the Committee is to undertake the duties of an audit committee described in applicable rules of the Securities and Exchange Commission (the “Commission”) and any other similar rules of any securities exchange or trading facility to which the Corporation may become subject.

In carrying out its purpose, the Committee shall (i) serve as an independent and objective monitor of the performance of the Corporation’s financial reporting process and system of internal control, (ii) review and appraise the audit efforts of the Corporation’s independent accountants and internal accounting and finance department, and (iii) provide for open, ongoing communication among the independent accountants, financial and senior management and the Board of Directors concerning the Corporation’s financial condition and results of operations.

~~COMPOSITION~~

The Committee shall be comprised of two or more directors, as determined by the Board of Directors. The members of the Committee shall be appointed annually by the Board of Directors. Each member shall meet the applicable independence and experience requirements of the NASD, and at least one member of the Committee shall have accounting or related financial management expertise. Except as otherwise expressly provided herein, a majority of the Committee shall constitute a quorum and shall be empowered to conduct any business that the Committee is empowered to conduct. One member of the Committee shall be designated the Chair, provided, however, that, in the absence of the designated Chair, another member of the Committee shall be designated by the members present, in person or by conference telephone call, and shall serve as Chair.

~~MEETINGS~~

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Committee shall meet at least annually, and more often as warranted, with the independent accountants to discuss any matters that the Committee or the auditors believes should be discussed privately. The Committee shall maintain a high degree of independence both in establishing its agenda and directly accessing various members of management. The Committee shall meet annually with management regarding their systems of internal control, results of audits, and accuracy of financial reporting. All such meetings may be held in person or, at the option of the Chair, by conference telephone call or any combination of the above. If any participant in any such meeting will participate by conference telephone call, such participant shall, whenever reasonably possible, be furnished with copies of financial statements, reports or other significant documents to be discussed at the meeting so as to permit such participant to engage in discussions of the subject matter of the meetings in all material respects as if such participant had attended in person; provided, however, that written or other materials generated at the meeting may, at the option of the Chair, be described to a participant by

~~A-1~~

~~conference telephone call if, as a practical matter, such materials cannot be concurrently electronically transmitted to such participant.~~

~~RESPONSIBILITIES AND DUTIES~~

The Committee’s responsibility is oversight, and it recognizes that the Corporation’s management is responsible for preparing the Corporation’s financial statements. Additionally, the Committee recognizes that financial management, as well as the independent accountants, have more knowledge and more detailed information about the Corporation than do the members of the Committee. Consequently, in carrying out its oversight responsibilities the Committee is not providing any expert or special assurance as to the Corporation’s financial statements or any professional certification as to the independent accountants’ work.

The following functions shall be the common recurring activities of the Committee in carrying out its oversight responsibility. In particular, and without limiting the generality of the foregoing, the Committee shall, to the extent it may reasonably do so, undertake the responsibilities and duties prescribed by the NASD, the Commission or other similar regulatory bodies having jurisdiction over the financial affairs of the Corporation and the following list of functions shall be deemed to include such responsibilities and duties, as they may be promulgated from time to time, as if they were specifically listed below. The functions listed below are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate in the circumstances.

• Review with a representative of financial management and the independent accountants the financial information contained in the Corporation’s Quarterly Report on Form 10-Q prior to its filing, the Corporation’s earnings announcements prior to release, and the results of the independent accountants’ review of Interim Financial Information pursuant to Statement of Accounting Standards (SAS) 71. The Chair may represent the entire Committee, either in person or by telephone conference call, for purposes of this review.

• Review with management and the independent accountants following the completion of the annual audit of the Corporation’s consolidated financial statements included in the Annual Report on Form 10-K for the last fiscal year, and prior to its filing:

Richard Palmer
     ~~(1) the Corporation’s annual consolidated financial statements~~President and ~~related footnotes;~~Chief Executive Officer
January 7, 2008
     ~~(2) the independent accountants’ audit of the consolidated financial statements and their report;~~

     ~~(3) any significant changes required in the independent accountants’ examination plan;~~
     ~~(4) any serious difficulties or disputes with management encountered during the course of the audit; and~~
     (5) other matters related to the conduct of the audit which are to be communicated to the Committee under generally accepted auditing standards including discussions relating to the independent accountants’ judgments about such matters as the quality, not just the acceptability, of the Corporation’s accounting practices and other items set forth in SAS 61 (Communication with Audit Committees) or other such auditing standards that may in time modify, supplement or replace SAS 61.

• On an annual basis, the Committee should ensure receipt of, and review with the independent accountants, a written statement required by Independence Standards Board (ISB) Standard No. 1, as may be modified or supplemented. The Committee will actively engage the independent accountants in a dialogue regarding any disclosed relationships or services that may impact their objectivity and independence. The Committee will recommend that the Board of Directors take appropriate action on any disclosed relationships that may reasonably be thought to bear on the independence of the accountants and satisfy itself that the Corporation has engaged independent accountants as required by the Securities Acts administered by the Commission.

~~A-2~~

• The Committee will have prepared and review the Audit Committee Report for inclusion in the proxy statement for the annual shareholders’ meeting. The Audit Committee Report must state whether the Committee:

     ~~(1) has reviewed and discussed the audited consolidated financial statements with management;~~
     ~~(2) has discussed with the independent accountants the matters required to be discussed by SAS 61, as may be modified, supplemented or replaced; and~~
     (3) has received the written disclosures from the independent accountants regarding the independent accountants’ independence required by ISB Standard No. 1, as may be modified or supplemented, and has discussed with the accountants their independence; and
     (4) has recommended to the Board of Directors, based on the review and discussions referred to in above items (1) through (3), that the Corporation’s audited consolidated financial statements be included in the Annual Report on Form 10-K for the last fiscal year for filing with the Commission.

• The Committee and Board of Directors are responsible for the selection, evaluation and, where appropriate, replacement of the independent accountants. Selection for the ensuing calendar year will be submitted to the shareholders for ratification or rejection at the annual meeting of shareholders. Consistent with these responsibilities, it is recognized that the independent accountants are ultimately accountable to the Board of Directors and Committee.
• Review and reassess the adequacy of the Audit Committee Charter on an annual basis. The charter will be included as an appendix to the annual shareholders’ meeting proxy statement triennially or in the next annual shareholders’ meeting proxy statement following any significant amendment to the charter.
• ~~In consultation with the independent accountants and the internal auditors, regularly review the integrity of the Corporation’s financial reporting processes and system of internal control.~~
• ~~Review and concur in the appointment, replacement, reassignment or dismissal of the internal auditors. Confirm and assure the objectivity of the internal auditors.~~
• Review the performance of the internal accounting and finance department, including the objectivity and authority of its reporting obligations, the proposed audit plans for the coming year, and the coordination of such plans with the independent accountants.
• Review from time to time as reasonably necessary the Corporation’s policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal accounting and finance department or the independent accountants.
• Review legal and regulatory matters that may have a material impact on the Corporation’s consolidated financial statements, related compliance policies and programs, and reports received from regulators.

~~OTHER POWERS AND RESPONSIBILITIES~~

In addition to the activities described above, the Committee will perform such other functions as necessary or appropriate under law, the Corporation’s Articles of Incorporation or Bylaws, and the resolutions and other directives of the Board of Directors.

The Committee shall have the power to conduct or authorize investigations into any matters within its scope of responsibilities and shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation.

~~The duties and responsibilities of a member of the Committee are in addition to those duties generally pertaining to a member of the Board of Directors.~~

~~The Committee will report its actions to the Board of Directors with such recommendations as the Committee may deem appropriate.~~

~~A-3~~

~~ANNEX B~~

~~AMENDED AND RESTATED ARTICLES OF INCORPORATION~~

MEDICAL DISCOVERIES, INC.


1.	~~Name~~

6033 W. Century Blvd, Suite 1090,

Los Angeles, California 90045

PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD JANUARY 29, 2008

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The ~~name~~undersigned, having received notice of the ~~corporation is~~Special Meeting of Shareholders of Medical Discoveries, Inc. (the ~~“Corporation”~~“Company”).


2.	~~Purposes and Powers~~

~~The Corporation is organized~~ to be held at 10:00 A.M. local time on Tuesday, January 29, 2008, hereby designates and appoints Richard Palmer and Dave Walker, and each of them, as attorney and proxy for ~~any and~~the undersigned, with full power of substitution, to vote all ~~lawful purposes for which a corporation may be organized under the Utah Revised Business Corporation Act (the “Act”).~~


3.	~~Authorized Shares~~

~~The aggregate number of shares of capital stock that the Corporation is authorized to issue is three hundred million (300,000,000), of which two hundred fifty million (250,000,000) are~~ shares of common stock ~~no par value (the “Common Stock”),~~of Medical Discoveries, Inc. that the undersigned is entitled to vote at such meeting or at any adjournment thereof, with all the powers the undersigned would possess if personally present, such proxies being directed to vote as specified below and fifty million (50,000,000) are shares of preferred stock, no par value (the “Preferred Stock”). The designations, preferences, limitations and relative rights of each class of stock are as follows:

~~(a)~~ ~~Preferred Stock.~~ The Preferred Stock may be issued in one or more series, from time to time, with each such series to have such designations, preferences, limitations and relative rights as shall be stated and expressed in an amendment to these Articles of Incorporation providing for the issue of such series. The board of directors of the Corporation is hereby expressly vested with authority to amend these Articles of Incorporation, without the prior approval of the Corporation’s shareholders, to: (x) create one or more series of the Preferred Stock, fix the number of shares of each such series, and designate and determine, in whole or part, the preferences, limitations, and relative rights of each series of the Preferred Stock; (y) alter or revoke the designations, preferences, limitations and relative rights of any wholly unissued series of the Preferred Stock; or (z) increase or decrease the number of shares constituting any series of the Preferred Stock the number of shares of which was originally fixed by the board of directors, either before or after the issuance of shares of the series; provided, however, that the number may not be decreased below the number of shares of such series then outstanding, or increased above the total number of authorized shares of the Preferred Stock available for designation as a part of such series. Without limiting the foregoing, the authority of the board of directors with respect to each such series shall include, but not be limited to, the determination or fixing of the following:

     (i) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the board of directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the board of directors;
     (ii) The dividend rate of such series, the conditions and times upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of stock or series thereof, or on the other series of the same class, and whether dividends shall be cumulative or noncumulative;
     (iii) The conditions upon which the shares of such series shall be subject to redemption by the Corporation and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;
     ~~(iv) Whether or not the shares of the series shall be subject to the operation of retirement or sinking fund provisions to be applied to the purchase or redemption of such shares and, if such~~

~~B-1~~

~~retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;~~
     (v) Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class and, if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange;
     (vi) Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, subject to the limitations hereinafter set forth, the terms of such voting rights;
     ~~(vii) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or upon distribution of assets of the Corporation; and~~
     ~~(viii) Any other designations, preferences, limitations and relative rights of the shares of such series, as the board of directors may deem advisable.~~

~~(b)~~ ~~Common Stock~~

~~(i)~~ ~~Dissolution~~

(A) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, after any preferential amount with respect to the Preferred Stock has been paid or reserved, the holders of Common Stock and the holders of any series of Preferred Stock entitled to participate in the distribution of assets are entitled to receive the net assets of the Corporation.

~~(ii)~~ ~~Voting~~

(A) At every meeting of the shareholders, every holder of shares of the Common Stock shall be entitled to one vote in person or by proxy for each share of such Common Stock standing in his name on the stock transfer records of the Corporation.
~~(B) No shareholder shall have the right to cumulate votes in the election of directors.~~

~~(iii)~~ ~~Preemptive Rights.~~ No holder of shares of the Common Stock of the Corporation shall, as such holder, be entitled as of right to subscribe for, purchase or receive any part of any new or additional issue of stock of any class, whether now or hereafter authorized, or of bonds, debentures or other securities convertible into or exchangeable for stock, but all such additional shares of stock of any class, or bonds, debentures or other securities convertible into or exchangeable for stock, may be issued and disposed of by the board of directors on such terms and for such consideration, so far as may be permitted by law, and to such persons, as the board of directors in its absolute discretion may deem advisable.
in their discretion on any other business that may properly come before the meeting.


4.	~~Officer and Director Liability~~

(a) The Corporation will indemnify and advance expenses to its directors, officers, employees, fiduciaries or agents and to any person who is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee, fiduciary or agent of another domestic or foreign corporation or other person or of an employee benefit plan (and their respective estates or personal representatives) to the fullest extent as from time to time permitted by Utah law.

~~(b) The personal liability of the directors and officers of the Corporation to the Corporation or its shareholders, or to any third person,~~

This proxy when properly executed will be ~~eliminated or limited to~~voted in the ~~fullest extent as from time to time permitted by Utah law.~~

~~(c) Any repeal or modification of this Article 4~~manner directed herein by the ~~shareholders~~undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.

PROPOSAL I. To approve the sale of ~~the Corporation will not adversely affect any right or protection of any person existing at the time of such repeal or modification.~~

~~B-2~~

our SaveCream assets to Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH.

¨ FOR
5.¨ AGAINST	~~Amended and Restated Articles~~¨ ABSTAIN

~~These~~

PROPOSAL II. To approve an amendment to our Amended and Restated Articles of Incorporation ~~supersede, replace, and restate in their entirety~~to increase the ~~original Articles~~authorized number of ~~Incorporation~~shares of ~~the Corporation and any amendments thereto. Any reference herein~~common stock from 250,000,000 to ~~Articles of Incorporation will be deemed a reference~~500,000,000.

¨ FOR

¨ AGAINST

¨ ABSTAIN

PROPOSAL III. To approve an amendment to ~~these~~our Amended and Restated Articles of ~~Incorporation.~~

~~B-3~~

Incorporation to change our company’s name to “Global Clean Energy Holdings, Inc.”

~~ANNEX C~~

~~MEDICAL DISCOVERIES, INC.~~

~~2002 STOCK INCENTIVE PLAN~~

1. ~~Purpose.~~

¨ FOR

¨ AGAINST

¨ ABSTAIN

In their discretion the proxies are authorized to vote upon such other business as may properly come before the meeting.

The ~~purpose of~~undersigned reserves the right to revoke this ~~2002 Stock Incentive Plan (the “Plan”) is~~Proxy at any time prior to ~~enable~~the Proxy being voted at the Meeting. The Proxy may be revoked by delivering a signed revocation to Medical Discoveries, Inc. (the “Company”) to attract and retain the services of (i) selected employees, officers and directors of the Company or any parent or subsidiary of the Company and (ii) selected nonemployee agents, consultants, advisers and independent contractors of the Company or any parent or subsidiary of the Company. For purposes of this Plan, a person is considered to be employed by or in the service of the Company if the person is employed by or in the service of any entity (the “Employer”) that is either the Company or a parent or subsidiary of the Company.

2. ~~Shares Subject to the Plan.~~ Subject to adjustment as provided below and in Section 10, the shares to be offered under the Plan shall consist of Common Stock of the Company, and the total number of shares of Common Stock that may be issued under the Plan shall be 20,000,000 shares. If an option or Performance-Based Award granted under the Plan expires, terminates or is canceled, the unissued shares subject to that option or Performance-Based Award shall again be available under the Plan. If shares awarded as a bonus pursuant to Section 7 or sold pursuant to Section 8 under the Plan are forfeited to or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan.

3. ~~Effective Date and Duration of Plan.~~

~~3.1~~ ~~Effective Date.~~ The Plan shall become effective as of July 11, 2002. No Incentive Stock Option (as defined in Section 5 below) granted under the Plan shall become exercisable and no payments shall be made under a Performance-Based Award, however, until the Plan is approved by the affirmative vote of the holders of a majority of the shares of Common Stock represented at a shareholders meeting at which a quorum is present or by means of unanimous consent resolutions, and the exercise of any Incentive Stock Options granted under the Plan before approval shall be conditioned on and subject to that approval. Subject to this limitation, options and Performance-Based Awards may be granted and shares may be awarded as bonuses or sold under the Plan at any time ~~after the effective date and before termination of the Plan.~~

~~3.2~~ ~~Duration.~~ The Plan shall continue in effect until all shares available for issuance under the Plan have been issued and all restrictions on the shares have lapsed. The Board of Directors may suspend or terminate the Plan at any time except with respect to options, Performance-Based Awards and shares subject to restrictions then outstanding under the Plan. Termination shall not affect any outstanding options, any outstanding Performance-Based Awards or any right of the Company to repurchase shares or the forfeitability of shares issued under the Plan.

4. ~~Administration.~~

~~4.1~~ ~~Board of Directors.~~ The Plan shall be administered by the Board of Directors of the Company, which shall determine and designate the individuals to whom awards shall be made, the amount of the awards and the other terms and conditions of the awards. Subjectprior to the provisions of the Plan, the Board of Directors may adopt and amend rules and regulations relating to administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares (except those restrictions imposedMeeting, by law) and make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan. The interpretation and construction of the provisions of the Plan and related agreements by the Board of Directors shall be final and conclusive. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it deems expedient to carry the Plan into effect, and the Board of Directors shall be the sole and final judge of such expediency.

~~4.2~~ ~~Committee.~~ The Board of Directors may delegate to any committee of the Board of Directors (the “Committee”) any or all authority for administration of the Plan. If authority is delegated to the Committee, all references to the Board of Directors in the Plan shall mean and relate to the Committee, except (i) as

~~C-1~~

~~otherwise provided by the Board of Directors and (ii) that only the Board of Directors may amend or terminate the Plan as provided in Sections 3 and 11.~~

5. ~~Types of Awards, Eligibility, Limitations.~~ The Board of Directors may, from time to time, take the following actions, separately or in combination, under the Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), as provided in Sections 6.1 and 6.2; (ii) grant options other than Incentive Stock Options (“Non-Statutory Stock Options”) as provided in Sections 6.1 and 6.3; (iii) award stock bonuses as provided in Section 7; (iv) sell shares subject to restrictions as provided in Section 8; and (v) award Performance-Based Awards as provided in Section 9. Awards may be made to employees, including employees who are officers or directors, and to other individuals described in Section 1 selected by the Board of Directors; provided, however, that only employees of the Company or any parent or subsidiary of the Company (as defined in subSections 424(e) and 424(f) of the Code) are eligible to receive Incentive Stock Options under the Plan. The Board of Directors shall select the individuals to whom awards shall be made and shall specify the action taken with respect to each individual to whom an award is made. At the discretion of the Board of Directors, an individual may be given an election to surrender an award in exchange for the grant ofsubmitting a ~~new award.~~

6. ~~Option Grants.~~

~~6.1~~ ~~General Rules Relating to Options.~~

~~6.1-1~~     ~~Terms of Grant.~~ The Board of Directors may grant options under the Plan. With respect to each option grant, the Board of Directors shall determine the number of shares subject to the option, the exercise price, the period of the option, the time or times at which the option may be exercised and whether the option is an Incentive Stock Option or a Non-Statutory Stock Option. At the time of the grant of an option or at any time thereafter, the Board of Directors may provide that an optionee who exercised an option with Common Stock of the Company shall automatically receive a new option to purchase additional shares equal to the number of shares surrendered and may specify the terms and conditions of such new options.
~~6.1-2~~     ~~Exercise of Options.~~ Except as provided in Section 6.1-4 or as determined by the Board of Directors, no option granted under the Plan may be exercised unless at the time of exercise the optionee is employed by or in the service of the Company and shall have been so employed or provided such service continuously since the date the option was granted. Except as provided in Sections 6.1-4 and 10, options granted under the Plan may be exercised from time to time over the period stated in each option in amounts and at times prescribed by the Board of Directors, provided that options may not be exercised for fractional shares. Unless otherwise determined by the Board of Directors, if an optionee does not exercise an option in any one year for the full number of shares to which the optionee is entitled in that year, the optionee’s rights shall be cumulative and the optionee may purchase those shares in any subsequent year during the term of the option.
~~6.1-3~~     ~~Nontransferability.~~ Each Incentive Stock Option and, unless otherwise determined by the Board of Directors, each other option granted under the Plan by its terms (i) shall be nonassignable and nontransferable by the optionee, either voluntarily or by operation of law, except by will or by the laws of descent and distribution of the state or country of the optionee’s domicile at the time of death, and (ii) during the optionee’s lifetime, shall be exercisable only by the optionee.
~~6.1-4~~     ~~Termination of Employment or Service.~~
~~6.1-4(a)~~     ~~General Rule.~~ Unless otherwise determined by the Board of Directors, if an optionee’s employment or service with the Company terminates for any reason other than because of total disability or death as provided in Sections 6.1-4(b) and (c), his or her option may be exercised at any time before the expiration date of the option or the expiration of 30 days after the date of termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of termination.

~~C-2~~

~~6.1-4(b)~~     ~~Termination Because of Total Disability.~~ Unless otherwise determined by the Board of Directors, if an optionee’s employment or service with the Company terminates because of total disability, his or her option may be exercised at any time before the expiration date of the option or before the date 12 months after the date of termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of termination. The term “total disability” means a medically determinable mental or physical impairment that is expected to result in death or has lasted or is expected to last for a continuous period of 12 months or more and that, in the opinion of the Company and two independent physicians, causes the optionee to be unable to perform his or her duties as an employee, director, officer or consultant of the Employer and unable to be engaged in any substantial gainful activity. Total disability shall be deemed to have occurred on the first day after the two independent physicians have furnished their written opinion of total disability to the Company and the Company has reached an opinion of total disability.
~~6.1-4(c)~~     ~~Termination Because of Death.~~ Unless otherwise determined by the Board of Directors, if an optionee dies while employed by or providing service to the Company, his or her option may be exercised at any time before the expiration date of the option or before the date 12 months after the date of death, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of death and only by the person or persons to whom the optionee’s rights under the option shall pass by the optionee’s will or by the laws of descent and distribution of the state or country of domicile at the time of death.
~~6.1-4(d)~~     ~~Amendment of Exercise Period Applicable to Termination.~~ The Board of Directors may at any time extend the 30-day and 12-month exercise periods any length of time not longer than the original expiration date of the option. The Board of Directors may at any time increase the portion of an option that is exercisable, subject to terms and conditions determined by the Board of Directors.
~~6.1-4(e)~~     ~~Failure to Exercise Option.~~ To the extent that the option of any deceased optionee or any optionee whose employment or service terminates is not exercised within the applicable period, all further rights to purchase shares pursuant to the option shall cease and terminate.
~~6.1-4(f)~~     ~~Leave of Absence.~~ Absence on leave approved by the Employer or on account of illness or disability shall not be deemed a termination or interruption of employment or service. Unless otherwise determined by the Board of Directors, vesting of options shall continue during a medical, family or military leave of absence, whether paid or unpaid, and vesting of options shall be suspended during any other unpaid leave of absence.
~~6.1-5~~     ~~Purchase of Shares.~~
~~6.1-5(a)~~     ~~Notice of Exercise.~~ Unless the Board of Directors determines otherwise, shares may be acquired pursuant to an option granted under the Plan only upon the Company’s receipt of written notice from the optionee of the optionee’s binding commitment to purchase shares, specifying the number of shares the optionee desires to purchase under the option and the date on which the optionee agrees to complete the transaction, and, if required to comply with the Securities Act of 1933, containing a representation that it is the optionee’s intention to acquire the shares for investment and not with a view to distribution.
~~6.1-5(b)~~     ~~Payment.~~ Unless the Board of Directors determines otherwise, on or before the date specified for completion of the purchase of shares pursuant to an option exercise, the optionee must pay the Company the full purchase price of those shares in cash or by check or, with the consent of the Board of Directors, in whole or in part, in Common Stock of the Company valued at fair market value, restricted stock or other contingent awards denominated in either stock or cash, promissory notes and other forms of consideration. Unless otherwise determined by the Board of Directors, any Common Stock provided in payment of the purchase price must have been previously acquired and held by the optionee for at least six months. The fair market value of Common Stock provided in payment of the purchase price shall be the closing price of the Common Stock last reported before the time payment in Common Stock is made or, if earlier, committed to be made, if the Common Stock is publicly traded, or another value of the

~~C-3~~

Common Stock as specified by the Board of Directors. No shares shall be issued until full payment for the shares has been made, including all amounts owed for tax withholding. With the consent of the Board of Directors, an optionee may request the Company to apply automatically the shares to be received upon the exercise of a portion of a stock option (even though stock certificates have not yet been issued) to satisfy the purchase price for additional portions of the option.
~~6.1-5(c)~~     ~~Tax Withholding.~~ Each optionee who has exercised an option shall, immediately upon notification of the amount due, if any, pay to the Company in cash or by check amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If additional withholding is or becomes required (as a result of exercise of an option or as a result of disposition of shares acquired pursuant to exercise of an option) beyond any amount deposited before delivery of the certificates, the optionee shall pay such amount, in cash or by check, to the Company on demand. If the optionee fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the optionee, including salary, subject to applicable law. With the consent of the Board of Directors, an optionee may satisfy this obligation, in whole or in part, by instructing the Company to withhold from the shares to be issued upon exercise or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation.
~~6.1-5(d)~~     ~~Reduction of Reserved Shares.~~ Upon the exercise of an option, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued upon exercise of the option (less the number of any shares surrendered in payment for the exercise price or withheld to satisfy withholding requirements).
~~6.1-6~~     ~~Limitations on Grants to Non-Exempt Employees.~~ Unless otherwise determined by the Board of Directors, if an employee of the Company or any parent or subsidiary of the Company is a non-exempt employee subject to the overtime compensation provisions of Section 7 of the Fair Labor Standards Act (the “FLSA”), any option granted to that employee shall be subject to the following restrictions: (i) the option price shall be at least 85 percent of the fair market value, as described in Section 6.2-4, of the Common Stock subject to the option on the date it is granted; and (ii) the option shall not be exercisable until at least six months after the date it is granted; provided, however, that this six-month restriction on exercisability will cease to apply if the employee dies, becomes disabled or retires, there is a change in ownership of the Company, or in other circumstances permitted by regulation, all as prescribed in Section 7(e)(8)(B) of the FLSA.
~~6.2~~     ~~Incentive Stock Options.~~ ~~Incentive Stock Options shall be subject to the following additional terms and conditions:~~

~~6.2-1~~ ~~Limitation on Amount of Grants.~~ If the aggregate fair market value of stock (determined as of the date the option is granted) for which Incentive Stock Options granted under this Plan (and any other stock incentive plan of the Company or its parent or subsidiary corporations, as defined in subSections 424(e) and 424(f) of the Code) are exercisable for the first time by an employee during any calendar year exceeds $100,000, the portion of the option or options not exceeding $100,000, to the extent of whole shares, will be treated as an Incentive Stock Option and the remaining portion of the option or options will be treated as a Non-Statutory Stock Option. The preceding sentence will be applied by taking options into account in the order in which they were granted. If, under the $100,000 limitation, a portion of an option is treated as an Incentive Stock Option and the remaining portion of the option is treated as a Non-Statutory Stock Option, unless the optionee designates otherwise at the time of exercise, the optionee’s exercise of all or a portion of the option will be treated as the exercise of the Incentive Stock Option portion of the option to the full extent permitted under the $100,000 limitation. If an optionee exercises an option that is treated as in part an Incentive Stock Option and in part a Non-Statutory Stock Option, the Company will designate the portion of the stock acquired pursuant to the exercise of the Incentive Stock Option portion as Incentive Stock Option stock by issuing a separate certificate for that portion of the stock and identifying the certificate as Incentive Stock Option stock in its stock records.

~~C-4~~

~~6.2-2~~     ~~Limitations on Grants to 10 percent Shareholders.~~ An Incentive Stock Option may be granted under the Plan to an employee possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary (as defined in subSections 424(e) and 424(f) of the Code) only if the option price is at least 110 percent of the fair market value, as described in Section 6.2-4, of the Common Stock subject to the option on the date it is granted and the option by its terms is not exercisable after the expiration of five years from the date it is granted.
~~6.2-3~~     ~~Duration of Options.~~ Subject to Sections 6.1-2, 6.1-4 and 6.2-2, Incentive Stock Options granted under the Plan shall continue in effect for the period fixed by the Board of Directors, except that by its terms no Incentive Stock Option shall be exercisable after the expiration of 10 years from the date it is granted.
~~6.2-4~~     ~~Option Price.~~ The option price per share shall be determined by the Board of Directors at the time of grant. Except as provided in Section 6.2-2, the option price shall not be less than 100 percent of the fair market value of the Common Stock covered by the Incentive Stock Option at the date the option is granted. The fair market value shall be the closing price of the Common Stock last reported before the time the option is granted, if the stock is publicly traded, or another value of the Common Stock as specified by the Board of Directors.
~~6.2-5~~     ~~Limitation on Time of Grant.~~ No Incentive Stock Option shall be granted on or after the tenth anniversary of the last action by the Board of Directors adopting the Plan or approving an increase in the number of shares available for issuance under the Plan, which action was subsequently approved within 12 months by the shareholders.
~~6.2-6~~ ~~Early Dispositions.~~ If within two years after an Incentive Stock Option is granted or within 12 months after an Incentive Stock Option is exercised, the optionee sells or otherwise disposes of Common Stock acquired on exercise of the Option, the optionee shall within 30 days of the sale or disposition notify the Company in writing of (i) the date of the sale or disposition, (ii) the amount realized on the sale or disposition and (iii) the nature of the disposition (e.g., sale, gift, etc.).

~~6.3~~ ~~Non-Statutory Stock Options.~~ ~~Non-Statutory Stock Options shall be subject to the following terms and conditions, in addition to those set forth in Section 6.1 above:~~

~~6.3-1~~ ~~Option Price.~~ ~~The option price for Non-Statutory Stock Options shall be determined by the Board of Directors at the time of grant and may be any amount determined by the Board of Directors.~~
~~6.3-2~~ ~~Duration of Options.~~ ~~Non-Statutory Stock Options granted under the Plan shall continue in effect for the period fixed by the Board of Directors.~~

7. ~~Stock Bonuses.~~ The Board of Directors may award shares under the Plan as stock bonuses. Shares awarded as a bonus shall be subject to the terms, conditions and restrictions determined by the Board of Directors. The restrictions may include restrictions concerning transferability and forfeiture of the shares awarded, together with any other restrictions determined by the Board of Directors. The Board of Directors may require the recipient to sign an agreement as a condition of the award, but may not require the recipient to pay any monetary consideration other than amounts necessary to satisfy tax withholding requirements. The agreement may contain any terms, conditions, restrictions, representations and warranties required by the Board of Directors. The certificates representing the shares awarded shall bear any legends required by the Board of Directors. The Company may require any recipient of a stock bonus to pay to the Company in cashlater-dated Proxy, or by ~~check upon demand amounts necessary~~attending the Meeting in person and casting a ballot. The undersigned hereby revokes any proxy previously given to satisfy any applicable federal, state or local tax withholding requirements. If the recipient fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the recipient, including salary, subject to applicable law. With the consent of the Board of Directors, a recipient may satisfy this obligation, in whole or in part, by instructing the Company to withhold from anyvote such shares to be issued or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation. Upon the issuance of a stock bonus, the

~~C-5~~

~~number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued, less the number of shares withheld or delivered to satisfy withholding obligations.~~

8. ~~Restricted Stock.~~ The Board of Directors may issue shares under the Plan for any consideration (including promissory notes and services) determined by the Board of Directors. Shares issued under the Plan shall be subject to the terms, conditions and restrictions determined by the Board of Directors. The restrictions may include restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued, together with any other restrictions determined by the Board of Directors. All Common Stock issued pursuant to this Section 8 shall be subject to a purchase agreement, which shall be executed by the Company and the prospective purchaser of the shares before the delivery of certificates representing the shares to the purchaser. The purchase agreement may contain any terms, conditions, restrictions, representations and warranties required by the Board of Directors. The certificates representing the shares shall bear any legends required by the Board of Directors. The Company may require any purchaser of restricted stock to pay to the Company in cash or by check upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the purchaser fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the purchaser, including salary, subject to applicable law. With the consent of the Board of Directors, a purchaser may satisfy this obligation, in whole or in part, by instructing the Company to withhold from any shares to be issued or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation. Upon the issuance of restricted stock, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued, less the number of shares withheld or delivered to satisfy withholding obligations.

9. ~~Performance-Based Awards.~~ The Board of Directors may grant awards intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder (“Performance-Based Awards”). Performance-Based Awards shall be denominated at the time of grant either in Common Stock (“Stock Performance Awards”) or in dollar amounts (“Dollar Performance Awards”). Payment under a Stock Performance Award or a Dollar Performance Award shall be made, at the discretion of the Board of Directors, in Common Stock (“Performance Shares”), or in cash or in any combination thereof. Performance-Based Awards shall be subject to the following terms and conditions:

Meeting.


	~~9.1~~ ~~Award Period.~~ ~~The Board of Directors shall determine the period of time for which a Performance-Based Award is made (the “Award Period”).~~

	~~9.2~~ ~~Performance Goals and Payment.~~ The Board of Directors shall establish in writing objectives (“Performance Goals”) that must be met by the Company or any subsidiary, division or other unit of the Company (“Business Unit”) during the Award Period as a condition to payment being made under the Performance-Based Award. The Performance Goals for each award shall be one or more targeted levels of performance with respect to one or more of the following objective measures with respect to the Company or any Business Unit: earnings, earnings per share, stock price increase, total shareholder return (stock price increase plus dividends), return on equity, return on assets, return on capital, economic value added, revenues, operating income, inventories, inventory turns, cash flows or any of the foregoing before the effect of acquisitions, divestitures, accounting changes, and restructuring and special charges (determined according to criteria established by the Board of Directors). The Board of Directors shall also establish the number of Performance Shares or the amount of cash payment to be made under a Performance-Based Award if the Performance Goals are met or exceeded, including the fixing of a maximum payment. The Board of Directors may establish other restrictions to payment under a Performance-Based Award, such as a continued employment requirement, in addition to satisfaction of the Performance Goals. Some or all of the Performance Shares may be issued at the time of the award as restricted shares subject to forfeiture in whole or in part if Performance Goals or, if applicable, other restrictions are not satisfied.

	~~9.3~~ ~~Computation of Payment.~~ During or after an Award Period, the performance of the Company or Business Unit, as applicable, during the period shall be measured against the Performance Goals. If the Performance Goals are not met, no payment shall be made under a Performance-Based Award. If the

~~C-6~~

Performance Goals are met or exceeded, the Board of Directors shall certify that fact in writing and certify the number of Performance Shares earned or the amount of cash payment to be made under the terms of the Performance-Based Award.
~~9.4~~ ~~Tax Withholding.~~ Each participant who has received Performance Shares shall, upon notification of the amount due, pay to the Company in cash or by check amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If the participant fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the participant, including salary, subject to applicable law. With the consent of the Board of Directors, a participant may satisfy this obligation, in whole or in part, by instructing the Company to withhold from any shares to be issued or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so delivered or withheld shall not exceed the minimum amount necessary to satisfy the required withholding obligation.
~~9.5~~ ~~Effect on Shares Available.~~ The payment of a Performance-Based Award in cash shall not reduce the number of shares of Common Stock reserved for issuance under the Plan. The number of shares of Common Stock reserved for issuance under the Plan shall be reduced by the number of shares issued upon payment of an award, less the number of shares delivered or withheld to satisfy withholding obligations.

~~10.~~ ~~Changes in Capital Structure.~~

~~10.1~~ ~~Stock Splits, Stock Dividends.~~ If the outstanding Common Stock of the Company is hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares, dividend payable in shares, recapitalization or reclassification, appropriate adjustment shall be made by the Board of Directors in the number and kind of shares available for grants under the Plan and in all other share amounts set forth in the Plan. In addition, the Board of Directors shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, so that the optionee’s proportionate interest before and after the occurrence of the event is maintained. Notwithstanding the foregoing, the Board of Directors shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Board of Directors. Any such adjustments made by the Board of Directors shall be conclusive.
~~10.2~~ ~~Mergers, Reorganizations, Etc.~~ In the event of a merger, consolidation, plan of exchange, acquisition of property or stock, split-up, split-off, spin-off, reorganization or liquidation to which the Company is a party or any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company (each, a “Transaction”), the Board of Directors shall, in its sole discretion and to the extent possible under the structure of the Transaction, select one of the following alternatives for treating outstanding options under the Plan:

     ~~10.2-1     Outstanding options shall remain in effect in accordance with their terms.~~
     10.2-2     Outstanding options shall be converted into options to purchase stock in one or more of the corporations, including the Company, that are the surviving or acquiring corporations in the Transaction. The amount, type of securities subject thereto and exercise price of the converted options shall be determined by the Board of Directors of the Company, taking into account the relative values of the companies involved in the Transaction and the exchange rate, if any, used in determining shares of the surviving corporation(s) to be held by holders of shares of the Company following the Transaction. Unless otherwise determined by the Board of Directors, the converted options shall be vested only to the extent that the vesting requirements relating to options granted hereunder have been satisfied.
     10.2-3     The Board of Directors shall provide a period of 30 days or less before the completion of the Transaction during which outstanding options may be exercised to the extent then exercisable, and upon the expiration of that period, all unexercised options shall immediately terminate. The

~~C-7~~

~~Board of Directors may, in its sole discretion, accelerate the exercisability of options so that they are exercisable in full during that period.~~

~~10.3~~ ~~Dissolution of the Company.~~ ~~In the event of the dissolution of the Company, options shall be treated in accordance with Section 10.2-3.~~
~~10.4~~ ~~Rights Issued by Another Corporation.~~ The Board of Directors may also grant options and stock bonuses and Performance-Based Awards and issue restricted stock under the Plan with terms, conditions and provisions that vary from those specified in the Plan, provided that any such awards are granted in substitution for, or in connection with the assumption of, existing options, stock bonuses, Performance-Based Awards and restricted stock granted, awarded or issued by another corporation and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a Transaction.

~~11.~~ ~~Amendment of the Plan.~~ The Board of Directors may at any time modify or amend the Plan in any respect. Except as provided in Section 10, however, no change in an award already granted shall be made without the written consent of the holder of the award if the change would adversely affect the holder.

~~12.~~ ~~Approvals.~~ The Company’s obligations under the Plan are subject to the approval of state and federal authorities or agencies with jurisdiction in the matter. The Company will use its best efforts to take steps required by state or federal law or applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange on which the Company’s shares may then be listed, in connection with the grants under the Plan. The foregoing notwithstanding, the Company shall not be obligated to issue or deliver Common Stock under the Plan if such issuance or delivery would violate state or federal securities laws.

~~13.~~ ~~Employment and Service Rights.~~ Nothing in the Plan or any award pursuant to the Plan shall (i) confer upon any employee any right to be continued in the employment of an Employer or interfere in any way with the Employer’s right to terminate the employee’s employment at will at any time, for any reason, with or without cause, or to decrease the employee’s compensation or benefits, or (ii) confer upon any person engaged by an Employer any right to be retained or employed by the Employer or to the continuation, extension, renewal or modification of any compensation, contract or arrangement with or by the Employer.

~~14.~~ ~~Rights as a Shareholder.~~ The recipient of any award under the Plan shall have no rights as a shareholder with respect to any shares of Common Stock until the date the recipient becomes the holder of record of those shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date occurs before the date the recipient becomes the holder of record.

~~Adopted: July 11, 2002~~

~~C-8~~

~~[FORM OF PROXY]~~

~~PROXY~~

~~THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS~~

~~FOR ANNUAL MEETING OF SHAREHOLDERS~~

~~MAY 21, 2004 AT 1:00 P.M.~~

~~MEDICAL DISCOVERIES, INC.~~

The undersigned shareholder of Medical Discoveries, Inc. hereby appoints David R. Walker and Judy M. Robinett and each of them, as attorneys and proxies, each with the power to act without the other and with power of substitution and revocation, and hereby authorizes them to represent the undersigned and vote, as designated on the other side, all shares of stock of Medical Discoveries, Inc. standing in the name of the undersigned with all powers that the undersigned would possess if present at the Annual Meeting of Shareholders of the Company to be held May 21, 2004 or any adjournments or postponements thereof.

~~Receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement furnished herewith is hereby acknowledged.~~

~~(Continued and to be marked, dated and signed on the other side)~~

~~FOLD AND DETACH HERE~~

~~Annual Meeting of~~

~~Shareholders~~

~~MEDICAL DISCOVERIES, INC.~~

~~May 21, 2004~~

~~1:00 p.m.~~

~~Little America Hotel~~

~~500 S. Main Street~~

~~Salt Lake City, Utah~~


~~THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.~~			~~Please mark your votes as indicated in this example X~~Signature


~~1. ELECTION OF DIRECTORS~~Date:	~~(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW)~~
~~FOR all nominees listed to the right (except as marked to the contrary herein)~~	~~WITHHOLD AUTHORITY~~ ~~To vote for all nominees listed to the right~~	~~NOMINEES: David R. Walker, Judy M. Robinett, Larry Anderson~~ ~~(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.)~~



~~2. RATIFICATION OF SELECTION OF BALUKOFF LINDSTROM & CO., P.A. AS INDEPENDENT ACCOUNTANTS~~			~~(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF BALUKOFF LINDSTROM & CO., P.A. AS INDEPENDENT ACCOUNTANTS)~~

~~FOR~~	~~AGAINST~~	~~ABSTAIN~~
Signature

~~3. PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION~~Date:	~~(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION)~~

~~FOR~~	~~AGAINST~~	~~ABSTAIN~~


~~4. PROPOSAL TO APPROVE THE 2002 STOCK INCENTIVE PLAN~~			~~(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE 2002 STOCK INCENTIVE PLAN)~~

~~FOR~~	~~AGAINST~~	~~ABSTAIN~~


~~5. In their discretion the Proxies are authorized to vote upon such other business~~NOTE: Please sign exactly as ~~may properly come before the meeting or any adjournment thereof.~~			~~The signature~~name appears hereon. Joint owners should ~~agree with the name on your stock certificate. When shares are held by joint tenants, both should~~each sign. When signing as attorney, executor, administrator, trustee, guardian or ~~guardian,~~corporate officer, please give full title as such.

APPENDIX A

SALE AND PURCHASE AGREEMENT

A-1

SALE AND PURCHASE AGREEMENT

AMONG

MEDICAL DISCOVERIES INC.

AND

MDI ONCOLOGY, INC.

AND

EUCODIS PHARMACEUTICALS FORSCHUNGS-und ENTWICKLUNGS GmbH

Dated

July 6, 2007

SALE AND ASSET PURCHASE AGREEMENT

This Sale and Asset Purchase Agreement (this “Agreement”, which term is intended to include all exhibits, schedules and other documents attached hereto or referred to herein) is made and entered into on July 6, 2007 (the “Effective Date”) by and among Medical Discoveries, Inc., a Utah corporation, whose principal place of business is 1338 South Foothill Drive, #266, Salt Lake City, Utah 84108 (“MDI”), MDI Oncology, Inc., a Delaware corporation and wholly-owned subsidiary of MDI, whose principal place of business is 1338 South Foothill Drive, #266, Salt Lake City, Utah 84108 (“MDI Oncology” and, together with MDI, the “MDI Parties”) and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company whose principal place of business is Brunnerstrasse 59, 1230, Vienna, Austria (“EUCODIS”; collectively, the MDI Parties and EUCODIS are referred to as the “Parties”).

RECITALS

MDI purchased substantially all of the intellectual property assets of Savetherapeutics AG a German company in liquidation pursuant to an agreement with its liquidator dated March 11, 2005 (the “Savetherapeutics Contract”), as a result of which the MDI Parties own, among other things, patents, patent applications, pre-clinical study data and anecdotal clinical trial data concerning “SaveCream”, a developmental topical aromatase inhibitor cream (the “Product”).

MDI Oncology and EUCODIS entered into an agreement for the co-development and license of the Product as of July 29, 2006 (the “Co-Development Contract”).

On March 8, 2007, the Parties entered into a letter of intent for the acquisition by EUCODIS of all of the MDI Parties’ rights under the Savetherapeutics Contract, and all intellectual property and other rights belonging to the MDI Parties, whether subsequently acquired or developed by or though the efforts of the MDI Parties or otherwise which are related to the Product.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties herein, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, the following definitions shall apply unless specifically stated otherwise

1.1 “Affiliate” shall mean, with respect to any Person, any other Person controlling, controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation (or other entity) if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity), whether through the ownership of voting securities, by contract or otherwise

1.2 “Agreement” shall have the meaning set forth in the heading of this document.

1.3 “Assigned Contracts” shall have the meaning set forth in Section 3.2(a) of this Agreement.

1.4 “Closing” shall have the meaning set forth in Section 4.1(b).

1.5“Co-Development Contract” shall have the meaning set forth in the Recitals to this Agreement.

1.6 “Commitment” shall have the meaning set forth in Section 4.1 of this Agreement.

1.7 “Confidential Information” shall have the meaning set forth in Section 8.1 of this Agreement.

1.8 “Creditor Indebtedness” shall have the meaning set forth in Section 3.1(a) of this Agreement.

1.9 “Effective Date” shall have the meaning set forth in the heading of this Agreement.

1.10 “Encumbrance” shall mean any title defect, mortgage, assignment, pledge, hypothecation, security interest, lien, charge, option, claim of others or encumbrance of any kind.

1.11 “Escrow Agent” shall mean the New York City law firm of Otterbourg, Steindler, Houston & Rosen, P.C.

1.12 “EUCODIS” shall have the meaning set forth in the heading of this Agreement.

1.13 “Excess Portion” shall have the meaning set forth in Section 3.1(b) of this Agreement.

1.14 “MDI” shall have the meaning set forth in the heading of this Agreement.

1.15 “MDI Creditor” shall have the meaning set forth in Section 3.1(a) of this Agreement.

1.16 “MDI Oncology” shall have the meaning set forth in the heading of this Agreement.

1.17 “MDI Parties” shall have the meaning set forth in the heading of this Agreement.

1.18 “MDI Retained Creditors” shall have the meaning set forth in Section 6.1(s) of this Agreement.

1.19 “Parties” shall have the meaning set forth in the heading of this Agreement.

1.20 “Patent Rights” shall mean all of the MDI Parties' right, title and interest in the patents and patent applications acquired under the Savetherapeutics Contract or in connection therewith, and any other patent and/or patent application pertaining to the Product, owned or in possession or control of or under contract for the MDI Parties, and any division, continuation, continuation-in-part, renewal, extension, reexamination or reissue of each such patent and any and all corresponding US and foreign counterpart patent applications or patents.

1.21 “Product” shall have the meaning set forth in the Recitals to this Agreement.

1.22 “Purchased Assets” shall have the meaning set forth in Section 2.1 of this Agreement.

1.23 “Purchase Price” shall have the meaning set forth in Section 3.1 of this Agreement.

1.24 “Person” shall mean any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.

1.25 “Savetherapeutics Contract” shall have the meaning set forth in the Recitals to this Agreement.

1.26 “Schmidt Litigation” shall have the meaning set forth in Section 3.2(b) of this Agreement.

1.27 “Transfer Documents” shall have the meaning set forth in Section 2.5 of this Agreement.

ARTICLE 2

SALE, ASSIGNMENT AND TRANSFER OF PURCHASED ASSETS

2.1 Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties of the Parties herein set forth, promptly following satisfaction of the conditions to the Closing set forth in Article 4 of this Agreement, the MDI Parties are selling, assigning, transferring, conveying and delivering, as the case may be, to EUCODIS, and EUCODIS shall purchase and, as set forth in Article 3 of this Agreement, pay for, all of the MDI Parties’ rights, title and interests in and relating to the Product and the following related assets of the MDI Parties (collectively, the “Purchased Assets”):

(a)All of the intellectual property and all contractual and other rights, if any, acquired by the MDI Parties pursuant to the Savetherapeutics Contract;

(b)All of the rights of the MDI Parties under the Co-Development Contract, including without limitation the intellectual property and all contractual and other rights acquired by the MDI Parties pursuant to the Co-Development Contract;

(c)Any and all Patent Rights, inventions, discoveries, rights in confidential data (including know-how and trade secrets), manufacturing methods and processes, trademarks, trade names, brand names, logos, trade dress, copyrights and other intellectual property and goodwill associated with the Product, owned or in possession or control of or under contract to acquire by the MDI Parties, in each case whether registered or unregistered, and including without limitation all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection;

(d)Any and all United States and foreign regulatory files and data relating to the Product in the possession or control of the MDI Parties, including without limitation marketing authorization procedures and preclinical and clinical studies; and,

(e)All rights of the MDI Parties under the Assigned Contracts.

2.2 The Purchased Assets are being sold, assigned, transferred, conveyed and delivered to EUCODIS free of any and all liabilities, obligations and Encumbrances except only for those as may be described in reasonable detail in Exhibit 2.2 (to the extent that Exhibit 2.2 has been attached to this Agreement prior to the Effective Date).

2.3 Upon the Closing, all of the Purchased Assets and all non-publicly available information relating thereto shall be considered to be Confidential Information belonging to EUCODIS, and the MDI Parties shall no longer have any rights thereto or therein.

2.4 The MDI Parties shall be solely responsible for all sales, use, transfer, value added and other related taxes, if any, arising out of the sale by MDI Parties of the Purchased Assets to EUCODIS pursuant to this Agreement.

2.5 Simultaneously with the execution and delivery of this Agreement by the Parties, the MDI Parties shall deliver to the Escrow Agent (in original, fully executed form) all assignments, bills of sale and other documents which are necessary, sufficient or reasonably desirable to effect the transfer of the Purchased Assets to EUCODIS, along with all other documents referred to in this Agreement as being delivered to EUCODIS on or prior to the Closing (collectively, the “Transfer Documents”). The Transfer Documents shall be held by the Escrow Agent for delivery as set forth in Article 4 of this Agreement.

ARTICLE 3

PURCHASE PRICE; TIMING OF PAYMENTS; DISCHARGE OF CERTAIN DEBTS

3.1 The purchase price for the Purchased Assets (the “Purchase Price”) shall consist of the following:

(a)Relief of the MDI Parties from an aggregate of two million four hundred sixty-nine thousand seventy-two Euros (2,469,072€) of indebtedness, which is comprised of the following amounts (each a “Creditor Indebtedness”) owed to the following creditors of the MDI Parties (each an “MDI Creditor”):

(i)1,850,000 € owed to the Liquidator of Savetherapeutics AG;

(ii)205,000 € owed to Professor Wieland;

(iii)188,197€ owed to Mayer, Brown, Rowe and Maw, LLP;

(iv)127,875 € owed to Epstein, Becker and Green, LLP;

(v)46,000 € owed to H3 Pharma;

(vi)31,000 € owed to Millbank Tweed (Bob Koch); and

(vii)21,000 € owed to Marc Kessemeier

(b)An aggregate of one million five hundred thirty-eight thousand four hundred and sixty-two Euros (1,538,462€) (herein, the “Excess Portion”).

(c)On or before September 30, 2007, EUCODIS shall pay the Excess Portion to the MDI Parties or to another party as the MDI Parties may so direct.

(d)MDI Parties shall be responsible to cause the transfer of the Purchased Assets to EUCODIS by the Closing.

(e) On Closing, EUCODIS shall deliver to the MDI Parties, in form and substance reasonably satisfactory to the MDI Parties, releases from each of the MDI Creditors forever discharging and releasing the MDI Parties from any liability for any of their respective Creditor Indebtedness.

3.2 In addition, on the Closing, EUCODIS shall assume and shall be financially responsible for:

(a)The financial obligations of the MDI Parties arising under the assigned contracts described in reasonable detail in Exhibit 3.2(a) (to the extent that Exhibit 3.2(a) has been attached to this Agreement prior to the Effective Date); provided, however, that the benefits of each of such assigned contracts (the “Assigned Contracts”) has been validly assigned to EUCODIS in accordance with the terms thereof.

(b)All costs accruing after February 28, 2007 which were necessarily incurred by or on behalf of the MDI Parties to maintain any of the Purchased Assets, including but not limited to: (i) the costs to file and maintain, throughout the world, any of the Patent Rights, and (ii) the legal fees and related legal costs incurred in connection with the legal proceedings in Hamburg, Germany to obtain certain rights belonging to the MDI Parties by co-inventor Dr. Alfred Schmidt (the “Schmidt Litigation”); provided, however, that a reasonably detailed description of such costs are set forth in Exhibit 3.2(b) (to the extent that Exhibit 3.2(b) has been attached to this Agreement prior to the Effective Date) and that such costs are backed up by duly rendered invoices (or receipts) and the amounts set forth thereon for any costs do no exceed the amounts listed on Exhibit 3.2(b) by more than ten percent (10%). After the Effective Date, the MDI Parties shall continue to vigorously prosecute the Schmidt action (which shall be conducted at the direction, and under the control, of EUCODIS) at the sole expense of EUCODIS until such time, if any, as EUCODIS can be substituted for the MDI Parties in such action. For purposes of clarification, the reasonably incurred out-of-pocket expenses of the MDI Parties and their representatives (including legal fees and costs), in furnishing such assistance as may be reasonably requested by EUCODIS, shall be at the sole expense of EUCODIS.

ARTICLE 4

CONDITIONS TO THE CLOSING

4.1. The Closing shall occur if the following conditions are met:

(a)The MDI Parties shall have delivered to the Escrow Agent all of the Transfer Documents,

(b)The Escrow Agent shall not deliver the Transfer Documents to EUCODIS until such time as EUCODIS has delivered to the MDI Parties (i) the Excess Portion of the Purchase Price without any off set or deduction, and (ii) releases from each of the MDI Creditors in which such MDI Creditors forever discharges and releases the MDI Parties from any liability for any of their respective Creditor Indebtedness, or paid in full the amounts set forth in Section 3.1(a) to the MDI Parties for the account of such MDI Creditor.

4.2 In the event that the Closing does not occur by September 30, 2007, and unless the parties have otherwise agreed in writing, the Escrow Agent shall deliver the Transfer Documents to the MDI Parties or to whomever as the MDI Parties may so direct.

4.3 Irrespective of any provision of this Agreement to the contrary, the obligation of EUCODIS to purchase the Purchased Assets is subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by EUCODIS in its sole discretion):

(a)Each of the representations and warranties made by the MDI Parties in this Agreement shall be true and correct in all material respects on and as of the Closing as though such representation or warranty was made on and as of the Closing.

(b)The MDI Parties shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by the MDI Parties at or before the Closing.

(c)The MDI Parties shall have delivered to the Escrow Agent all of the Transfer Documents.

(d)Since the Effective Date, MDI shall have obtained additional capital or a credit facility aggregating in the amount of at least $250,000.00.

(e)The MDI Parties shall have delivered or caused to be delivered to the Escrow Agent or to EUCODIS any and all originals and copies of documents pertaining to Purchased Assets and the Product, which are within the possession or control of the MDI Parties, along with any additional documents reasonably requested by EUCODIS.

4.4 In the event that, before the Creditor Indebtedness of any MDI Creditor has been fully satisfied, actions are taken pursuant to which either of the MDI Parties voluntarily declares bankruptcy (however evidenced), or involuntary is caused to become bankrupt, then the unpaid amount(s) of any still outstanding Creditor Indebtedness shall be paid into the court having jurisdiction over the bankrupt’s estate.

4.5 If valid transfer of title to any Purchased Assets or portion thereof is not made on the Closing and can not be made by the MDI Parties promptly thereafter, or if the circumstances that make such assignment or transfer or any claim to any of the Purchased Assets to EUCODIS questionable or impracticable for any reason, it shall be the obligation of the MDI Parties to determine another way by which EUCODIS shall be able to utilize the Purchased Assets with equal or at least substantially similar economical effect, including (if agreeable to EUCODIS) under an exclusive, royalty-free, perpetual license with the right to sublicense.

ARTICLE 5

DELIVERIES BY THE MDI PARTIES; RESIDUAL RIGHTS

5.1 As soon as possible, but no later than within fifteen (15) business days after the Effective Date, the MDI Parties shall deliver or cause to be delivered to the Escrow Agent any and all originals and copies of documents pertaining to Purchased Assets and the Product, which are within the possession or control of the MDI Parties. All of such documents after the Closing are considered to be Confidential Information of EUCODIS in accordance with Article 8 of this Agreement.

5.2 Promptly after the Effective Date, the MDI Parties shall deliver to the Escrow Agent (or if the Closing has occurred, to EUCODIS) such additional assignments and bills of sale transferring title to the Purchased Assets and the Product as EUCODIS reasonably shall request, and promptly following the Closing shall cause the change of title to such assets to be recorded by applicable patent offices as appropriate

5.3 The MDI Parties shall be entitled to retain one copy of any documents being delivered, but only in its legal files for evidential purposes in respect of its confidentiality obligations in relation to this Agreement or other matters related hereto.

5.4 It is expressly understood and agreed that EUCODIS is not the successor to either of the MDI Parties in their business affairs, and EUCODIS undertakes no responsibility, obligation or liability, expressed or implied, under any contract of the MDI Parties that are not Assigned Contracts, and that such other contracts shall remain the sole responsibility of the MDI Parties.

5.5 For the period of five (5) years from the Closing, neither of the MDI Parties, nor any of its or their Affiliates shall be a party to, or assist with or undertake, either on its own, with third parties or on behalf of third parties, any research and development with respect to the Product or any product which could be used in reasonable substitution thereof, nor commercialize any products based on the Product, save as requested by EUCODIS.

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1 The MDI Parties represent, warrant and covenant to EUCODIS as of the Effective Date and at the Closing as follows:

(a)MDI is a corporation duly and validly existing and in good standing under the laws of the State of Utah. MDI Oncology is a corporation wholly-owned by MDI which is duly and validly existing and in good standing under the laws of the State of Delaware, and does not conduct business in any other jurisdiction. Each of the MDI Parties has all requisite power and authority to own its assets, including the Purchased Assets, and to carry on its business as presently conducted.

(b)Each of the MDI Parties has all requisite power and authority to execute and deliver and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.

(c)All acts (corporate or otherwise) required to be taken by or on the part of, and all approvals required to be obtained by, each of the MDI Parties necessary to enter into this Agreement, consummate the transactions contemplated by this Agreement and perform its obligations under this Agreement have been duly and properly taken by such MDI Party.

(d)This Agreement has been duly and validly executed and delivered by the MDI Parties, and constitutes the legal, valid and binding obligation of the MDI Parties enforceable against the MDI Parties in accordance with its terms, subject to applicable bankruptcy, moratorium, reorganization, insolvency and similar laws of general application relating to or affecting the rights and remedies of creditors generally and to general equitable principles (regardless of whether a proceesings is brought in equity or at law).

(e)The Purchased Assets do not constitute all or substantially all of the assets of MDI.

(f)The execution and delivery of this Agreement by each of the MDI Parties, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times (i) violate or conflict with any provision of its respective Certificate of Incorporation or By-Laws, or (ii) result in a violation by such MDI Party of any law to which it or any of its properties or assets are subject.

(g)The execution and delivery of this Agreement by each of the MDI Parties, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times violate, or conflict with, or result in a breach of any provision of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement lease, instrument, obligation, understanding or arrangement to which such MDI Party is a party or by which any of its properties or assets is subject.

(h)Except as set forth in Exhibit 6.1(h) (to the extent that Exhibit 6.1(h) has been attached to this Agreement prior to the Effective Date), there is no litigation, proceeding, investigation, arbitration or claim pending, or, to the best of the knowledge of the MDI Parties, threatened against the MDI Parties, and there is, to the best of the MDI Parties’ knowledge, no reasonable basis for any such action, which affects in whole or in part either MDI Party’s ability to consummate the transactions contemplated by this Agreement, the performance of the MDI Parties obligations hereunder or the ability of EUCODIS to fully enjoy the Purchased Assets.

(i)To the best of the MDI Parties’ knowledge, the use of the Purchased Assets does not infringe intellectual property rights of third parties, except to the extent as may have been alleged in the Schmidt Litigation, (ii) the Purchased Assets are free from any liens, charges and Encumbrances or other rights of third parties, (iii) the full enjoyment of the Purchased Assets are not dependant on any rights of third parties, (iv) no fraudulent or other improper document has been filed with any third governmental agency which may invalidate any of the rights enjoyed by the Purchased Assets, and (v) the Purchased Assets are, to the best knowledge of the MDI Parties, valid and enforceable against third parties, and there are no grounds for revocation, invalidation or re-examination of any of the Purchased Assets

(j)Except as set forth in Exhibit 6.1(j) (to the extent that Exhibit 6.1(j) has been attached to this Agreement prior to the Effective Date), no permit, consent, approval or authorization of, or declaration, filing or registration with, any governmental authority or other third party is or will be necessary to be made or obtained by the MDI Parties in connection with (i) the execution and delivery by MDI of this Agreement, (ii) the consummation by them of the transactions contemplated under this Agreement, or (iii) the performance by the MDI Parties of their obligations under this Agreement.

(k)One or both of the MDI Parties are a party to each of the Assigned Contracts, all of which (i) are in full force and effect, (ii) constitute binding and enforceable obligations, (iii) subject to the terms and conditions thereof, are assignable to EUCODIS, and (iv) are being duly assigned to EUCODIS at the Closing.

(l)Except as set forth in Exhibit 6.1(l) (to the extent that Exhibit 6.1(l) has been attached to this Agreement prior to the Effective Date), all of the Purchased Assets are legally, beneficially, and solely owned by the MDI Parties, and there are no pending or threatened claims or any other undisclosed liabilities that could impair any right or claim of the MDI Parties is assigning and transferring that may be deemed to be part of, or arise under or are related to, the Purchased Assets to EUCODIS under this Agreement or that may cause any liability to be incurred by EUCODIS as the result of its use of the Purchased Assets after the Closing.

(m)The MDI Parties have not granted any third parties any rights relating to the Product or relating in any way to any of the rights obtained pursuant to the Savetherapeutics Contract.

(n)Schedule 6.1(n) contains a complete and correct list of (i) all documents relating to the Savetherapeutics Contract, including without limitation the Savetherapeutics Contract, all exhibits and schedules thereto, all amendments thereof and all correspondence pertaining thereto with, or on behalf of, the liquidator of Savetherapeutics AG, dated subsequent to March 11, 2005, (ii) all invoices and other debit memoranda from each of the MDI Creditors which support the Creditor Indebtedness, and (iii) all contracts, findings and correspondence with any other third parties, including consultants, which relate to the Purchased Assets and which were obtained on or after March 11, 2005. Prior to or on the Effective Date, the MDI Parties have delivered or are delivering to EUCODIS or as it may direct a true and complete copy of each item listed on Schedule 6.1(n).

(o)As specifically set forth in this Agreement, the MDI Parties shall timely fulfill obligations which relate to or otherwise affect, in any respect, the Purchased Assets. The MDI Parties shall indemnify and reimburse EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses incurredby EUCODIS and its officers, directors, employees, consultants and agents arising from any claims by the contractual parties of the Assigned Contracts in relation to the non-fulfillment of any obligations of the MDI Parties prior to the Effective Date.

(p)The MDI Parties shall be responsible for obtaining any consents and approvals by the contractual parties to the Assigned Contracts necessary to effectuate the assignment of the Assigned Contracts to EUCODIS, and to obtain the consent and approval of the MDI Creditors for the assumption and transfer of their debt to EUCODIS; provided, however, that EUCODIS shall render the MDI Parties reasonable help in obtaining such consents and approvals.

(q)If valid transfer of title to any Purchased Assets or portion thereof is not made on the Closing and can not be made by the MDI Parties promptly thereafter, or if the circumstances that make such assignment or transfer or any claim to any of the Purchased Assets to EUCODIS questionable or impracticable for any reason, it shall be the obligation of the MDI Parties to determine another way by which EUCODIS shall be able to utilize the Purchased Assets with equal or at least substantially similar economical effect, including (if agreeable to EUCODIS) under an exclusive, royalty-free, perpetual license with the right to sublicense.

(r)Prior to or on the Effective Date, the MDI Parties have delivered or are delivering to the Escrow Agent an opinion of recognized counsel, addressed to EUCODIS, relating to the representations contained in clauses (a) through (f) above reasonably satisfactory to counsel for EUCODIS, which may contain such reasonable qualifications and exceptions as are customary.

(s)Schedule 6.1(s) contains a complete and correct list of creditors of the MDI Parties (including the MDI Creditors) and the amounts owed by the MDI Parties as of June 30, 2007, except for not more than in aggregate of $5, 000 of unlisted indebtedness. After subtracting from such list any Creditor Indebtedness of a MDI Creditor included on such list, the remaining balance is less than $1,850,000.

6.2 EUCODIS represents, warrants and covenants to the MDI Parties as follows:

(a)EUCODIS is a company duly organized, validly existing and in good standing under the laws of Austria and has all requisite power and authority to own its assets and to carry on its business as presently conducted.

(b)EUCODIS has all requisite power and authority to execute and deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

(c)All acts (corporate or otherwise) required to be taken by or on the part of, and all approvals required to be obtained by, EUCODIS necessary to enter into this Agreement, consummate the transactions contemplated by this Agreement and perform its obligations under this Agreement have been duly and properly taken by EUCODIS.

(d)This Agreement has been duly and validly executed and delivered by EUCODIS and constitutes the legal, valid and binding obligation of EUCODIS enforceable against EUCODIS in accordance with its terms, subject to applicable bankruptcy, moratorium, reorganization, insolvency and similar laws of general application relating to or affecting the rights and remedies of creditors generally and to general equitable principles (regardless of whether a proceedings is brought in equity or at law).

(e)The execution and delivery of this Agreement by EUCODIS, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times (i) violate or conflict with any provision of its operative governing documents, or (ii) result in a violation by EUCODIS of any law to which it or any of its properties or assets are subject.

(f)The execution and delivery of this Agreement by EUCODIS, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times violate, or conflict with, or result in a breach of any provision of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement lease, instrument, obligation, understanding or arrangement to which EUCODIS is a party or by which any of its properties or assets is subject.

(g)EUCODIS shall timely fulfill after the Closing all obligations incurred to the MDI Parties under or pursuant to this Agreement. EUCODIS shall indemnify and reimburse the MDI Parties and their officers, directors, employees and agents from and against all liabilities, claims, damages, costs and expenses incurredby the MDI Parties and their officers, directors, employees and agents arising from any claims by the contractual parties of the Assigned Contracts in relation to the non-fulfillment of any obligations of EUCODIS arising on or after the Closing..

(h)If any MDI Creditor does not agree to have its debt obligation assumed by, and transferred to, EUCODIS, then EUCODIS shall pay the amount set forth in Section 3.1(a) to MDI for the account of such MDI Creditor, and MDI shall immediately make payment to such MDI Creditor and will be solely responsible for such payment. MDI shall provide written notification to EUCODIS that said payment to such MDI Creditor has been made by MDI.

6.3 In addition to any obligations of indemnification by the MDI Parties set forth under this Agreement, the MDI Parties shall indemnify, defend and hold harmless EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by EUCODIS and its officers, directors, employees and agents arising from the breach of any of the representations, warranties or covenants made by the MDI Parties under this Agreement.

6.4 In addition to any obligations of indemnification by EUCODIS set forth under this Agreement, EUCODIS shall indemnify, defend and hold harmless the MDI Parties and their officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by the MDI Parties and its officers, directors, employees and agents arising from the breach of any of the representations, warranties or covenants made by EUCODIS under this Agreement.

ARTICLE 7

INDEMNIFICATION

7.1 From and after the Closing, the MDI Parties shall defend, indemnify and hold harmless EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by EUCODIS and its officers, directors, employees, consultants and agents arising from or out of (a) any breach of any representation, warranty, covenant or agreement made by the MDI Parties in this Agreement, (b) any act or omission by the MDI Parties (or their agents and employees) in connection with (i) the Purchased Assets, (ii) the Assigned Contracts, to the extent that the cause for such claim was existing prior to or on the Effective Date, or (iii) the transactions contemplated by this Agreement; provided, however, that with respect to the Creditor Indebtedness owing to the MDI Creditors, the MDI Parties shall have no liability.

7.2 From and after the Closing, EUCODIS shall defend, indemnify and hold harmless the MDI Parties and their officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by the MDI Parties and their officers, directors, employees, consultants and agents arising from or out of (a) any breach of any representation, warranty, covenant or agreement made by EUCODIS in this Agreement, (b) non-payment of the Creditor Indebtedness to the MDI Parties, or (c) any act or omission by EUCODIS (or its agents and employees) in connection with (i) the Purchased Assets, (ii) the Assigned Contracts, to the extent that the cause for such claim was created after the Effective Date, or (iii) the transactions contemplated by this Agreement.

7.3 No obligation of indemnification shall arise relating to a third party claim or cause of action unless the indemnified Party making such claim shall: (a) notify the indemnifying Party of such claim promptly upon becoming aware of the existence or threatened existence of any such claim giving rise to or that may give rise to a claim of indemnification hereunder, and (b) allow the indemnifying Party full control over the defense of such claim and (c) cooperate in the defense of such claim at the indemnifying Party’s expense. Notwithstanding any contrary provision in this Article, the failure to so notify, provide information and assistance shall not relieve the indemnifying Party of its obligations to the indemnified Party hereunder if and to the extent that the indemnifying Party is materially prejudiced thereby. If the indemnifying Party does not timely acknowledge its indemnification obligation hereunder with respect to such claim, or elects not to defend such claim, the indemnified Party shall have the right, but not the obligation, to defend and settle such claim until such time as the indemnifying Party acknowledges in writing its indemnification obligation hereunder with respect to such claim or elects in writing to defend and settle such claim in accordance with the indemnification provisions herein. The indemnified Party shall, at its own cost, have the right to participate in any legal proceeding, settlement negotiation or other like event, and to contest and defend a claim and to be represented by legal counsel of its choosing, but shall have no right to settle a claim without the prior written approval of the indemnifying Party.

7.4 Each Party shall cooperate with and provide to the other all information and assistance which the latter may reasonably request in connection with any claim entitling any party to indemnification hereunder.

7.5 No party shall be responsible for or bound by any settlement that imposes any obligation on it that is made without its prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.

7.6 For avoidance of any doubt, this Section applies to the situation when (a) both Parties are named defendants, as well as (b) a Party is named a defendant and deems that it may have any right to recourse or indemnification against the other Party under this Agreement.

ARTICLE 8

CONFIDENTIALITY

8.1 For purposes of this Agreement, “Confidential Information” shall mean information and data in any medium, including oral, written or electronic, disclosed in connection with this Agreement, relating to the Purchased Assets or the transactions contemplated by this Agreement, along with any trade secrets, business information, technical information, or marketing information that the party disclosing the information deems confidential and has appropriately marked as such prior to disclosing such information to the receiving party. The terms and conditions of this Agreement (but not its existence) are deemed to be Confidential Information that shall not be disclosed to third parties without the written consent of the Parties, with the exception of any regulatory filings, press releases as set forth in Section 9.11, or disclosures to investors that a Party may be required to make under either applicable laws and regulations. Irrespective of the foregoing, Confidential Information shall not include information that (a) was reported as nonconfidential by EUCODIS in writing prior to disclosure, (b) was lawfully in the public domain prior to Closing, or becomes publicly available other than through breach of this Agreement, (c) is publicly disclosed pursuant to legal, judicial or administrative proceedings or otherwise required by law (including, without limitation, regulations promulgated by the U.S. Securities and Exchange Commission), subject to the MDI Parties giving all reasonable prior notice and assistance to EUCODIS to allow it to seek protective or other court orders; and/or (d) is approved for release in writing by EUCODIS. From and after the Closing, all Confidential Information relating to the Purchased Assets shall be deemed to be Confidential Information belonging to EUCODIS.

8.2 Each Party shall:

(a)strictly protect and maintain the confidentiality of the Confidential Information belonging to any other Party with at least a reasonable standard of care that is no less than that which it uses to protect similar confidential information of its own;

(b)not disclose, nor allow to be disclosed, the Confidential Information belonging to any other Party to any person other than to employees, consultants and counsel, on a need to know basis; provided, however, that such recipients of the Confidential Information are bound by obligations of confidentiality no less strict than those contained herein;

(c)unless otherwise expressly provided for in this Agreement, not use the Confidential Information belonging to any other Party for any purpose other than in relation to the exercise of its rights and obligations under this Agreement; and,

(d)take all necessary precautions to restrict access of the Confidential Information belonging to any other Party to unauthorized personnel; and immediately notify the Party to which the Confidential Information belongs in the event of any unauthorized disclosure or loss of such Confidential Information.

8.3 The MDI Parties shall not publish or otherwise disclose any Confidential Information about or in relation to the Purchased Assets generated or known to them before or after the Effective Date, without the explicit prior written approval of EUCODIS.

8.4 No Party shall assert that anything disclosed or discussed constitutes a waiver of attorney-client privilege or attorney work-product.

8.5 The Parties acknowledge and agree that monetary damages may not be adequate in the event of a default under this Article and that the non-defaulting Party shall be entitled, without the posting of a bond, to seek injunctive relief by a court or other body granting such relief, in which event such relief or receipt of monetary damages shall not constitute an election of remedies; and the non-defaulting Party is independently entitled to each and every remedy available by law for a default under this Article.

8.6 The provisions of this Article, from and after the Effective Date, shall supersede and fully replace any confidentiality obligations established between the Parties in relation to the Purchased Assets prior to the Effective Date.

ARTICLE 9

MISCELLANEOUS

9.1 Notice. All notices, requests, demands or other communications to or upon the respective Parties hereto shall be deemed to have been given or made the earlier of (a) actual receipt or refusal to accept receipt, (b) two (2) business days after deposit with a recognized overnight courier service, (c) receipt by facsimile or electronic means, when such delivery is confirmed by the recipient or his agent, or (d) five business days after mailing when deposited in the mails, registered mail or certified, return receipt requested, postage prepaid, addressed to the respective party at the following address (or to such other person or address as is specified elsewhere in this Agreement for specific purposes):

The above addresses for receipt of notice may be changed by any Party by notice, given as provided herein, which notice shall be effective only upon actual receipt.

9.2 Entire Agreement. This Agreement contains the entire understanding of the Parties with regard to the transactions contemplated by this Agreement, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof, other than the Co-Development Contract. This Agreement can be amended, modified or supplemented only by an agreement in writing which is signed by the Parties to be charged.

9.3 Incorporation of Exhibits and Schedules. The Exhibits and Schedules attached to this Agreement are incorporated herein and are hereby made a part of this Agreement.

9.4 Severability. If and to the extent that any court of competent jurisdiction holds any provision or part of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement before any other court or in any other jurisdiction.

9.5 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the Parties.

9.6 AssignmentThe benefits of this Agreement (but not the obligations set forth hereunder) can be assigned or otherwise transferred in whole or in part by either party without the transferring party receiving prior written consent of the other party; provided, however, that the rights of the non-transferring party under this Agreement remain unaffected.

9.7 Waiver. A waiver by any party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future.

9.8 Headings. Headings in this Agreement are included for ease of reference only and have no legal effect.

9.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

9.10 Applicable Law. This Agreement is governed by and shall be construed in accordance with the laws of the State of Delaware, regardless of any conflicts of laws provisions. Any disputes under this Agreement shall be first submitted to resolution by the chief executive of the MDI Parties and CEO of EUCODIS, and if the said persons (or their nominees) cannot reach agreement on the disputed issue within a period of thirty (30) days, the Parties shall refer the issue to arbitration under the Rules of Arbitration of the American Arbitration Association, to which the Parties hereby consent. The arbitration shall take place in New York City, New York with three arbitrators, two of whom shall have significant experience in the biotech/pharmaceutical licensing area. The arbitration proceedings shall be conducted in the English language. The arbitrators shall apportion the expenses of the arbitration (including the legal fees and expenses incurred by the parties) between the parties. Any judgment of the arbitrators shall be enforceable in any court of competent jurisdiction.

9.11 Further Assurances. The Parties shall provide, grant and/or execute any additional documents or declarations and shall provide any other assistance that may reasonably be requested to enable EUCODIS to acquire and manage the Purchased Assets properly and in full. Except (a) as otherwise provided herein to the contrary, and (b) for the costs of recording any assignments to EUCODIS for the Patent Rights in patent offices worldwide, which cost shall be at the expense of EUCODIS, each of the Parties shall bear its own expenses, including without limitation the expenses relating to the duplication and delivery of documents and the expenses relating to the preparation of this Agreement, the documents referred to herein and the actions being taken (whether before or after the Effective Date) to enable such Party to comply with its representations, warranties, covenants and agreements contained herein.

9.12 Press Release. The Parties shall have the right to issue press releases relating to its entry into this Agreement; provided, however, that prior to release, the releasing Party provides the other Parties with a draft of the press release in sufficient time for the non-releasing Party to comment on the release. At no time shall any Party issue a release which places the other Parties at risk with any governmental authority as such relates to its public company position.

SIGNATURE PAGE

In Witness Whereof, the Parties have caused this Agreement to be duly executed in their respective names and on their behalf, on the date first above written.

EUCODIS PHARMACEUTICALS FORSCHUNGS-UND ENTWICKLUNGS GmbH By: __________________________ Wolfgang Schoenfeld, M.D. Title:Chief Executive Officer	~~(Signature)~~MEDICAL DISCOVERIES, INC. By: ___________________________ Judy Robinett Title:President & CEO
	MDI ONCOLOGY, INC. By: ___________________________ Judy Robinett Title:President & CEO

FIRST AMENDMENT TO SALE AND ASSET PURCHASE AGREEMENT

This Amendment (the “Amendment”) is made as of this 30^th day of September 2007 to that that certain Sale and Asset Purchase Agreement, dated as of July 6, 2007 (the “Asset Agreement”), by and among Medical Discoveries, Inc., a Utah corporation (“MDI”), MDI Oncology, Inc., a Delaware corporation and wholly-owned subsidiary of MDI (“MDI Oncology”), and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”). Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Asset Agreement.

WHEREAS, the Asset Agreement (including, but not limited to, Sections 3.1 and 4.2 thereof) contemplates that that the transactions thereunder (such transactions, the “Asset Sale”) shall close on or before September 30, 2007; and

WHEREAS, the Parties remain committed to closing the Asset Sale, however, desire to extend the period provided for closing the Asset Sale.

NOW, THEREFORE, in consideration of the mutual promises exchanged herein, the Parties agree as follows:

1. Amendment of Asset Agreement.

Section 1.11 of the Asset Agreement is hereby amended as of the Asset Agreement Effective Date and restated in its entirety to read as follows:

1.11“Escrow Agent shall mean Emmes Group Consulting LLC.”

Section 3.1 (c) of the Asset Agreement is hereby amended and restated in its entirety to read as follows:

(c) “On or before October 31, 2007, EUCODIS shall pay the Excess Portion to the MDI Parties or to another party as the MDI Parties may so direct.”

Section 4.2 of the Asset Agreement is hereby amended and restated in its entirety to read as follows:

4.2“In the event that the Closing does not occur by October 31, 2007, and unless the parties have otherwise agreed in writing, the Escrow Agent shall deliver the Transfer Documents to the MDI Parties or to whomever as the MDI Parties may so direct.”

2. No Further Changes. All other provisions of the Asset Agreement shall remain in full force and effect after the execution of this Amendment.

3. Delaware Law Governs. This Amendment shall be governed by and construed under the internal laws of the State of Delaware.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

EUCODIS PHARMACEUTICALS FORSCHUNGS-UND ENTWICKLUNGS GmbH By:/s/ WOLFGANG SCHOENFELD Wolfgang Schoenfeld, M.D. Title:Chief Executive Officer	MEDICAL DISCOVERIES, INC. By:/s/ JUDY ROBINETT Judy Robinett Title:Chief Executive Officer
	MDI ONCOLOGY, INC. By:/s/ JUDY ROBINETT Judy Robinett Title:Chief Executive Officer

SECOND AMENDMENT TO SALE AND ASSET PURCHASE AGREEMENT

This Amendment (the “Second Amendment”) is made as of this 30^th day of October 2007 to that that certain Sale and Asset Purchase Agreement, dated as of July 6, 2007 (the “Asset Agreement”, (as previously amended by the First Amendment dated September 29, 2007), by and among Medical Discoveries, Inc., a Utah corporation (“MDI”), MDI Oncology, Inc., a Delaware corporation and wholly-owned subsidiary of MDI (“MDI Oncology”), and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”). Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Asset Agreement.

WHEREAS, the Asset Agreement (including, but not limited to, Sections 3.1 and 4.2 thereof), as amended by the First Amendment dated September 29, 2007, contemplates that that the transactions thereunder (such transactions, the “Asset Sale”) shall close on or before October 31, 2007; and

WHEREAS, the Parties remain committed to closing the Asset Sale, however, desire to extend the period provided for closing the Asset Sale.

NOW, THEREFORE, in consideration of the mutual promises exchanged herein, the Parties agree as follows:

1. Second Amendment of the Asset Agreement.

Section 3.1 (c) of the Asset Agreement is hereby amended and restated in its entirety to read as follows:

(c) “On or before January 31, 2008, EUCODIS shall pay the Excess Portion to the MDI Parties or to another party as the MDI Parties may so direct.”

Section 4.2 of the Asset Agreement is hereby amended and restated in its entirety to read as follows

4.2“In the event that the Closing does not occur by January 31, 2008, and unless the parties have otherwise agreed in writing, the Escrow Agent shall deliver the Transfer Documents to the MDI Parties or to whomever as the MDI Parties may so direct.”

2. No Further Changes. All other provisions of the Asset Agreement shall remain in full force and effect after the execution of this Second Amendment.

3. Delaware Law Governs. This Second Amendment shall be governed by and construed under the internal laws of the State of Delaware.

[signature page follows]

IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above.

EUCODIS PHARMACEUTICALS FORSCHUNGS-UND ENTWICKLUNGS GmbH By: __________________________ Wolfgang Schoenfeld, M.D. Title:Chief Executive Officer	MEDICAL DISCOVERIES, INC. By: ___________________________ Judy Robinett Title:Chief Executive Officer
		~~(Signature if held jointly)~~MDI ONCOLOGY, INC. By: ___________________________ Judy Robinett Title:Chief Executive Officer

~~PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE~~

~~FOLD AND DETACH HERE~~

~~Admission Ticket~~

~~Annual Meeting of~~

~~Shareholders~~

~~MEDICAL DISCOVERIES, INC.~~

~~May 21, 2004~~

~~1:00 p.m.~~

~~Little America Hotel~~

~~500 S. Main Street~~

~~Salt Lake City, Utah~~

o		Preliminary Proxy Statement

o		Confidential, ~~for use~~For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ	x	Definitive Proxy Statement

o		Definitive Additional Materials

o		Soliciting ~~Material~~Materials Under Rule 14a-12

þ	MEDICAL DISCOVERIES, INC.
	(Name of Registrant as Specified in its Charter)

	(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

	Payment of Filing Fee (Check the appropriate box):

·	Assets Sold (page22)	The assets being sold to Eucodis include (i) all of our right, title and interest in a certain Asset Purchase Agreement between Medical Discoveries, Inc. and the liquidator of Savetherapeutics AG, a German company in liquidation, dated as of March 11, 2005, relating to certain rights in “SaveCream”; (ii) all of our right, title and interest in that certain agreement between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection with the co-development and licensing of SaveCream; and (iii) all of our right, title and interest under certain contracts relating to SaveCream.

~~16,000,000/0~~·	Purchase Price (page 23)	The purchase price paid by Eucodis is approximately 4,007,534 euros or approximately $5,906,000 based on the currency exchange rate in effect as of November 30, 2007, comprising a cash payment of approximately $2,267,000, and Eucodis’ assumption of certain of our obligations and liabilities aggregating approximately $3,639,000. The financial terms of the Eucodis Agreement are denominated in euros, and we will be paid in euros. However, for convenience, the financial terms have been converted throughout the text of this proxy statement into U.S. dollars. The currency exchange rate in effect as of the closing of the Eucodis transaction or at any future date may differ, which may result is us receiving a different amount of U.S. dollars for the SaveCream assets.

~~2,060,000/0~~·	Obligations Assumed and Discharged Indebtedness (page 23)	Eucodis has agreed to assume an aggregate of approximately $3,639,000 of our current indebtedness that we owe to certain of our creditors. Eucodis will also assume all of our financial and other obligations under certain contracts relating to SaveCream, and certain other costs we have incurred since February 28, 2007 in connection with preserving the sold assets for the benefit of Eucodis through the closing of the transaction.

·	Non-Competition (page 24)	We have agreed to a non-compete provision for the duration of five years after the closing of the Eucodis transaction. Specifically, the non-compete provision restricts us from undertaking research and development activities with respect to “SaveCream.”

·	Representation and Warranties (page 24)	The Eucodis Agreement contains customary representations, warranties and covenants, which survive through the closing of the transaction.

·	Closing Conditions (page 25)	The closing of the transaction depends on meeting a number of conditions, including the following: our delivery to Eucodis of certain documents necessary to effect the transfer of the assets being sold, and us obtaining additional capital or a credit facility in the aggregate amount of at least $250,000 (this latter condition has already been met).

·	Our Board’s Recommendation (page 26)	Our board of directors has unanimously determined that the transaction with Eucodis is advisable, fair to, and in the best interests of our shareholders.

British Petroleum (UK)	Plans to establish 100,000 hectares of Jatropha plantations in Indonesia to feed the 350,000-tonne-per-year biodiesel refinery that it is building in the country.
Van Der Horst Corporation (Singapore)	Building a 200,000-tpy biodiesel plant in Juron Island in Singapore that will eventually be supplied with Jatropha from plantations it operates in Cambodia and China, and possible new plantations in India, Laos and Burma.
Mission Biofuels (Australia)	Hired Agro Diesel of India to manage a 100,000-heactare Jatropha plantation, and a contract farming network in India to feed its Malaysian and Chinese biodiesel refineries. Mission Biofuels has raised in excess of $80 million to fund its operations.
D1 Oils (UK)	As of June 2007, together with its partners, D1 Oils has planted or obtained rights to offtake from a total approximately 172,000 hectares of Jatropha under cultivation worldwide. D1’s Jatropha plantations are located in Saudi Arabia, Cambodia, Ghana, Indonesia, the Philippines, China, India, Zambia, South Africa and Swaziland. In June 2007, D1 Oils and British Petroleum entered into a 50:50 joint venture to plant up to an additional 1 million hectares of Jatropha worldwide. British Petroleum funded the first £31.75 million of the Joint Venture’s working capital requirements through a purchase of D1 Oils equity, and the total Joint Venture funding requirement is anticipated to be £80 million over the next five years.
NRG Chemical Engineering (UK)	Signed a $1.3 billion deal with state-owned Philippine National Oil Co. in May 2007. NRG Chemical will own a 70% stake in the joint venture which will involve the construction of a biodiesel refinery, two ethanol distilleries and a $600 million investment in Jatropha plantations that will cover over 1 million hectares, mainly on the islands of Palawan and Mindanao.

1)	(1)	Title of each class of securities to which transaction applies:


2)	(2)	Aggregate number of securities to which transaction applies:


3)	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule ~~0-11:~~0-11 (set forth the amount on which
	the filing fee is calculated and state how it was determined):
(4)	Proposed maximum aggregate value of transaction: $5,906,000
(5)	Total fee paid: $1,182


4)		~~Proposed maximum aggregate value of transaction:~~


5)		~~Total fee paid:~~

o	ý	Fee paid previously with preliminary materials.

o
¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	1)		~~Amount Previously Paid:~~


	2)		~~Form, Schedule or Registration Statement No.:~~


	3)		~~Filing Party:~~


	4)		~~Date Filed:~~


	~~1. To elect three directors of the Company.~~

	~~2. To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the financial statements of the Company for the year ending December 31, 2004.~~

	3. To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.

	~~4. To approve the Company’s 2002 Stock Incentive Plan.~~

	~~5. To transact such other business as may properly come before the Meeting.~~


	~~BY ORDER OF THE BOARD OF DIRECTORS~~

	~~/s/ STEPHEN R. DRAKE~~
	~~Stephen R. Drake,~~
	~~Secretary~~


	~~(1) To elect three directors of the Company.~~

	(2) To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the consolidated financial statements of the Company and its subsidiaries for the year ending December 31, 2004.

	(3) To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.

	~~(4) To approve the Company’s 2002 Stock Incentive Plan.~~

	~~(5) To transact such other business as may properly come before the Meeting or any adjournments of the Meeting.~~


	•	have the ultimate authority to select (subject to shareholder ratification, which ratification is not binding on the Audit Committee), compensate, evaluate and replace the Company’s independent accountants;

	•	~~review and approve the scope of the annual external audit;~~

	•	~~review and pre-approve the engagement of the Company’s independent accountants to perform audit and permitted non-audit services and the related fees;~~


	•	~~meet independently with the Company’s accounting staff, independent accountants and senior management;~~

	•	~~review the integrity of the Company’s financial reporting process; and~~

	•	~~review the Company’s financial statements and disclosures and certain Securities and Exchange Commission filings.~~


								Securities
								Underlying
			Salary					Options
Name and Principal Position(s)	Year		($)(a)		Bonus ($)			(#)

Judy M. Robinett		2003		220,000		—			14,500,000
President and Chief		2002		193,336		300,000			500,000
Executive Officer		2001		180,000		4,500	(b)		1,000,000

·	due incorporation	·	due authorization,
·	consents	·	enforceability
·	corporate authority	·	contracts
·	no defaults or violations	·	litigation
·	no liens	·	no infringement

				Pro forma				Pro forma
	As Reported (1)			Adjustments				Total
ASSETS
CURRENT ASSETS
Cash	$	296,121		$	1,987,539		a	$	1,783,660
					(500,000	)	b
Prepaid expenses		66,031							66,031
Total Current Assets		362,152			1,487,539				1,849,691

Property and equipment, net		29,870							29,870
Deferred offering costs		1,530							1,530

TOTAL ASSETS	$	393,552		$	1,487,539			$	1,881,091

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable	$	1,111,501		$	-			$	1,111,501
Accrued payroll and payroll taxes		1,294,584			(895,137	)	b		399,447
Accrued interest payable		291,585							291,585
Notes payable to shareholders		56,000							56,000
Secured promissory note, less unamortized discount		58,673							58,673
Convertible notes payable		193,200							193,200
Financial instrument		2,065,470							2,065,470
Current liabilities associated with assets held for sale		3,137,859			(3,137,859	)	a		-
Total Current Liabilities		8,208,872			(4,032,996	)			4,175,876

STOCKHOLDERS' DEFICIT
Preferred stock - undesignated, Series A, convertible; no par value;
50,000,000 shares authorized; 28,928 shares issued and outstanding;
(aggregate liquidation preference of $2,892,800); the Company also
has designated Series B with no shares issued or outstanding		514,612							514,612
Common stock, no par value; 250,000,000 shares authorized;
170,238,669 shares issued and outstanding		16,403,248							16,403,248
Additional paid-in capital		1,468,057							1,468,057
Deficit accumulated prior to the development stage		(1,399,577	)						(1,399,577	)
Deficit accumulated during the development stage		(24,801,660	)		5,125,398		a		(19,281,125	)
					395,137		b
Total Stockholders' Deficit		(7,815,320	)		5,520,535				(2,294,785	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	393,552		$	1,487,539			$	1,881,091

HANSEN, BARNETT& MAXWELL, P.C.
A Professional Corporation		Registered with the Public Company
CERTIFIED PUBLIC ACCOUNTANTS		Accounting Oversight Board
AND
BUSINESS CONSULTANTS
5 Triad Center, Suite 750
Salt Lake City, UT 84180-1128
Phone: (801) 532-2200
Fax: (801) 532-7944
www.hbmcpas.com

	December 31,			December 31,
	2006			2005
ASSETS
CURRENT ASSETS

Cash	$	47,658		$	654,438

Total Current Assets		47,658			654,438

Notes receivable		-			296,050
Property and equipment, net		62,249			80,635

TOTAL ASSETS	$	109,907		$	1,031,123

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Accounts payable	$	1,136,684		$	935,132
Accrued payroll and payroll taxes		1,184,264			1,673,651
Accrued interest payable		267,739			237,836
Notes payable to shareholders		56,000			56,000
Convertible notes payable		193,200			193,200
Research and development obligation		2,441,445			592,100
Financial instrument		294,988			2,859,596

Total Current Liabilities		5,574,320			6,547,515

Long-term liability		90,000			-

TOTAL LIABILITIES		5,664,320			6,547,515

STOCKHOLDERS' DEFICIT

Preferred stock - undesignated, Series A, convertible; no par value; 50,000,000 shares
authorized; 34,420 and 42,000 shares issued and outstanding, respectively; (aggregate
liquidation preference of $3,442,000 and $4,200,000, respectively); the Company also has
designated a Series B with no shares issued or outstanding		514,612			523,334
Common stock, no par value; 250,000,000 shares authorized; 118,357,704 and 107,679,724
shares issued and outstanding, respectively		15,299,017			15,211,895
Additional paid-in capital		1,056,020			988,670
Deficit accumulated prior to the development stage		(1,399,577	)		(1,399,577	)
Deficit accumulated during the development stage		(21,024,485	)		(20,840,714	)

Total Stockholders' Deficit		(5,554,413	)		(5,516,392	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	109,907		$	1,031,123

							From Inception of
							the Development Stage
	For the Years Ended						on November 20, 1991
	December 31,						Through
	2006			2005			December 31, 2006

REVENUES	$	800,000		$	-		$	957,044

COST OF GOODS SOLD		-			-			14,564

GROSS PROFIT		800,000			-			942,480

OPERATING EXPENSES

General and administrative		1,986,052			1,878,027			19,041,049
Research and development		2,026,907			2,172,461			7,748,106
Inventory write-down		-			-			96,859
Impairment loss		-			-			9,709
License fees		-			-			1,001,500

Total Expenses		4,012,959			4,050,488			27,897,223

LOSS FROM OPERATIONS		(3,212,959	)		(4,050,488	)		(26,954,743	)

OTHER INCOME (EXPENSES)

Unrealized gain on
financial instrument		2,564,608			2,300,191			4,864,799
Interest income		2,866			25,727			58,164
Interest expense		(29,919	)		(38,264	)		(1,185,620	)
Foreign currency transaction gain (loss)		(117,501	)		56,480			(61,021	)
Gain on debt restructuring		607,761			196,353			2,039,650
Other income		1,373			23,220			906,485

Total Other Income (Expenses)		3,029,188			2,563,707			6,622,457

NET LOSS		(183,771	)		(1,486,781	)		(20,332,286	)

Preferred stock dividend from
beneficial conversion feature		-			-			(692,199	)
NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS	$	(183,771	)	$	(1,486,781	)	$	(21,024,485	)

BASIC AND DILUTED INCOME (LOSS)
PER COMMON SHARE	$	(0.00	)	$	(0.01	)

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING		113,809,546			107,398,164

													Accumulated			Deficit
													Deficit			Accumulated
											Additional		Prior to			During the		Escrow/
	Preferred Stock				Common stock						Paid in		Development			Development		Subscription
	Shares		Amount		Shares			Amount			Capital		Stage			Stage		Receivables			Total

Balance at October 31, 1991						1,750,000		$	252,997		$	-	$	(1,482,514	)	$	-	$	-		$	(1,229,517	)

Restatement for reverse acquisition of WPI
Pharmaceutical, Inc. by Medical Discoveries, Inc.		-		-		-			(252,997	)		-		252,997			-		-			-

Shares issued in merger of WPI Pharmaceutical, Inc.
Medical Discoveries, Inc., $0.01 per share		-		-		10,000,000			135,000			-		(170,060	)		-		-			(35,060	)

Balance at November 20, 1991
(Date of Inception of Development Stage)		-		-		11,750,000			135,000			-		(1,399,577	)		-		-			(1,264,577	)

Issuance of common stock for:
Cash
1992 - $0.50 per share		-		-		200,000			100,000			-		-			-		-			100,000
1992 - $1.50 per share		-		-		40,000			60,000			-		-			-		-			60,000
1993 - $0.97 per share		-		-		542,917			528,500			-		-			-		-			528,500
1994 - $1.20 per share		-		-		617,237			739,500			-		-			-		-			739,500
1995 - $0.67 per share		-		-		424,732			283,200			-		-			-		-			283,200
1996 - $0.66 per share		-		-		962,868			635,000			-		-			-		(60,000	)		575,000
1997 - $0.43 per share		-		-		311,538			135,000			-		-			-		60,000			195,000
1998 - $0.29 per share		-		-		2,236,928			650,000			-		-			-		-			650,000
1999 - $0.15 per share		-		-		13,334			2,000			-		-			-		-			2,000
2001 - $0.15 per share		-		-		660,000			99,000			-		-			-		-			99,000
2003 - $0.04 per share		-		-		20,162,500			790,300			-		-			-		-			790,300
2004 - $0.09 per share		-		-		20,138,024			1,813,186			-		-			-		-			1,813,186
Services and Interest
1992 - $0.50 per share		-		-		500,000			250,000			-		-			-		-			250,000
1993 - $0.51 per share		-		-		251,450			127,900			-		-			-		-			127,900
1993 - $0.50 per share		-		-		800,000			400,000			-		-			-		-			400,000
1994 - $1.00 per share		-		-		239,675			239,675			-		-			-		-			239,675
1995 - $0.39 per share		-		-		4,333,547			1,683,846			-		-			-		(584,860	)		1,098,986
1996 - $0.65 per share		-		-		156,539			101,550			-		-			-		-			101,550
1997 - $0.29 per share		-		-		12,500			3,625			-		-			-		-			3,625
1998 - $0.16 per share		-		-		683,000			110,750			-		-			-		-			110,750
1999 - $0.30 per share		-		-		100,000			30,000			-		-			-		-			30,000
2001 - $0.14 per share		-		-		1,971,496			284,689			-		-			-		-			284,689
2002 - $0.11 per share		-		-		2,956,733			332,236			-		-			-		-			332,236
2003 - $0.04 per share		-		-		694,739			43,395			-		-			-		-			43,395
2004 - $0.06 per share		-		-		1,189,465			66,501			-		-			-		-			66,501
Conversion of Debt
1996 - $0.78 per share						239,458			186,958			-		-			-		-			186,958
1997 - $0.25 per share		-		-		100,000			25,000			-		-			-		-			25,000
1998 - $0.20 per share		-		-		283,400			56,680			-		-			-		-			56,680
2002 - $0.03 per share		-		-		17,935,206			583,500			-		-			-		-			583,500
2004 - $0.07 per share		-		-		9,875,951			650,468			-		-			-		-			650,468
Other Issuances
1993 -License - $0.50 share		-		-		2,000,000			1,000,000			-		-			-		-			1,000,000
1997 - Settlement of contract		-		-		800,000			200,000			-		-			-		-			200,000
1998 - Issuance of common stock from
exercise of warrants, $0.001 per share		-		-		200,000			200			-		-			-		-			200
2000 - Reversal of shares issued		-		-		(81,538	)		-			-		-			-		-			-

	For the Year Ended December 31,						From Inception of the Development Stage
	2006			2005			on November 20, 1991 Through Dec. 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(183,771	)	$	(1,486,781	)	$	(20,332,286	)
Adjustments to reconcile net loss to net cash used by operating activities:
Foreign currency transaction (gain) loss		117,501			(56,480	)		61,021
Gain on debt restructuring		(607,761	)		(196,353	)		(2,039,650	)
Common stock issued for services, expenses, and litigation		78,400			-			4,346,117
Commitment for research and development obligation		1,712,745			665,700			2,378,445
Depreciation		18,386			8,515			127,172
Reduction of escrow receivable from research and development		-			-			272,700
Unrealized gain on financial instrument		(2,564,608	)		(2,300,191	)		(4,864,799	)
Stock options and warrants granted for services		67,350			-			4,878,603
Reduction of legal costs		-			-			(130,000	)
Write-off of subscriptions receivable		-			-			112,500
Impairment of loss on assets		-			-			9,709
Loss on disposal of equipment		-			-			30,364
Write-off of receivable		317,175			51,100			562,240
Note payable issued for litigation		-			-			385,000
Changes in operating assets and liabilities
Increase in accounts receivable		-			-			(7,529	)
Increase in accounts payable, accrued payroll and payroll taxes		407,900			171,641			2,872,086
Increase in accrued interest		29,903			38,210			667,822
Net Cash Used in Operating Activities		(606,780	)		(3,104,639	)		(10,670,485	)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in deposits		-			-			(51,100	)
Purchase of equipment		-			(89,150	)		(221,334	)
Issuance of note receivable		-			(313,170	)		(313,170	)
Payments received on note receivable		-			-			130,000
Net Cash Used in Investing Activities		-			(402,320	)		(455,604	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock, preferred stock and warrants for cash		-			3,006,000			10,033,845
Contributed equity		-			-			131,374
Proceeds from notes payable		-			-			1,336,613
Payments on notes payable		-			(300,000	)		(801,287	)
Proceeds from convertible notes payable		-			-			571,702
Payments on convertible notes payable		-			-			(98,500	)
Net Cash Provided by Financing Activities		-			2,706,000			11,173,747

NET INCREASE (DECREASE) IN CASH		(606,780	)		(800,959	)		47,658
CASH AT BEGINNING OF PERIOD		654,438			1,455,397			-

CASH AT END OF PERIOD	$	47,658		$	654,438		$	47,658

	For the Year Ended
	December 31,
	2006		2005
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Interest paid	$	46	$	19,283

NONCASH INVESTING AND FINANCING ACTIVITIES
Conversion of preferred stock to common stock	$	8,722	$	-
Common stock and warrants issued to placement agent	$	-	$	11,312
Conversion of accounts payable to long-term liability	$	90,000	$	-

	Potential Common Shares
	as of December 31,
	2006		2005
Convertible notes		128,671		128,671
Convertible preferred stock		114,080,000		48,000,000
Warrants		38,973,861		40,923,861
Stock options		19,883,000		19,483,000
Total potential common shares		173,065,532		108,535,532

	2006			2005

Research equipment	$	168,468		$	168,468
Accumulated depreciation		(106,219	)		(87,833	)
	$	62,249		$	80,635

	Years Ended December 31,
	2006			2005
Federal income tax benefit at statutory rate (34%)	$	62,000		$	506,000
State income tax, net of federal benefit		11,000			89,000
Unrealized gain on financial instrument		1,026,000			920,000
Change in valuation allowance		(1,099,000	)		(1,515,000	)
Provision for income taxes	$	-		$	-

	December 31,
	2006			2005
Net operating loss carryforward	$	7,684,000		$	6,663,000
Research and development credits		80,000			80,000
Stock options		673,000			646,000
Accrued compensation		436,000			380,000
Valuation allowance		(8,873,000	)		(7,769,000	)
Net deferred tax asset	$	-		$	-

	2006		2005
Notes payable to shareholders, which are currently due
and in default. Interest is at 12%.	$	56,000	$	56,000

	2006		2005
Convertible notes payable to a trust, which is currently due
and in default. Interest is at 12%. Each $1,000 note is convertible	$	193,200	$	193,200
into 667 shares of Company's common stock.

						Weighted
				Weighted		Average
	Shares			Average		Remaining		Aggregate
	Under			Exercise		Contractual		Intrinsic
	Option			Price		Life		Value
Outstanding at January 1, 2005		19,483,000		$	0.04
Granted		-			-
Expired		-			-
Outstanding at December 31, 2005		19,483,000			0.04
Granted		500,000			0.25
Expired		(100,000	)		0.50
Outstanding at December 31, 2006		19,883,000		$	0.05		6.4 years	$	340,000

Exercisable at December 31, 2006		19,883,000		$	0.05		6.4 years	$	340,000

MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	September 30,			December 31,
	2007			2006
ASSETS

CURRENT ASSETS
Cash	$	296,121		$	47,658
Prepaid expenses		66,031			-
Total Current Assets		362,152			47,658

Property and equipment, net		29,870			789
Deferred offering costs		1,530			-
Assets held for sale		-			61,460

TOTAL ASSETS	$	393,552		$	109,907

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable	$	1,111,501		$	663,691
Accrued payroll and payroll taxes		1,294,584			1,184,264
Accrued interest payable		291,585			267,739
Notes payable to shareholders		56,000			56,000
Secured promissory note, less unamortized discount		58,673			-
Convertible notes payable		193,200			193,200
Financial instrument		2,065,470			294,988
Current liabilities associated with assets held for sale		3,137,859			2,914,438
Total Current Liabilities		8,208,872			5,574,320

LONG-TERM LIABILITY		-			90,000

TOTAL LIABILITIES		8,208,872			5,664,320

STOCKHOLDERS' DEFICIT
Preferred stock - undesignated, Series A, convertible; no par value;
50,000,000 shares authorized; 28,928 and 34,420 shares issued and
outstanding, respectively; (aggregate liquidation preference of
$2,892,800 and $3,442,000, respectively); the Company also has
designated Series B with no shares issued or outstanding		514,612			514,612
Common stock, no par value; 250,000,000 shares authorized; 170,238,669
and 118,357,704 shares issued and outstanding, respectively		16,403,248			15,299,017
Additional paid-in capital		1,468,057			1,056,020
Deficit accumulated prior to the development stage		(1,399,577	)		(1,399,577	)
Deficit accumulated during the development stage		(24,801,660	)		(21,024,485	)
Total Stockholders' Deficit		(7,815,320	)		(5,554,413	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	393,552		$	109,907

		For the Three Months						For the Nine Months						From Inception of the Development Stage on November 20, 1991
		Ended						Ended						through
		September 30,						September 30,						September 30,
		2007			2006			2007			2006			2007

Operating Expenses
General and administrative	$	564,268		$	160,773		$	919,273		$	350,954		$	5,869,946
Research and development		986,584			-			986,584			-			986,584

Loss from Operations		(1,550,852	)		(160,773	)		(1,905,857	)		(350,954	)		(6,856,530	)

Other Income (Expenses)
Unrealized gain (loss) on financial instrument		(1,735,102	)		840,271			(1,520,482	)		1,720,351			3,344,317
Interest income		124			519			394			2,295			58,558
Interest expense		(11,501	)		(7,538	)		(27,252	)		(22,382	)		(1,212,872	)
Interest expense from amortization of discount
on secured promissory note		(58,673	)		-			(58,673	)		-			(58,673	)
Gain on debt restructuring		90,000			2,709			90,000			607,761			2,129,650
Other income		-			22			-			805			906,485

Total Other Income (Expenses)		(1,715,152	)		835,983			(1,516,013	)		2,308,830			5,167,465

Income (Loss) from Continuing Operations		(3,266,004	)		675,210			(3,421,870	)		1,957,876			(1,689,065	)

Loss from Discontinued Operations (net of
gain on disposal of MDI-P of $258,809 in 2007)		(60,501	)		(1,322,366	)		(355,305	)		(2,214,318	)		(22,420,396	)

Net Loss		(3,326,505	)		(647,156	)		(3,777,175	)		(256,442	)		(24,109,461	)

Preferred stock dividend from beneficial
conversion feature		-			-			-			-			(692,199	)

Net Loss Applicable to Common Shareholders	$	(3,326,505	)	$	(647,156	)	$	(3,777,175	)	$	(256,442	)	$	(24,801,660	)
��
Basic and Diluted Income (Loss) per Common Share:
Income (Loss) from Continuing Operations	$	(0.025	)	$	0.006		$	(0.028	)	$	0.018
Loss from Discontinued Operations	$	(0.001	)	$	(0.011	)	$	(0.003	)	$	(0.020	)

Net loss	$	(0.026	)	$	(0.005	)	$	(0.031	)	$	(0.002	)

Basic and Diluted Weighted-Average Common
Shares Outstanding		129,802,551			117,922,148			122,214,575			112,382,132

							From Inception of the Development Stage
	For the Nine Months						on November 20, 1991
	Ended						through
	September 30,						September
	2007			2006			30, 2007
Cash Flows From Operating Activities
Net loss	$	(3,777,175	)	$	(256,442	)	$	(24,109,461	)
Adjustments to reconcile net loss to net cash used in
operating activities
Foreign currency transaction loss		199,296			21,125			260,317
Gain on debt restructuring		(90,000	)		(607,761	)		(2,129,650	)
Common stock issued for services, expenses, litigation, and
research and development		986,584			-			5,254,301
Commitment for research and development obligation		-			1,712,745			2,378,445
Depreciation		10,438			13,928			137,610
Reduction of escrow receivable from research and development		-			-			272,700
Unrealized loss (gain) on financial instrument		1,520,482			(1,720,351	)		(3,344,317	)
Share-based compensation for services		529,684			67,350			5,486,687
Interest expense from amortization of disocunt on secured
promissory note		58,673			-			58,673
Reduction of legal costs		-			-			(130,000	)
Write-off of subscriptions receivable		-			-			112,500
Impairment loss on assets		-			-			9,709
Gain on disposal of assets, net of losses		(258,809	)		-			(228,445	)
Write-off of receivable		-			167,175			562,240
Note payable issued for litigation		-			-			385,000
Changes in operating assets and liabilities
Accounts receivable		-			(225,000	)		(7,529	)
Prepaid expenses		(66,031	)		-			(66,031	)
Accounts payable		470,405			254,171			3,843,872
Accrued expenses		134,166			22,366			300,607
Net Cash Used in Operating Activities		(282,287	)		(550,694	)		(10,952,772	)
Cash Flows From Investing Activities
Proceeds from disposal of assets		310,000			-			310,000
Increase in deposits		-			-			(51,100	)
Purchase of property and equipment		(29,250	)		-			(250,584	)
Issuance of note receivable		-			-			(313,170	)
Payments received on note receivable		-			-			130,000
Net Cash Provided by (Used in) Financing Activities		280,750			-			(174,854	)
Cash Flows From Investing Activities
Issuance of common stock, preferred stock, and warrants for cash		-			-			10,033,845
Contributed equity		-			-			131,374
Proceeds from notes payable and related warrants		250,000			-			1,586,613
Payments on notes payable		-			-			(801,287	)
Proceeds from convertible notes payable		-			-			571,702
Payments on convertible notes payable		-			-			(98,500	)
Net Cash Provided by Financing Activities		250,000			-			11,423,747
Net Increase (Decrease) in Cash		248,463			(550,694	)		296,121
Cash at Beginning of Period		47,658			654,438			-
Cash at End of Period		296,121			103,744			296,121

Supplemental Disclosures of Cash Flow Information:
Noncash Investing and Financing Activities:
Conversion of preferred stock to common stock	$	-		$	8,722

	September 30,
	2007		2006
Convertible notes		128,671		128,671
Convertible preferred stock		57,856,000		62,018,018
Warrants		35,279,494		40,923,861
Compensation-based stock options and warrants		41,883,000		19,983,000
Common stock held in escrow		27,405,111		-
		162,552,276		123,053,550

Secured promissory note	$	250,000
Less unamortized discount		(191,327	)
Balance at September 30, 2007	$	58,673

If ~~a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.~~to EUCODIS:

Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH
Brunnerstrasser 59, 1235
1230, Vienna, Austria
Attention: Wolfgang Schoenfeld, M.D.

If to MDI:

~~Dated: -------------------------------------------------------------------------------- , 2004~~

Medical Discoveries, Inc.
1338 South Foothill Drive # 266
Salt Lake City, Utah 84108
Attention: Judy M. Robinett

If to MDI Oncology:

MDI Oncology, Inc.
1338 South Foothill Drive # 266
Salt Lake City, Utah 84108
Attention: Judy M. Robinett