UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  SCHEDULE 14A
                                 (Rule 14a-101)

                            SCHEDULE 14A INFORMATION

                    Proxy Statement Pursuant to Section 14(a)
                     of the Securities Exchange Act of 1934


Filed by Registrant  |X|

Filed by a Party other than the Registrant  |_|

Check the appropriate box:

|X|      Preliminary Proxy Statement

|_|      Confidential, for Use of the Commission Only (as permitted by Rule
         14a-6(3)(2))

|_|      Definitive Proxy Statement

|_|      Definitive Additional Materials

|_|      Soliciting Material Pursuant to ss.240.14a-12


                        PARADIGM MEDICAL INDUSTRIES, 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):

|X|      No fee required.

|_|      Fee computed on table below per Securities Exchange Act Rules 15a-6(i)
         (4) and 0-11.*

|_|      Fee paid previously with preliminary materials.

         (1)  Title of each class of securities to which transaction applies:
         (2)  Aggregate number of securities to which transaction applies:
         (3)  Per unit price or other  underlying value  of transaction computed
              pursuant  to  Securities  Exchange  Act Rule  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)  Total fee paid:


|_|      Check box if  any part  of the fee is offset as  provided by Securities
         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.:
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                        PARADIGM MEDICAL INDUSTRIES, INC.

                              2355 South 1070 West
                           Salt Lake City, Utah 84119


                                  July __, 2006






Dear Shareholder:


         On behalf of the Board of Directors, it is my pleasure to invite you to
attend the Annual Meeting of Shareholders of Paradigm Medical  Industries,  Inc.
(the "Company") to be held on Friday,  August 18, 2006, at 10:00 a.m.,  Mountain
Daylight Time, at 2355 South 1070 West, Salt Lake City, Utah 84119.


         The formal notice of the Annual  Meeting and the Proxy  Statement  have
been made a part of this  invitation.  Also  enclosed is a copy of the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2005.


         The  matters  to be  addressed  at the  meeting  will  include  (i) the
election of four directors;  (ii) the approval of the proposed  amendment to the
Certificate  of  Incorporation  to increase the number of  authorized  shares of
common stock from 250,000,000 shares to 800,000,000  shares;  (iii) the approval
of the  amendment  to the 1995 Stock  Option  Plan to  authorize  an  additional
3,000,000  shares of common stock to be made  available  for issuance  under the
plan;  and (iv) the  ratification  of the  appointment  of Chisholm,  Bierwolf &
Nilson as the Company's registered public independent accountants for the fiscal
year ending  December  31, 2006.  I will also report on the  Company's  business
activities  and  answer  any  shareholder  questions.  The  Board  of  Directors
recommends  that  you  vote  FOR  election  of the  director  nominees,  FOR the
amendment  to the  Certificate  of  Incorporation  to  increase  the  number  of
authorized  shares, FOR the amendment to the 1995 Stock Option Plan to authorize
additional shares for issuance  thereunder,  and FOR ratification of appointment
of the  registered  public  independent  accountants.  Please refer to the Proxy
Statement  for  detailed  information  on each of the  proposals  and the Annual
Meeting.


         Your vote is very  important.  We hope you will take a few  minutes  to
review the Proxy Statement and complete, sign, and return your Proxy Card in the
envelope  provided,  even if you plan to attend the  meeting.  Please  note that
sending us your Proxy will not prevent you from voting in person at the meeting,
should you wish to do so.

         Thank you for your support of Paradigm Medical Industries, Inc. We look
forward to seeing you at the Annual Meeting.

                                         Sincerely yours,



                                         Raymond P.L. Cannefax
                                         President and Chief Executive Officer




                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                           TO BE HELD AUGUST 18, 2006
                            _________________________



To our Shareholders:


         NOTICE IS HEREBY  GIVEN that the Annual  Meeting of  Shareholders  (the
"Annual Meeting") of Paradigm Medical Industries, Inc. (the "Company") will held
on Friday,  August 18, 2006,  beginning at 10:00 a.m. Mountain Daylight Time, at
the Company's  corporate  headquarters  at 2355 South 1070 West, Salt Lake City,
Utah.  At the  Annual  Meeting,  shareholders  will  consider  and act  upon the
following matters:


         1.   To elect a Board of  Directors  consisting  of four  directors  to
              serve  until the next  annual  meeting of  shareholders  and until
              their respective successors are elected and qualified;


         2.   To approve the proposed amendment to the Company's  Certificate of
              Incorporation  to  increase  the  number of  authorized  shares of
              common stock from 250,000,000 to 800,000,000 shares;


         3.   To amend the  Company's  1995 Stock  Option Plan to  authorize  an
              additional  3,000,000  shares of common stock to be made available
              for issuance under the plan;

         4.   To ratify the  appointment  of Chisholm,  Bierwolf & Nilson as the
              Company's registered public independent accountants for the fiscal
              year ending December 31, 2006; and

         5.   To transact  such other  business as may properly  come before the
              meeting or any adjournment thereof.

         The foregoing  items of business are more fully  described in the Proxy
Statement  accompanying  this Notice.  Also included is a single-page Proxy Card
and a postage prepaid return envelope.  Only shareholders of record at the close
of  business  on June 27,  2006 are  entitled  to notice of, and to vote at, the
Annual Meeting or any adjournment thereof.

         If you do not expect to attend the meeting in person,  it is  important
that your shares be  represented.  Please use the enclosed Proxy Card to vote on
the matters to be  considered  at the meeting,  sign and date the proxy card and
mail it promptly in the enclosed  envelope,  which requires no postage if mailed
in the United  States.  You may revoke your proxy at any time before the meeting
by written notice to such effect, by submitting a subsequently dated proxy or by
attending  the meeting and voting in person.  If your shares are held in "street
name," you should instruct your broker how to vote in accordance with your Proxy
Card.

                                          By order of the Board of Directors,



                                          Luis A. Mostacero
                                          Vice President of Finance, Treasurer
                                          and Secretary
July __, 2006
Salt Lake City, Utah




                        PARADIGM MEDICAL INDUSTRIES, INC.
                              2355 South 1070 West
                           Salt Lake City, Utah 84119


                                 PROXY STATEMENT

                 INFORMATION CONCERNING SOLICITATION AND VOTING

General


         The enclosed  Proxy is solicited on behalf of the Board of Directors of
Paradigm Medical  Industries,  Inc., a Delaware  corporation (the "Company") for
use at the Annual Meeting of Shareholders  (the "Annual  Meeting") to be held on
Friday,  August 18, 2006, beginning at 10:00 a.m., Mountain Daylight Time, or at
any adjournment(s) thereof. The purposes of the meeting are set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at the Company's  corporate  headquarters  at 2355 South 1070 West,
Salt Lake City, Utah. This Proxy Statement and accompanying  materials are being
mailed  on or about  July  10,  2006.  The  Company  will  bear the cost of this
solicitation.


Record Date

         Shareholders  of record of the  Company's  Common Stock at the close of
business on June 26, 2006 are  entitled to notice of and to vote at the meeting.
At the record date,  193,956,828 shares of the Company's Common Stock, $.001 par
value,  5,627 shares of the Series A Preferred  Stock,  8,986 shares of Series B
Preferred Stock, no shares of Series C Convertible Preferred Stock, 5,000 shares
of Series D  Convertible  Preferred  Stock,  250 shares of Series E  Convertible
Preferred Stock, 4,598.75 shares of Series F Preferred Stock, and 588,235 shares
of Series G Preferred Stock were issued and outstanding.  Shareholders of Series
A, Series B, Series C, Series D, Series E, Series F and Series G Preferred Stock
are not entitled to vote at the Annual  Meeting.  Shareholders  holding at least
one-third of the outstanding  shares of Common Stock represented in person or by
proxy shall  constitute a quorum for the  transaction  of business at the Annual
Meeting.

Revocability of Proxies

         Shareholders may revoke any appointment of proxy given pursuant to this
solicitation  by delivering the Company a written notice of revocation or a duly
executed  proxy  bearing a later date or by attending  the meeting and voting in
person.  An  appointment of proxy is revoked upon the death or incapacity of the
shareholder  if the  Secretary  or other  officer of the Company  authorized  to
tabulate  votes  receives  notice of such death or  incapacity  before the proxy
exercises its authority under the appointment.

Voting and Solicitation

         Each  shareholder will be entitled to one vote for each share of Common
Stock held at the record  date.  Assuming a quorum is present,  a  plurality  of
votes cast by the shares  entitled to vote in the election of directors  will be
required  to elect each  director.  Because  the  shares of Series A,  Series B,
Series  C,  Series  D,  Series  E,  Series F and  Series G  Preferred  Stock are
non-voting  securities,  the holders thereof will not be entitled to vote at the
Annual  Meeting.  To approve the  granting  of the stock  options to the outside
directors of the Company,  holders of a majority of the shares  entitled to vote
at the Annual  Meeting must vote in favor of the stock  options.  The  principal
executive  offices of the Company are located at 2355 South 1070 West, Salt Lake
City,  Utah.  In  addition  to the use of the mails,  proxies  may be  solicited
personally,  by  telephone,  or by  facsimile,  and the  Company  may  reimburse
brokerage  firms and other persons  holding shares in the Company in their names
or  those  of  their  nominees  for  their  reasonable  expenses  in  forwarding
soliciting materials to the beneficial owners.



                                       1


                              ELECTION OF DIRECTORS

                                   Proposal 1

Nominees

         The Company's  Bylaws do not limit the number of persons serving on the
Company's  Board  of  Directors,  and it is  contemplated  that a board of three
directors  will be  elected  at the  Annual  Meeting.  The  Board  of  Directors
recommends  that the  shareholders  vote "FOR" the election of the four director
nominees listed below.  Assuming a quorum is present,  a plurality of votes cast
by the shares  entitled to vote in the election of directors will be required to
elect each director.  Unless otherwise  instructed,  the proxy holders will vote
the proxies received by them for management's  four nominees named below, all of
whom are presently directors of the Company.

         In the event that any management nominee is unable or declines to serve
as a director at the time of the Annual  Meeting,  the proxies will be voted for
any nominee who shall be  designated  by the present  Board of Directors to fill
the vacancy.  In the event that  additional  persons are nominated as directors,
the proxy holders  intend to vote all proxies  received by them in such a manner
as will ensure the election of as many of the nominees listed below as possible.
It is not expected that any nominee will be unable or will decline to serve as a
director.  The term of office of each person elected as a director will continue
until the next annual meeting of shareholders and until such person's  successor
has been elected and qualified. Officers are appointed by the Board of Directors
and serve at the discretion of the board.

         The name and certain  information  regarding  each nominee is set forth
below. See also "Certain Relationships and Related Transactions."

     Name                    Age     Director Since    Position with the Company
     ----                    ---     --------------    -------------------------
  Randall A. Mackey, Esq.    60      January 2000      Chairman of the Board
  Dr. David M. Silver        64      January 2000      Director
  Keith D. Ignotz            58      November 2000     Director
  John C. Pingree            65`     April 2004        Director

         The following biographical information is furnished with respect to the
four director nominees:

         Randall A. Mackey,  Esq. has been the  Company's  Chairman of the Board
since August 20, 2002,  and a director  since  January  2000. He had served as a
director of the Company from  November  1995 to September  1998.  Mr. Mackey has
been  President of the Salt Lake City law firm of Mackey Price Thompson & Ostler
since 1992, and a shareholder and director of the firm and its predecessor firms
since 1989. Mr. Mackey  received a B.S.  degree in Economics from the University
of Utah in 1968, an M.B.A.  degree from the Harvard  Business  School in 1970, a
J.D.  degree from  Columbia  Law School in 1975 and a B.C.L.  degree from Oxford
University  in 1977.  Mr.  Mackey has also  served as Chairman of the Board from
June  2001 to May 2003,  and as a  director  from 1998 to May 2003 of  Cimetrix,
Incorporated, a software development company. Mr. Mackey has additionally served
as Chairman of the Board from July 2000 to July 2003 and as a trustee  from 1993
to July  2003 of Salt Lake  Community  College,  and a member of the Utah  State
Board of Education since September 2005.

         David M. Silver,  Ph.D.  has been a director since January 2000. He had
served as a director of the company from  November 1995 to September  1998.  Dr.
Silver is a Principal Senior Scientist in the Milton S. Eisenhower  Research and
Technology  Development  Center at the Johns Hopkins  University Applied Physics
Laboratory,  where he has been  employed  since  1970.  He  served  as the J. H.
Fitzgerald  Dunning  Professor of  Ophthalmology in the Johns Hopkins Wilmer Eye
Institute in Baltimore  during 1998-99.  He received a B.S. degree from Illinois
Institute of  Technology,  an M.A.  degree from Johns Hopkins  University  and a
Ph.D. degree from Iowa State University before holding a postdoctoral fellowship
at Harvard  University  and a visiting  scientist  position at the University of
Paris.

         Keith D. Ignotz has been a director since  November  2000.  Since March
2005,  Mr.  Ignotz has been  President  and Chief  Executive  Officer of Diakine
Therapeutics,  Inc., a pharmaceutical  therapeutics  company. From 1992 to 2004,
Mr. Ignotz was with SpectRx, Inc., a medical technology company that he founded,
which develops, manufactures and markets alternatives to traditional blood based
medical  tests,  serving  from 2002 to 2004 as the Chief  Executive  Officer  of
Guided Therapeutics,  Inc., a wholly-owned subsidiary of SpectRx, Inc., and from
1992 to 2002 as President and Chief Operating Officer of SpectRx, Inc. From 1986
to 1992,  Mr.  Ignotz was Senior Vice  President of Allergan  Humphrey,  Inc., a
medical  electronics  company.  From 1985 to 1986,  he was President of Humphrey
Instruments  Limited-SKB,  a medical electronics company, and from 1980 to 1985,
Mr.  Ignotz  was  President  of  Humphrey   Instruments  GmbH,  also  a  medical
electronics company. Mr. Ignotz also served on the Board of Directors of Vismed,
Inc.,  d/b/a Dicon from 1992 to June 2000. Mr. Ignotz  received a B.A. degree in


                                       2


Sociology and Political  Science from San Jose  University and an M.B.A.  degree
from Pepperdine  University.  Mr. Ignotz has served as a trustee of Pennsylvania
College of Optometry and Audiology since 1990, a director of AeroVectrix,  Inc.,
a drug  delivery  company,  since August  2005,  and as a member of the American
Diabetes  Association  and the American  Marketing  Association  of the American
Association of Diabetes Education.

         John C. Pingree has been a director since April 2004.  From August 2001
to March 2004, Mr. Pingree was the Executive Director of the Semnani Foundation,
which funds projects to assist women and children in developing countries.  From
July 1998 to July 2001,  Mr.  Pingree was a Mission  President for the Church of
Jesus Christ of Latter-day Saints,  serving in Mexico City, Mexico. From 1977 to
1997,  Mr.  Pingree was  General  Manager  and Chief  Executive  Officer of Utah
Transit  Authority.  From 1970 to 1975, he was Director of Marketing for Memorex
Corporation. From 1967 to 1970, Mr. Pingree was Regional Manager, Sales Planning
at Xerox  Corporation.  He also  currently  serves as a member of the Utah State
Board of Education.  Mr.  Pingree  received a B.A.  degree in Economics from the
University of Utah and an M.B.A. degree from the Harvard Business School.

Board Meetings and Committees

         The size of the Board of  Directors  of the Company for the coming year
is  four  members.  Three  of the  directors,  or a  majority  of the  Board  of
Directors,  are independent directors.  The independent directors have regularly
scheduled meetings at which only independent  directors are present. The term of
office of each  director is for a period of one year or until the  election  and
qualification  of his  successor.  The Board of  Directors  held a total of four
meetings  during the fiscal year ended December 31, 2005. No directors  attended
fewer than 75% of all meetings of the Board of Directors  during the 2005 fiscal
year.

         Unless  authority  is withheld by your Proxy,  it is intended  that the
common stock represented by your Proxy will be voted for the respective nominees
listed above. If any nominee should not serve for any reason,  the Proxy will be
voted  for such  person as shall be  designated  by the  Board of  Directors  to
replace such  nominee.  The Board of Directors  has no reason to expect that any
nominee  will be unable to serve.  There is no  arrangement  between  any of the
nominees  and any other  person or persons  pursuant to which he was or is to be
selected as a director.

         There  are  three  committees  of the Board of  Directors,  which  meet
periodically during the year: the Compensation  Committee,  the Audit Committee,
and the Nominating and Corporate Governance Committee.

         The Compensation Committee is responsible for recommending to the Board
of Directors for approval the annual  compensation of each executive  officer of
the Company, developing policy in the areas of compensation and fringe benefits,
contribution under the 401(k) Retirement Savings Plan, granting of options under
the stock option plans,  and creating other  employee  compensation  plans.  The
Compensation  Committee consists of Messrs. Keith D. Ignotz,  Randall A. Mackey,
John C. Pingree and Dr.  David M. Silver  (Chairman  of the  Committee).  During
2005, the Compensation Committee met on one occasion.

         The Audit  Committee  directs the auditing  activities of the Company's
internal auditors and registered public independent  accounting firm and reviews
the services performed by the registered public independent  accounting firm and
evaluates the Company's  accounting  practices and  procedures and its system of
internal accounting  controls.  The Audit Committee consists of Messrs. Keith D.
Ignotz (Chairman of the Committee),  Randall A. Mackey,  John C. Pingree and Dr.
David M. Silver.  During 2004,  the Audit  Committee  met on one  occasion.  The
Company's  Board of Directors  has  determined  that Keith D. Ignotz and John C.
Pingree,  who currently  serve as directors of the Company as well as members of
the  Company's  audit  committee,  are  independent  audit  committee  financial
experts.

         The   Nominating   and  Corporate   Governance   Committee   identifies
individuals  qualified to become board members consistent with criteria approved
by the board,  recommends  to the board the persons to be nominated by the board
for  election  as  directors  at a meeting of  shareholders,  and  develops  and
recommends to the board a set of corporate governance principles. The Nominating
and Corporate Governance Committee consists of Messrs. Keith D. Ignotz,  Randall
A. Mackey,  John C. Pingree (Chairman of the Committee) and Dr. David M. Silver.
The  Nominating  and  Corporate  Governance  Committee  is  composed  solely  of
independent directors.

                                       3


Director Nominating Process

         The process for  identifying  and  evaluating  nominees  for  directors
include  the  following  steps:  (1) the  Nominating  and  Corporate  Governance
Committee,  Chairman of the Board or other board members identify a need to fill
vacancies or add newly created directorships; (2) the Chairman of the Nominating
and Corporate Governance Committee initiates a search and seeks input from board
members and senior  management  and, if necessary,  obtains advice from legal or
other  advisors  (but  does not  hire an  outside  search  firm);  (3)  director
candidates,  including  any  candidates  properly  proposed by  shareholders  in
accordance  with the  Company's  bylaws,  are  identified  and  presented to the
Nominating  and Corporate  Governance  Committee;  (4) initial  interviews  with
candidates  are  conducted  by the  Chairman  of the  Nominating  and  Corporate
Governance  Committee;  (5) the  Nominating and Corporate  Governance  Committee
meets to consider and approve final  candidate(s) and conduct further interviews
as necessary;  and (6) the Nominating and Corporate  Governance  Committee makes
recommendations  to the board for  inclusion  in the slate of  directors  at the
annual meeting.  The evaluation  process will be the same whether the nominee is
recommended by a shareholder or by a member of the Board of Directors.

         The  Nominating  and  Corporate   Governance  Committee  will  consider
nominees  proposed by shareholders.  To recommend a prospective  nominee for the
Nominating and Corporate Governance Committee's consideration,  shareholders may
submit  the  candidate's  name  and   qualifications   to:  Luis  A.  Mostacero,
Controller,  Treasurer and Secretary,  Paradigm Medical  Industries,  Inc., 2355
South 1070 East, Salt Lake City, Utah 84119.  Recommendations  from shareholders
for nominees must be received by Mr. Mostacero not later than the date set forth
under "Deadline for Receipt of Shareholder's  Proposals for Annual Meeting to be
Held in August 2006" below.

         The Nominating and Corporate  Governance Committee operates pursuant to
a written  charter.  The full text of the charter is published on the  Company's
website at www.paradigm-medical.com.  Shareholders may also obtain a copy of the
charter  without charge by writing to: Luis A. Mostacero,  Controller,  Paradigm
Medical Industries, Inc., 2355 South 1070 East, Salt Lake City, Utah 84119.

Meetings of Non-Management Directors

         The Company's nonmanagement directors regularly meet without management
participation.  In addition, an executive session including only the independent
directors is held at least annually.

Shareholder Communications with the Board of Directors

         Shareholders  who wish to communicate  with the Board of Directors or a
particular  director  may  send a  letter  to  Luis  A.  Mostacero,  Controller,
Treasurer and Secretary,  Paradigm  Medical  Industries,  Inc.,  2355 South 1070
East,  Salt Lake City,  Utah 84119.  The mailing  envelope  must contain a clear
notation   indicating   that  the  enclosed   letter  is  a   "Shareholder-Board
Communication" or  "Shareholder-Director  Communication."  All such letters must
identify  the author as a  shareholder  and clearly  state  whether the intended
recipients  are all members of the board or just  certain  specified  individual
directors.  The  Company's  Secretary  will make copies of all such  letters and
circulate them to the appropriate director or directors.

Appointment of New President and Chief Executive Officer

         On January 5, 2006,  Raymond P.L.  Cannefax was  appointed as President
and Chief  Executive  Officer,  replacing  John Y. Yoon who had  served in those
positions  from March 18,  2004 to  December  31,  2005.  Mr.  Yoon  resigned as
President and Chief Executive  Officer,  effective  December 31, 2005, to pursue
other opportunities.

Appointment of New Vice President of Finance and New Vice President of Sales and
Marketing

         On March 20, 2006, Luis A. Mostacero was appointed as Vice President of
Finance.  Mr.  Mostacero  previously  served as Controller from June 20, 2000 to
September 15, 2005, when he resigned to pursue other opportunities. On April 10,
2006, Michael S. Austin was appointed as Vice President of Sales and Marketing.

Resignation of Vice President of Operations

         In addition to the  resignation of John Y. Yoon on December 31, 2005 as
President and Chief Executive Officer, Aziz A. Mohabbat resigned on November 15,
2005 as Vice President of Operations and Chief Operating Officer to pursue other
opportunities.  Mr.  Mohabbat  served as Vice  President of Operations and Chief
Operating  Officer  from  March 22,  2004 to  November  15,  2005,  and as Chief
Operating Officer from August 30, 2002 to March 2003. The Board of Directors has
not yet appointed a new Chief Operating Officer since Aziz A. Mohabbat resigned.

                                       4


Moreover,  since  Mr.  Mohabbat's  resignation,   the  Board  of  Directors  has
endeavored to reduce the Company's operating expenditures, which has resulted in
a  reduction  in the  number of the  Company's  employees.  It is the  Company's
intention  to appoint a new Chief  Operating  Officer in the future  when it has
adequate funds to do so.

Executive Officers

         The  following  sets  forth  certain  information  with  respect to the
executive officers of the Company:

         Name                        Age                 Title
         ----                        ---                 -----
      Raymond P.L. Cannefax          57          President and  Chief
                                                 Executive Officer

         Raymond P.L.  Cannefax has served as the Company's  President and Chief
Executive  Officer since January 5, 2006. Mr. Cannefax  previously served as the
Company's  Vice  President of Sales and Marketing from January 2003 to May 2005.
From May 2005 to January  2006,  Mr.  Cannefax  served as Vice  President of the
Asia/Pacific Region for Sonomed, Inc., a manufacturer of ophthalmic products and
a wholly owned  subsidiary of Escalon Medical Corp. From January 2002 to January
2003,  Mr.  Cannefax was Vice  President of Business  Development  and Sales for
Vermax,  Inc., a  manufacturer  of products for hotel  properties.  From 1996 to
January 2002, he was  President,  Chief  Operating  Officer and founder of Aspen
Network, Inc., a software development and e-commerce company. From 1992 to 1996,
Mr. Cannefax was President and Chief Executive Officer of Apollo Telecom,  Inc.,
a  telecommunications  company.  From  1986 to  1992,  he was a  Regional  Sales
Director and a Senior District Manager of Sprint Communications Corporation. Mr.
Cannefax received a B.S. degree in Psychology and Zoology from the University of
Utah in 1976.

Corporate Governance

         Corporate Governance Guidelines. The Board of Directors has adopted the
Paradigm  Medical  Industries,  Inc.  Corporate  Governance  Guidelines.   These
guidelines  outline the  functions  of the board,  director  qualifications  and
responsibilities,  and  various  processes  and  procedures  designed  to insure
effective and  responsive  governance.  The guidelines are reviewed from time to
time in response to regulatory  requirements  and best practices and are revised
accordingly.  The full text of the  guidelines  is  published  on the  Company's
website  at  www.paradigm-medical.com.   A  copy  of  the  Corporate  Governance
Guidelines may also be obtained at no charge by written request to the attention
of Luis A.  Mostacero,  Controller,  Treasurer and Secretary,  Paradigm  Medical
Industries, Inc., 2355 South 1070 East, Salt Lake City, Utah 84119.

         Code of Business Conduct. All of the Company's officers,  employees and
directors are required to comply with the Company's Code of Business Conduct and
Ethics to help insure that the  Company's  business is conducted  in  accordance
with appropriate  standards of ethical behavior.  The Company's Code of Business
Conduct and Ethics covers all areas of professional conduct,  including customer
relationships,  conflicts of interest,  insider trading,  financial disclosures,
intellectual  property  and  confidential  information,   as  well  as  requires
adherence to all laws and  regulations  applicable  to the  Company's  business.
Employees are required to report any  violations or suspected  violations of the
Code.  The Code includes an anti-  retaliation  statement.  The full text of the
Code of Business  Conduct and Ethics is  published on the  Company's  website at
www.paradigm-medical.com.  A copy of the Code of Business Conduct and Ethics may
also be obtained  at no charge by written  request to the  attention  of Luis A.
Mostacero,  Controller,  Treasurer and Secretary,  Paradigm Medical  Industries,
Inc., 2355 South 1070 East, Salt Lake City, Utah 84119.

Executive Compensation

         The  following  table sets  forth,  for each of the last  three  fiscal
years, the compensation  received by John Y. Yoon, President and Chief Executive
Officer of the Company,  and other executive officers whose salary and bonus for
all  services  in all  capacities  exceed  $100,000  for the fiscal  years ended
December 31, 2005, 2004 and 2003.

                                       5





                                            Summary Compensation Table


                                                   Annual Compensation                         Long Term Compensation
                                                                                       Awards                 Payouts
                                                                 Other                     Securities
                                                                 Annual      Restricted    Underlying    Long-term      All Other
Name and                                                         Compen-     Stock          Options/     Incentive      Compensa-
Principal Position      Year        Salary$        Bonus($)      sation($)   Awards($)      SARs(#)      Payouts($)     tion($)
------------------      ----        -------        --------      --------    ----------   -----------    ----------     ----------
                                                                                              
John Y. Yoon            2005(1)     $165,881(5)       0        $ 2,257(5)      0              0             0         $5,927(8)
Former President and    2004(2)     $110,961(6)       0        $18,494(6)      0      1,000,000(7)          0              0
Chief Executive
Officer(4)

Aziz A. Mohabbat        2005(1)     $126,328          0              0         0              0             0         $2,113(11)
Former Vice             2004(2)     $106,244          0              0         0        200,000(10)         0              0
President of            2003(3)     $ 24,219          0              0         0              0             0         $9,634(12)
Operations and Chief
Operating Officer(9)
____________________


(1)   For the fiscal year ended December 31, 2005
(2)   For the fiscal year ended December 31, 2004
(3)   For the fiscal year ended December 31, 2003
(4)   Mr. Yoon served as President  and Chief  Executive  Officer from March 18,
      2004 to December  31,  2005,  at which time he  resigned  to pursue  other
      opportunities.
(5)   Of the  salary  payable to Mr.  Yoon in 2005  pursuant  to his  employment
      agreement,  $165,881 was paid to him during 2005 and the remaining  amount
      of $2,257 was deferred until 2006. This deferred salary of $2,257 was paid
      to Mr. Yoon on January 17, 2006.
(6)   Of the salary  payable to Mr. Yoon pursuant to his  employment  agreement,
      $110,961 was paid to him during 2004 and the  remaining  amount of $18,494
      payable  in 2004 was  deferred  until  the  Company's  Board of  Directors
      determined that its financial condition had improved.  The deferred salary
      of $18,494 was paid to Mr. Yoon in June and July of 2005.
(7)   On March 18,  2004,  the  Company's  Board of  Directors  granted Mr. Yoon
      options to purchase  1,000,000  shares of the Company's common stock at an
      exercise  price of $.13 per share.  Mr.  Yoon  resigned  as the  Company's
      President  and Chief  Executive  Officer on  December  31,  2005 and, as a
      result, the options terminated on March 31, 2006.
(8)   The amounts under "All Other Compensation" for 2005 consist of payments to
      Mr.  Yoon for  accrued  vacation  days prior to his  resignation  from the
      Company on December 31, 2005.
(9)   Mr.  Mohabbat  served a Vice President of Operations  and Chief  Operating
      Officer  from  March 22,  2004 to  November  15,  2005,  at which  time he
      resigned to pursue other opportunities.  Mr. Mohabbat also served as Chief
      Operating  Officer  from  August  30,  2002 to March  2003.  He was not an
      officer in prior years.
(10)  On September 30, 2004, the Board of Directors granted Mr. Mohabbat options
      to purchase  200,000  shares of the Company's  common stock at an exercise
      price of $.12 per share,  effective  as of March 23,  2004.  Mr.  Mohabbat
      resigned as the Company's Vice President of Operations and Chief Operating
      Officer on November 15, 2005 and, as a result,  the options  terminated on
      February 13, 2006.
(11)  The amounts under "All Other  Compensation"  for 2005 consist of a payment
      to Mr. Mohabbat for accrued  vacation days prior to his  resignation  from
      the Company on November 15, 2005.
(12)  The amounts under "All Other Compensation" for 2004 consist of payments to
      Mr. Mohabbat for accrued  vacation days prior to his resignation  from the
      Company in March 2003.

                                       6


Options

         The  following  table sets forth  information  regarding  stock options
granted during the fiscal year ended December 31, 2005, to each named  executive
officer.

                        Option Grants in Last Fiscal Year




                                                                Individual Grants
                                                  Percentage of Total
                        Number of Securities      Options Granted to      Exercise Price
                         UnderlyingOptions           Employees in            Per Share          Expiration
Name                        Granted (#)             Fiscal Year(%)            ($/Sh)               Date
----                    --------------------      --------------------    --------------        ----------
                                                                                        
John Y. Yoon                    0                          0                    N/A                 N/A
Aziz A. Mohabbat.......         0                          0                    N/A                 N/A


         The  following  table  sets  forth  information  regarding  unexercised
options to acquire shares of the Company's  common stock held as of December 31,
2005, by each named executive officer.

                 Aggregated Option Exercises in Last Fiscal Year
                       and Fiscal Year-End Option Values




                                                                      Number of Securities
                                                                           Underlying                    Value of Unexercised
                                                                       Unexercised Options               In-the-Money Options
                                                                     at December 31, 2005(#)            at December 31, 2004($)
                             Shares Acquired       Value             -----------------------            -----------------------
Name                           on Exercise      Realized($)       Exercisable      Unexercisable      Exercisable     Unexercisable
----                        ----------------    -----------       -----------      -------------      -----------     -------------
                                                                                                          
John Y. Yoon..............          0                0                    583,338           416,662        0                0
Aziz A. Mohabbat............        0                0                    105,564            94,436        0                0


Director Compensation

         On April 19, 2004,  John C.  Pingree,  a director of the  Company,  was
granted  options to purchase  125,000  shares of its common stock at an exercise
price of $.12 per share. On September 30, 2004,  Messrs.  Randall A. Mackey, Dr.
David M. Silver and Keith D. Ignotz, directors of the Company, were each granted
options to purchase  125,000 shares of the Company's common stock at an exercise
price of $.13 per share.  The directors were not granted any options to purchase
shares of common stock during 2005.  In  addition,  outside  directors  are also
reimbursed  for  their  expenses  in  attending  board and  committee  meetings.
Directors are not precluded  from serving the Company in any other  capacity and
receiving compensation  therefore.  The options were not issued at a discount to
the then market price.

Employee 401(k) Plan

         In October  1996,  the  Company's  Board of Directors  adopted a 401(k)
Retirement  Savings  Plan.  Under the terms of the 401(k) plan,  effective as of
November  1,  1996,  the  Company  may  make  discretionary   employer  matching
contributions  to its employees who choose to  participate in the plan. The plan
allows the board to determine the amount of the contribution at the beginning of
each  year.  The  board  adopted a  contribution  formula  specifying  that such
discretionary   employer  matching   contributions   would  equal  100%  of  the
participating  employee's contribution to the plan up to a maximum discretionary
employee  contribution  of 3% of a  participating  employee's  compensation,  as
defined by the plan. All persons who have completed at least six months' service
with the Company and satisfy other plan requirements are eligible to participate
in the plan. The plan is currently  available to the Company's  employees at the
employees' expense with no matching contribution from the Company.

1995 Stock Option Plan

         The  Company  adopted  a 1995  Stock  Option  Plan,  for the  officers,
employees,  directors and  consultants  of its company on November 7, 1995.  The
plan  authorized  the granting of stock  options to purchase an aggregate of not
more than 300,000 shares of its common stock. On February 16, 1996,  options for
substantially  all 300,000  shares were granted.  On June 9, 1997, the Company's
shareholders  approved an amendment to the plan to increase the number of shares
of common stock reserved for issuance  thereunder from 300,000 shares to 600,000
shares. On September 3, 1998, the Company's  shareholders  approved an amendment
to the plan to  increase  the  number of shares of  common  stock  reserved  for
issuance  thereunder  from 600,000 shares to 1,200,000  shares.  On November 29,
2000, the Company's  shareholders  approved an amendment to the plan to increase

                                       7


the number of shares of common  stock  reserved  for  issuance  thereunder  from
1,200,000  shares to 1,700,000  shares.  On September  11, 2001,  the  Company's
shareholders  approved an amendment to the plan to increase the number of shares
of common stock  reserved  for  issuance  thereunder  from  1,700,000  shares to
2,700,000  shares.  On June 13, 2003,  the  Company's  shareholders  approved an
amendment to the plan to increase the member of shares of common stock  reserved
for issuance  thereunder from 2,700,000 shares to 3,700,000  shares. On July 11,
2005, the Company's  shareholders  approved an amendment to the plan to increase
the number of shares of common  stock  reserved  for  issuance  thereunder  from
3,700,000 shares to 5,000,000 shares.

         The compensation  committee  administers the 1995 Stock Option Plan. In
general, the compensation  committee will select the person to whom options will
be granted  and will  determine,  subject to the terms of the plan,  the number,
exercise,  and other provisions of such options.  Options granted under the plan
will become  exercisable at such times as may be determined by the  compensation
committee. Options granted under the plan may be either incentive stock options,
as such term is defined in the Internal  Revenue  Code, or  non-incentive  stock
options.  Incentive  stock  options  may  only be  granted  to  persons  who are
employees.  Non-incentive stock options may be granted to any person, including,
but not  limited  to, its  employees,  independent  agents,  consultants  as the
compensation  committee  believes has contributed,  or will  contribute,  to the
Company's success.  The compensation  committee determines the exercise price of
options granted under the 1995 Stock Option Plan,  provided that, in the case of
incentive  stock options,  such price is not less than 100% (110% in the case of
incentive  stock options granted to holders of 10% of voting power of its stock)
of the fair  market  value (as  defined in the plan) of the common  stock on the
date of grant. The aggregate fair market value (determined at the time of option
grant) of stock with respect to which incentive stock options become exercisable
for the first time in any year cannot exceed $100,000.

         The term of each option shall not be more than ten years (five years in
the case of  incentive  stock  options  granted  to holders of 10% of the voting
power of its stock) from the date of grant.  The Board of Directors  has a right
to amend, suspend or terminate the 1995 Stock Option Plan at any time; provided,
however, that unless ratified by its shareholders, no amendment or change in the
plan will be effective  that would  increase the total number of shares that may
be issued under the plan,  materially  increase the benefits accruing to persons
granted under the plan or materially  modify the  requirements as to eligibility
and  participation in the plan. No amendment,  supervision or termination of the
plan  shall,  without  the  consent  of an  employee  to  whom an  option  shall
heretofore  have been  granted,  affect the rights of such  employee  under such
option.

Employment Agreements

         The Company  entered  into an  employment  agreement  with Raymond P.L.
Cannefax, which commenced on January 5, 2006 and expires on January 5, 2007. The
employment  agreement  requires Mr. Cannefax to devote  substantially all of his
working time as the Company's  President and Chief Executive Officer,  providing
that he may be  terminated  for  "cause"  (as  provided  in the  agreement)  and
prohibits  him from  competing  with the  Company  for two years  following  the
termination of his employment  agreement.  The employment agreement provides for
the payment of an initial base salary of $125,000. The employment agreement also
provides  for  salary  increases  and  bonuses  as  shall be  determined  at the
discretion of the Board of Directors, with the first review of the annual salary
to be made as of June 30, 2006. The employment  agreement  further  provides for
the  issuance of stock  options to purchase  4,500,000  shares of the  Company's
common  stock at $.01 per  share.  The  options  vest in  twelve  equal  monthly
installments of 375,000 shares,  beginning on February 5, 2006 until such shares
are vested.

         In  the  event  of a  change  of  control  of  the  Company,  then  all
outstanding stock options granted to Mr. Cannefax shall be immediately vested. A
change of control  shall be deemed to have  occurred if (i) a tender offer shall
be made and  consummated  for the  ownership  of more than 25% of the  Company's
outstanding  shares;  (ii) the  Company  shall be  merged or  consolidated  with
another  corporation and, as a result,  less than 25% of the outstanding  common
shares  of the  surviving  corporation  shall be owned in the  aggregate  by the
Company's  former  shareholders,  as the same  shall have  listed  prior to such
merger or  consolidation;  (iii) the Company shall sell all or substantially all
of its assets to another  corporation  that is not a wholly owned  subsidiary or
affiliate;  (iv)  as a  result  of any  contested  election  for  the  Board  of
Directors,  or any tender or exchange offer,  merger of business  combination or
sale of assets,  the persons  who were  directors  of the Company  before such a
transaction  shall cease to constitute a majority of the Board of Directors;  or
(v) a person other than an officer or director of the Company shall acquire more
than 20% of the outstanding shares of common stock of the Company.

                                       8


         The Company  entered into an  employment  agreement  with John Y. Yoon,
which  commenced  on March 18,  2004 and was to expire  on March 18,  2007.  The
employment  agreement  required  Mr.  Yoon to  devote  substantially  all of his
working time as the Company's  President and Chief Executive Officer,  providing
that he could be  terminated  for  "cause"  (as  defined in the  agreement)  and
prohibited  him from  competing  with the  Company for two years  following  the
termination of his employment  agreement.  The employment agreement provided for
the payment of an initial  base  salary of  $175,000,  effective  as of April 1,
2004. The employment agreement also provided for salary increases and bonuses as
shall be determined at the discretion of the Board of Directors.  The employment
agreement  further  provided  for the  issuance  of stock  options  to  purchase
1,000,000  shares of the Company's  common stock at $.13 per share.  The options
were to vest in 36 equal monthly  installments  of 27,778  shares,  beginning on
April 30, 2004 until such shares were vested. Mr. Yoon resigned as President and
Chief  Executive  Officer of the  Company on December  31, 2005 to pursue  other
opportunities. At the time of his resignation, stock options to purchase 583,338
shares of the  Company's  common stock were vested.  Under the terms of the 1995
Stock Option Plan, the vested options terminated on March 31, 2006.

         The Company entered into an employment  agreement with Aziz A. Mohabbat
on October 5, 2004,  which was effective as of April 1, 2004,  and was to expire
on March 18, 2006.  The  employment  agreement  required Mr.  Mohabbat to devote
substantially  all of his  working  time  as the  Company's  Vice  President  of
Operations and Chief Operating Officer, provided that he could be terminated for
"cause" (as defined in the agreement) and prohibited him from competing with the
Company for two years following the termination of the employment agreement. The
employment  agreement  provided  for the  payment of an initial  base  salary of
$144,500,  effective as of April 1, 2004. The employment agreement also provided
for salary increases and bonuses as shall be determined at the discretion of the
Company's Board of Directors.  The employment agreement further provided for the
issuance of stock options to purchase  200,000  shares of the  Company's  common
stock  at $.12  per  share.  These  options  were to  vest in 36  equal  monthly
installments  of 5,556  shares,  beginning on April 30, 2004,  until such shares
were vested.  Mr.  Mohabbat  resigned as Vice  President of Operations and Chief
Operating  Officer  of  the  Company  on  November  15,  2005  to  pursue  other
opportunities. At the time of his resignation, stock options to purchase 105,564
shares of the  Company's  common stock were vested.  Under the terms of the 1995
Stock Option Plan, the vested options terminated on February 13, 2006.

Consulting Agreement

         On April 3, 2003, the Company entered into a consultant  agreement with
Kinexsys  Corporation.  Under the terms of the agreement,  Kinexsys  through its
Senior Partner, Timothy R. Forstrom, was to prepare a capital markets plan and a
corporate  positioning  and  communications  plan  for the  Company,  for  which
Kinexsys  was to  receive  warrants  to  purchase  up to  200,000  shares of the
Company's  common  stock at an  exercise  price of $.16 per share.  The  capital
markets plan was to include a detailed  analysis of the Company's capital market
structure in relation to current  investors,  market trends and projected equity
movements,  and recommendations on capital management strategies.  The corporate
positioning  and  communications  plan was to  include a  corporate  positioning
matrix for markets, analysts, customers and partners, and a communications plan.
The agreement was for a one-year term but could be renewed at the option of both
parties.  The agreement  expired on April 3, 2004 as the Company  elected not to
exercise its renewal option.

Retirement Agreement

         On May 6, 1999, the Company's Board of Directors  approved  resolutions
relating to the retirement of John M. Hemmer, then Vice President of Finance and
Chief Financial Officer of the Company.  The board resolutions provided that Mr.
Hemmer's annual salary of $120,000 per annum was to continue until June 1, 1999,
at which time his employment  contract and change of control  agreement with the
Company  would  terminate and he would become an  independent  consultant to the
Company.  As a  consultant,  Mr.  Hemmer was to  receive  an initial  payment of
$12,500 with annual  payments  thereafter of $25,000 payable on January 1, 2000,
2001 and 2002, and a final payment of $12,500  payable on January 1, 2003, for a
total consulting contract of $100,000.

         In addition,  the board  resolutions  provided  that the Company was to
issue to Mr. Hemmer warrants to purchase 125,000 shares of common stock at $2.63
per share,  exerciseable  for a period of five years,  and  warrants to purchase
75,000 shares of common stock at $7.50 per share,  exerciseable  for a period of
five years,  but such warrants were not to be issued until Mr. Hemmer  exercised
all of the warrants to purchase  125,000  common shares at $2.63 per share.  The
Company  has  paid a  total  of  $87,500  to Mr.  Hemmer  under  the  consulting
agreement.

         On May 30, 2006, the Company  entered into an agreement with Mr. Hemmer
in which he  acknowledged  that the Company owed him a total of $12,500 for past
services he rendered to the Company,  including as a consultant, and the Company

                                       9



agreed to pay him the sum of $12,500 in twelve  monthly  installments  of $1,000
each and a final  monthly  payment of $500.  The  Company has paid $2,000 to Mr.
Hemmer under this agreement.


Certain Relationships and Related Transactions

         The information set forth herein describes certain transactions between
the Company and certain affiliated parties. Future transactions, if any, will be
approved by a majority of the disinterested members and will be on terms no less
favorable  to the Company  than those that could be obtained  from  unaffiliated
parties.

         Randall  A.  Mackey,  a  director  since  January  21,  2000,  and from
September  1995 to  September 3, 1998 and Chairman of the Board since August 30,
2002, is president and a shareholder  of the law firm of Mackey Price Thompson &
Ostler,  which  rendered  legal  services in connection  with various  corporate
matters.  Legal fees and expenses paid to Mackey Price Thompson & Ostler for the
fiscal years ended  December 31, 2005 and 2004,  totaled  $220,000 and $100,000,
respectively. In addition, on April 7, 2005 the Company issued 250,000 shares of
common stock to Mackey  Price  Thompson & Ostler in payment for $22,500 in legal
services. As of December 31, 2005, the Company owed this firm $93,000,  which is
included in accounts payable.

Report of the Audit Committee

         The Company has an Audit  Committee  consisting  of four  nonmanagement
directors,  Randall A. Mackey, Keith D. Ignotz, John C. Pingree and Dr. David M.
Silver.  Each  member of the  audit  committee  is  considered  independent  and
qualified in accordance with applicable independent director and audit committee
listing  standards.  The  Company's  Board of  Directors  has  adopted a written
charter for the Audit Committee.

         During  the year  2005 the  Audit  Committee  met one  time.  The Audit
Committee has met with management and discussed the Company's internal controls,
the quality of the Company's  financial  reporting,  the results of internal and
external audit examinations,  and the audited financial statements. In addition,
the Audit Committee has met with the Company's independent  auditors,  Chisholm,
Bierwolf & Nilson,  and  discussed  all matters  required to be discussed by the
auditors with the Audit Committee  under Statement on Auditing  Standards No. 61
(communication  with  audit  committees).   The  Audit  Committee  received  and
discussed with the auditors  their annual  written report on their  independence
from the Company and its management,  which is made under Independence Standards
Board  Standard No. 1  (independence  discussions  with audit  committees),  and
considered  with the auditors  whether the  provision  of financial  information
systems design and  implementation and other non-audit services provided by them
to the Company during 2005 was compatible with the auditors' independence.

         In performing  these  functions,  the Audit  Committee  acts only in an
oversight  capacity.  In its oversight role, the Audit  Committee  relies on the
work and assurances of the Company's  management,  which is responsible  for the
integrity of the Company's  internal  controls and its financial  statements and
reports,  and  the  Company's  independent  auditors,  who are  responsible  for
performing  an  independent  audit  of the  Company's  financial  statements  in
accordance with generally  accepted auditing  standards and for issuing a report
on these financial statements.

         Pursuant to the  reviews and  discussions  described  above,  the Audit
Committee  recommended  to the Board of  Directors  that the  audited  financial
statements  be included in the  Company's  Annual  Report on Form 10-KSB for the
fiscal year ended  December 31, 2005 for filing with the Securities and Exchange
Commission.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's executive officers, directors and persons who own more than 10% of any
class of the  Company's  Common Stock to file initial  reports of ownership  and
periodic  changes  of  ownership  of the  Company's  Common  Stock with the U.S.
Securities  and Exchange  Commission.  Such persons are also required to furnish
the Company with copies of all Section 16(a) reports they file.  Based solely on
its review of the copies of such  reports  received by it with respect to fiscal
2005, or written  representations  from certain reporting  persons,  the Company
believes that its  directors,  officers and greater than 10%  beneficial  owners
complied with all Section 16(a) filing requirements applicable to them.

Security Ownership of Certain Beneficial Owners and Management

                                       10


         The  following  table sets forth  certain  information  with respect to
beneficial  ownership of the Company's  common stock as of June 26, 2006 for (i)
each  executive  officer  (ii) each  director,  (iii) each  person  known to the
Company to be the beneficial  owner of more than 5% of the  outstanding  shares,
and (iv) all directors and officers as a group.



                                                                 Percent of
Name and Address(1)                        Number of Shares       Ownership
-------------------                        ----------------      ----------
Raymond P.L. Cannefax (2)                       2,625,000            1.4%
Dr. David M. Silver (2)                           761,166               *
Randall A. Mackey (2)                             725,000               *
Keith D. Ignotz (2)                               525,709               *
John C. Pingree (2)                               431,500               *
                                                ---------
Executive officers and directors
   as a group (five persons)                    5,068,375            2.6%
                  _________________
                  *Less than 1%.

         (1)  Unless otherwise indicated, the address of each listed shareholder
              is c/o Paradigm  Medical  Industries,  Inc., 2355 South 1070 West,
              Salt Lake City, Utah, 84119.
         (2)  The amounts shown include  shares that may be acquired  currently,
              or within 60 days after June 26,  2006  through  the  exercise  of
              stock options are follows:  Mr. Cannefax,  2,625,000  shares;  Dr.
              Silver,  725,000 shares;  Mr. Mackey,  725,000 shares; Mr. Ignotz,
              525,851 shares; and Mr. Pingree, 275,000 shares.



                                       11

             APPROVAL OF INCREASE IN THE NUMBER OF AUTHORIZED SHARES

                                   Proposal 2


         The Certificate of Incorporation  currently  authorizes the issuance of
250,000,000  shares of common stock. As of the record date,  193,956,828  shares
were issued and  outstanding.  There have been 6,753  shares of common stock set
aside and  reserved  in the event that  holders of shares of Series A  preferred
stock elect to convert those shares into shares of common  stock,  10,783 shares
of common  stock set aside and  reserved in the event that  holders of shares of
Series B  preferred  stock elect to convert  those  shares into shares of Common
Stock,  8,750  shares of common  stock set aside and  reserved in the event that
holders of shares of Series D preferred stock elect to convert those shares into
shares of common stock,  13,333 shares of common stock set aside and reserved in
the event that  holders of shares of Series E  preferred  stock elect to convert
those shares into shares of common stock, and 245,217 shares of common stock set
aside and  reserved  in the event that  holders of shares of Series F  preferred
stock elect to convert  those  shares into shares of common  stock,  and 588,235
shares of common stock set aside and reserved in the event  holders of shares of
Series G  preferred  stock elect to convert  those  shares into shares of common
stock.

         Between June 10, 1997 and June 26, 2006,  the Company  issued (i) stock
options that are currently  outstanding  to executive  officers and employees to
purchase  4,847,500  shares of the  Company's  common  stock at exercise  prices
ranging from $.01 per share to $2.75 per share,  and (ii) stock options that are
currently outstanding to directors to purchase 2,250,000 shares of the Company's
common  stock at  exercise  prices  from $.09 per share to $2.75 per  share.  In
addition,  between June 10, 1997 and June 26, 2006, the Company issued  warrants
to  individuals  and  entities to purchase a total of  25,781,095  shares of the
Company's  common stock at exercise  prices ranging from $.10 per share to $6.75
per share.


Callable Secured Convertible Notes and Warrants

         April 27,  2005 Sale of  $2,500,000  in  Callable  Secured  Convertible
Notes:  To obtain  funding for the  Company's  ongoing  operations,  the Company
entered into a securities  purchase agreement with four accredited  investors on
April 27, 2005 for the sale of (i)  $2,500,000 in callable  secured  convertible
notes and (ii) warrants to purchase  16,534,392  shares of its common stock. The
sale of the callable secured  convertible  notes and warrants  occurred in three
traunches and the investors provided the Company with an aggregate of $2,500,000
as follows:


         o    $850,000 was disbursed on April 27, 2005;
         o    $800,000 was  disbursed on June 23, 2005 after the Company filed a
              registration  statement on June 22, 2005 to register the shares of
              common stock underlying the callable secured convertible notes and
              the warrants; and
         o    $850,000 was disbursed on June 30, 2005, the effective date of the
              registration statement.


                                       12


         Under the  terms of the  securities  purchase  agreement,  the  Company
agreed not, without the prior written consent of a  majority-in-interest  of the
investors,  to negotiate or contract with any party to obtain  additional equity
financing  (including debt financing with an equity component) that involves (i)
the  issuance of common  stock at a discount  to the market  price of the common
stock on the date of issuance  (taking into account the value of any warrants or
options to acquire common stock in connection  therewith),  (ii) the issuance of
convertible  securities that are  convertible  into an  indeterminate  number of
shares of common  stock,  or (iii) the  issuance of warrants  during the lock-up
period  beginning  April 27,  2005 and  ending on the later of (A) 270 days from
April 27,  2005,  and (B) 180 days from the date the  registration  statement is
declared effective.

         In  addition,  the Company  agreed not to conduct any equity  financing
(including debt financing with an equity  component) during the period beginning
April 27,  2005 and ending two years after the end of the above  lock-up  period
unless it has first  provided  each  investor an option to purchase its pro-rata
share  (based  on the ratio of each  investor's  purchase  under the  securities
purchase  agreement)  of the  securities  being  offered in any proposed  equity
financing. Each investor must be provided written notice describing any proposed
equity financing at least 20 business days prior to the closing of such proposed
equity  financing  and the option must be extended to each  investor  during the
15-day period following delivery of such notice.

         The $2,500,000 in callable secured  convertible  notes bear interest at
8% per annum from the date of  issuance.  Interest is computed on the basis of a
365-day  year and is payable  quarterly  in cash,  with six  months of  interest
payable up front.  The  interest  rate  resets to zero  percent for any month in
which the stock  price is greater  than 125% of the  initial  market  price,  or
$.0945,  for each  trading  day during that month.  Any amount of  principal  or
interest on the  callable  secured  convertible  notes that is not paid when due
will bear  interest at the rate of 15% per annum from the date due thereof until
such amount is paid.  The  callable  secured  convertible  notes mature in three
years from the date of issuance,  and are convertible  into the Company's common
stock at the  noteholders'  option,  at the lower of (i) $.09 or (ii) 60% of the
average of the three lowest intraday  trading prices for the common stock on the
OTC  Bulletin  Board  for the 20  trading  days  before  but not  including  the
conversion  date.  Accordingly,  there is no limit on the number of shares  into
which the notes may be converted.

         The $2,500,000 in callable secured convertible notes are secured by the
Company's assets,  including the Company's  inventory,  accounts  receivable and
intellectual  property.  Moreover, the Company has a call option under the terms
of the notes.  The call option provides the Company with the right to prepay all
of the outstanding  callable  secured  convertible  notes at any time,  provided
there is no event of default by the Company and its stock is trading at or below
$.09 per share.  An event of default  includes the failure by the Company to pay
the principal or interest on the callable secured  convertible notes when due or
to timely  file a  registration  statement  as required by the Company or obtain
effectiveness  with the Securities and Exchange  Commission of the  registration
statement. Prepayment of the callable secured convertible notes is to be made in
cash equal to either (i) 125% of the outstanding  principal and accrued interest
for prepayments  occurring within 30 days following the issue date of the notes;
(ii) 130% of the  outstanding  principal  and accrued  interest for  prepayments
occurring  between 31 and 60 days  following  the issue  date of the notes;  and
(iii) 145% of the  outstanding  principal and accrued  interest for  prepayments
occurring after the 60th day following the issue date of the notes.

         The warrants are exercisable until five years from the date of issuance
at a purchase  price of $.20 per share.  The investors may exercise the warrants
on a cashless  basis if the shares of common stock  underlying  the warrants are
not then  registered  pursuant to an effective  registration  statement.  In the
event the investors  exercise the warrants on a cashless basis, the Company will
not receive any  proceeds  therefrom.  In addition,  the  exercise  price of the
warrants  will be  adjusted in the event the Company  issues  common  stock at a
price below market,  with the exception of any securities  issued as of the date
of the warrants or issued in connection  with the callable  secured  convertible
notes issued pursuant to the securities purchase agreement.

         The noteholders  have agreed to restrict their ability to convert their
callable secured convertible notes or exercise their warrants and receive shares
of our common  stock such that the number of shares of common stock held by them
in the aggregate and their affiliates after such conversion or exercise does not
exceed 4.99% of the then issued and outstanding shares of common stock. However,
the  noteholders  may repeatedly  sell shares of common stock in order to reduce
their ownership percentage, and subsequently convert additional callable secured
convertible  notes. As of June 26, 2006, a total of $842,830 in callable secured
convertible  notes have been converted into 166,666,667  shares of the Company's
common stock pursuant to conversion notices from The NIR Group.

         February 28, 2006 Sale of  $1,500,000 in Callable  Secured  Convertible
Notes: To obtain additional  funding for the Company's ongoing  operations,  the
Company entered into a second securities purchase agreement on February 28, 2006
with the same  four  accredited  investors  for the  sale of (i)  $1,500,000  in
callable  secured  convertible  notes and (ii)  warrants to purchase  12,000,000
shares of its common stock. The sale of the callable secured  convertible  notes
and warrants is to occur in three  traunches  and the investors are obligated to
provide the Company with an aggregate of $1,500,000 as follows:

                                       13



         o    $500,000 was disbursed on February 28, 2006;
         o    $500,000 was  disbursed on June 28, 2006 after the Company filed a
              registration  statement on June 15, 2006 to register the shares of
              common stock underlying the callable secured convertible notes and
              the warrants; and
         o    $500,000  will  be  disbursed  upon  the   effectiveness   of  the
              registration statement.


         Each closing under the securities  purchase agreement is subject to the
following conditions:

         o    The  Company  delivers to the  investors  duly  executed  callable
              secured convertible notes and warrants;
         o    No litigation,  statute,  regulation or order had been  commenced,
              enacted or entered by or in any court,  governmental  authority or
              any  self-regulatory  organization that prohibits  consummation of
              the   transactions   contemplated   by  the  securities   purchase
              agreement; and
         o    No event  occurred  that could  reasonably  be  expected to have a
              material adverse effect on the Company's business.

         The Company  also agreed not,  without the prior  written  consent of a
majority-in-interest  of the investors,  to negotiate or contract with any party
to obtain additional  equity financing  (including debt financing with an equity
component)  that  involves (i) the issuance of common stock at a discount to the
market  price of the common  stock on the date of issuance  (taking into account
the value of any  warrants  or  options to acquire  common  stock in  connection
therewith),  (ii) the issuance of convertible  securities  that are  convertible
into an indeterminate number of shares of common stock, or (iii) the issuance of
warrants during the lock-up period beginning February 28, 2006 and ending on the
later of (a) 270 days from  February 28, 2006, or (b) 180 days from the date the
registration statement is declared effective.

         In  addition,  the Company  agreed not to conduct any equity  financing
(including debt financing with an equity  component) during the period beginning
February 28, 2006 and ending two years after the end of the above lock-up period
unless it first  provided each investor an option to purchase its pro-rata share
(based on the ratio of each  investor's  purchase under the securities  purchase
agreement) of the  securities  being offered in any proposed  equity  financing.
Each investor must be provided  written notice  describing  any proposed  equity
financing at least 20 business days prior to the closing of such proposed equity
financing  and the option must be extended  to each  investor  during the 15-day
period following delivery of such notice.

         The callable  secured  convertible  notes bear interest at 8% per annum
from the date of  issuance.  Interest is computed on the basis of a 365-day year
and is payable  quarterly in cash, with six months of interest payable up front.
The interest  rate resets to zero percent for any month in which the stock price
is greater than 125% of the initial  market price,  or $.0275,  for each trading
day during  that month.  Any amount of  principal  or  interest on the  callable
secured  convertible  notes that is not paid when due will bear  interest at the
rate of 15% per annum from the date due thereof  until such amount is paid.  The
callable  secured  convertible  notes  mature  in three  years  from the date of
issuance,   and  are  convertible   into  the  Company's  common  stock  at  the
noteholders'  option, at the lower of (i) $.02 or (ii) 60% of the average of the
three lowest  intraday  trading  prices for the common stock on the OTC Bulletin
Board for the 20 trading  days before but not  including  the  conversion  date.
Accordingly,  there is no limit on the number of shares into which the notes may
be converted.

         The callable  secured  convertible  notes are secured by the  Company's
assets, including the Company's inventory,  accounts receivable and intellectual
property.  Moreover, the Company has a call option under the terms of the notes.
The call  option  provides  the  Company  with the  right to  prepay  all of the
outstanding callable secured convertible notes at any time, provided there is no
event of  default by the  Company  and its stock is trading at or below $.02 per
share.  An event of  default  includes  the  failure  by the  Company to pay the
principal or interest on the callable secured  convertible  notes when due or to
timely  file a  registration  statement  as  required  by the  Company or obtain
effectiveness  with the Securities and Exchange  Commission of the  registration
statement. Prepayment of the callable secured convertible notes is to be made in
cash equal to either (a) 125% of the outstanding  principal and accrued interest
for prepayments  occurring within 30 days following the issue date of the notes;
(b) 130% of the  outstanding  principal  and accrued  interest  for  prepayments
occurring  between 31 and 60 days following the issue date of the notes;  or (c)
145% of the outstanding principal and accrued interest for prepayments occurring
after the 60th day following the issue date of the notes.

         The warrants are exercisable until five years from the date of issuance
at a purchase  price of $.10 per share.  The investors may exercise the warrants
on a cashless  basis if the shares of common stock  underlying  the warrants are
not then  registered  pursuant to an effective  registration  statement.  In the
event the investors  exercise the warrants on a cashless basis, the Company will
not receive any  proceeds  therefrom.  In addition,  the  exercise  price of the
warrants  will be  adjusted in the event the Company  issues  common  stock at a
price below market,  with the exception of any securities  issued as of the date
of the warrants or issued in connection  with the callable  secured  convertible
notes issued pursuant to the securities purchase agreement.

                                       14


         The noteholders  have agreed to restrict their ability to convert their
callable secured convertible notes or exercise their warrants and receive shares
of the  Company's  common  stock such that the number of shares of common  stock
held by them in the  aggregate  and their  affiliates  after such  conversion or
exercise  does not exceed  4.99% of the then  issued and  outstanding  shares of
common stock.  However,  the  noteholders  may repeatedly  sell shares of common
stock in order to reduce their ownership  percentage,  and subsequently  convert
additional callable secured convertible notes.

         The  Company is required  to  register  the shares of its common  stock
issuable upon the conversion of the callable secured  convertible  notes and the
exercise of the  warrants  that were issued to the  noteholders  pursuant to the
securities purchase agreement the Company entered into on February 28, 2006. The
registration statement must be filed with the Securities and Exchange Commission
within 60 days of the February 28, 2006  closing date and the  effectiveness  of
the registration is to be within 135 days of such closing date.  Penalties of 2%
of the outstanding  principal balance of the callable secured  convertible notes
plus accrued  interest are to be applied for each month the  registration is not
effective  within the required time. The penalty may be paid in cash or stock at
the Company's option.

Simple Conversion Calculation

         The number of shares of common stock  issuable  upon  conversion of the
callable secured convertible notes is determined by dividing that portion of the
principal of the notes to be converted and interest,  if any, by the  conversion
price. For example,  assuming  conversion of $3,157,170 of notes  outstanding on
June 26, 2006  (consisting of $4,000,000 in callable secured  convertible  notes
that  were  sold to the  four  investors  pursuant  to the  securities  purchase
agreements dated April 27, 2005 and February 28, 2006, less $842,830 in callable
secured  convertible  notes that were converted  during the period from June 30,
2005 to June 26, 2006) and a conversion  price of $.007 per share, the number of
shares issuable upon conversion would be:

                     $3,157,170/$.007 = 451,024,286 shares.


The  continuously  adjustable  conversion  price feature of the callable secured
convertible  notes could  require the Company to issue a  substantially  greater
number of shares, which will cause dilution to the existing shareholders.

         The  Company's  obligation  to  issue  shares  upon  conversion  of its
callable secured convertible notes is essentially limitless. The following is an
example  of the  amount  of  shares  of  common  stock  that are  issuable  upon
conversion of $3,157,170  principal amount of callable secured convertible notes
(excluding accrued interest), based on market prices 25%, 50%, and 75% below the
market price, as of June 26, 2006 of $.007.


                                                                   % of
% Below      Price Per        With 40%         Number of         Outstanding
Market         Share          Discount       Shares Issuable       Shares*
-------      ---------        --------       ---------------     -----------

 25%         $.00525         $.00315        1,002,276,190          516.8%
 50%         $.0035          $.0021         1,503,414,286          775.1%
 75%         $.00175         $.00105        3,006,828,571         1,550.3%

*Based on 193,956,828 shares outstanding.

         As  illustrated,  the number of shares of common  stock  issuable  upon
conversion of the Company's callable secured  convertible notes will increase if
the market price of the Company's stock  declines,  which will cause dilution to
the Company's existing shareholders.

The  continuously  adjustable  conversion  price feature of the callable secured
convertible  notes may encourage  investors to make short sales in the Company's
common stock, which could have a depressive effect on the price of the Company's
common stock.

         The callable secured  convertible  notes are convertible into shares of
the Company's  common stock at a 40% discount to the trading price of the common
stock prior to the conversion. The significant downward pressure on the price of
the common stock as the noteholders  convert and sell material amounts of common
stock  could  encourage  short  sales by  investors.  This could  place  further
downward  pressure on the price of the common stock. The noteholders  could sell
common  stock  into the market in  anticipation  of  covering  the short sale by

                                       15


converting their securities,  which could cause the further downward pressure on
the stock price.  In addition,  not only could the sales of shares issuable upon
conversion  or  exercise  of  notes,  warrants  and  options,  but also the mere
perception that these sales could occur,  may adversely  affect the market price
of the common stock.

The issuance of shares upon conversion of the callable secured convertible notes
and  exercise  of  outstanding  warrants  may cause  immediate  and  substantial
dilution to existing shareholders.

         The issuance of shares upon conversion of callable secured  convertible
notes and  exercise  of  warrants  may  result in  substantial  dilution  to the
interests of other shareholders since the noteholders may ultimately convert and
sell the full amount  issuable on conversion.  Although the  noteholders may not
convert their callable secured  convertible notes and/or exercise their warrants
if such  conversion or exercise price would cause them to own more than 4.99% of
the Company's  outstanding  common stock,  this restriction does not prevent the
noteholders  from converting  and/or  exercising some of their holdings and then
converting the rest of their holdings.  In this way, the noteholders  could sell
more than this limit while never holding more than this limit. There is no upper
limit on the number of shares that may be issued,  which will have the effect of
further diluting the  proportionate  equity interest and voting power of holders
of the Company's common stock.

Failure to obtain shareholder  approval at the Annual Meeting of Shareholders to
increase  the  number of  authorized  shares  to two times the  number of shares
issuable upon full  conversion  of the callable  secured  convertible  notes and
exercise of warrants  could  result in legal action  against the Company,  which
could require the Company to curtail or cease its operations.


         At the Annual  Meeting of  Shareholders  to be held on August 11, 2006,
the Board of Directors has recommended that the shareholders  approve a proposed
amendment  to its  Certificate  of  Incorporation  to  increase  the  number  of
authorized shares of common stock from 250,000,000 shares to 800,000,000 shares.
The terms of the callable secured  convertible notes and the securities purchase
agreements that the Company entered into on April 27, 2005 and February 28, 2006
with four  accredited  investors  require  the Company to have  authorized,  and
reserved  for the purpose of issuance,  two times the number of shares  actually
issuable upon full  conversion  of the callable  secured  convertible  notes and
exercise  of the  warrants  based on the  conversion  price of the  notes or the
exercise  price of the  warrants  in effect  from time to time.  The Company has
filed a registration  statement  with the Securities and Exchange  Commission to
register 528,534,392 common shares to cover the resale of common shares issuable
upon the conversion of the callable  secured  convertible  notes and exercise of
the warrants.

         In the event the  Company is unable to obtain  shareholder  approval at
the August 18, 2006 Annual Meeting of  Shareholders  to amend the Certificate of
Incorporation to increase the number of authorized shares to 800,000,000 shares,
the  Company  would be required to pay to the  noteholders  standard  liquidated
damages of 3% of the  outstanding  amount of the  callable  secured  convertible
notes per month plus  accrued  interest  on the notes,  in cash or shares of its
common stock at its option.  If the Company  elects to pay the  noteholders  the
standard  liquidated  damages amount in shares of its common stock,  such shares
would be issued at the  conversion  price at the time of payment.  In  addition,
failure to obtain  shareholder  approval  to increase  the number of  authorized
shares to two times the number of shares  issuable  upon full  conversion of the
notes and exercise of the warrants  would  constitute  an event of default under
the  securities  purchase  agreement.   If  the  Company  is  unable  to  obtain
shareholder approval to increase the number of authorized shares, as required in
the securities purchase agreement dated February 28, 2006, the noteholders could
commence  legal action against the Company and foreclose on all of its assets to
recover  damages.  Any such action would require the Company to curtail or cease
operations.

         Accordingly,  as a result of the completion of the financing  involving
the sale of $4,000,000 in callable  secured  convertible  notes,  the Company is
required,  under the terms of the callable secured convertible notes and related
agreements,  to have  authorized  and reserved for the purpose of issuance,  two
times the number of shares  actually  issuable upon full conversion of the notes
and additional notes, and exercise of the warrants. Thus, the Board of Directors
has  recommended  it to be  in  the  best  interests  of  the  Company  and  its
shareholders to amend Article III of the Company's  Certificate of Incorporation
to increase the number of authorized  shares of common stock of the Company from
250,000,000  shares to 800,000,000  shares,  and hereby solicits the approval of
the shareholders of the amendment.  If the  shareholders  approve the amendment,
the Board of Directors  currently  intends to file an amendment to the Company's
Certificate  of  Incorporation  reflecting  the amendment  with the Secretary of
State of the State of Delaware as soon as practicable following such shareholder
approval.  If the amendment is not approved by the shareholders,  Article III of
the existing Certificate of Incorporation will continue in effect.


         The  objective  of the increase in the  authorized  number of shares of
common stock is to ensure that the Company will have sufficient shares available
for  future  issuances  of  shares  under  the  terms  of the  callable  secured
convertible  notes.  The  Board of  Directors  believes  that it is  prudent  to
increase the authorized  number of shares of common stock to the proposed levels
in order to provide a reserve of shares  available for issuance upon  conversion

                                       16


of the notes and additional  notes, and exercise of the warrants under the terms
of the notes and related  agreements.  All  authorized  but  unissued  shares of
common  stock will be available  for  issuance  from time to time for any proper
purpose approved by the Board of Directors.

         The  Company's  shareholders  do not currently  have any  preemptive or
similar  rights to  subscribe  for or purchase any  additional  shares of common
stock that may be issued in the  future  and,  therefore,  future  issuances  of
common stock may, depending on the  circumstances,  have a diluted effect on the
earnings  per  share,   voting  power  and  other   interests  of  the  existing
shareholders.

Vote Required and Recommendation of the Board of Directors

         The  affirmative  vote of the holders of a majority of the  outstanding
shares of the Company's common stock entitled to vote at the Annual Meeting will
be required to approve the proposed amendment, assuming a quorum is present.


         The Board of Directors recommends that shareholders vote "FOR" approval
of the amendment to the Certificate of  Incorporation  to increase the number of
authorized shares of common stock from 250,000,000 to 800,000,000 shares.



               APPROVAL OF AMENDMENT TO THE 1995 STOCK OPTION PLAN

                                   Proposal 3

         The  Board of  Directors  adopted  on June  23,  2006,  subject  to the
approval by the  shareholders,  an amendment to the Company's  1995 Stock Option
Plan.  The amendment  increases from 5,000,000 to 8,000,000 the number of shares
of the Company's common stock available for issuance under the 1995 Stock Option
Plan.  The Company has in the past used, and intends in the future to use, stock
options as incentive  devices to motivate and compensate  its salaried  officers
and other key  employees,  and believes that equity  incentives  represented  by
stock  options  enhances the Company's  ability in attracting  and retaining the
best possible persons for positions of significant  responsibility  by providing
its officers and other key employees with additional incentives to contribute to
the Company's success.

         Management  further  believes  that  the  availability  of such  equity
incentives  has served,  and will  continue to serve,  an important  part in the
implementation  of the  Company's  acquisition  strategy.  As of June 26,  2006,
options to  purchase an  aggregate  of 85,300  shares of common  stock have been
exercised  under the 1995 plan; as of such date,  options to purchase  4,847,500
shares of common  stock  were  outstanding  under the 1995  Stock  Option  Plan.
Accordingly,  options to purchase  only  67,200  shares of common  stock  remain
available for future grants under the 1995 Stock Option Plan as of such date.

         The Board of  Directors  recommends  that the  shareholders  vote "FOR"
approval of the amendment to the 1995 Stock Option Plan.


          RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

                                   Proposal 4

         The independent  public accounting firm of Chisholm,  Bierwolf & Nilson
has been the Company's  registered public  independent  accountants since fiscal
year 2005. The Audit  Committee has  recommended  and the Board of Directors has
appointed Chisholm,  Bierwolf & Nilson for purposes of auditing the consolidated
financial  statements  of the Company for the fiscal  year ending  December  31,
2006. It is anticipated that representatives of Chisholm, Bierwolf & Nilson will
be present at the Annual  Meeting and will be provided an  opportunity to make a
statement  if  they  desire,  and to be  available  to  respond  to  appropriate
questions.

         The  Board  of  Directors   recommends  that  shareholders  vote  "FOR"
ratification of the appointment of Chisholm,  Bierwolf & Nilson as the Company's
registered public independent accountants for fiscal 2006.


                AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN
                   AND IMPLEMENTATION FEES, AND ALL OTHER FEES

         Fees for the 2005 annual audit of the financial  statements and related
quarterly  review  services were $45,000.  Fees in 2005 related to the review of
registration  statements  and  assistance  in  responding  to SEC comments  were

                                       17


$8,000. Fees in 2005 for edgarization of filings were $11,000.  Fees in 2005 for
tax return  preparation  were $4,000.  Other fees in 2005 for meetings and other
consultation were $10,000.

         Fees for the 2004 annual audit of the financial  statements and related
quarterly  review  services  prepared were $35,000.  Fees in 2004 related to the
review of  registration  statements and assistance in responding to SEC comments
were $16,000.  Fees in 2004 for  edgarization  of filings were $10,000.  Fees in
2004 for tax return preparation were $7,000. Other fees in 2004 for meetings and
other consultation were $1,000.

                             ADDITIONAL INFORMATION

         The Company will provide without charge to any person from whom a Proxy
is solicited by the Board of Directors, upon the written request of such person,
a copy of the  Company's  Annual  Report on Form 10-K for the fiscal  year ended
December  31,  2005,  excluding  certain  exhibits  thereto,  as filed  with the
Securities and Exchange Commission. Written requests for such information should
be directed to Luis A.  Mostacero,  Vice  President  of Finance,  Treasurer  and
Secretary,  Paradigm Medical  Industries,  Inc., 2355 South 1070 West, Salt Lake
City, Utah 84119.

                                  OTHER MATTERS

         As of the  date  of this  Proxy  Statement,  the  Company  knows  of no
business that will be presented for  consideration  at the Annual  Meeting other
than the items  referred to above.  However,  if any other  matters are properly
brought before the meeting,  it is the intention of the persons named as proxies
in the accompanying  Proxy to vote the shares they represent on such business in
accordance  with their best  judgment.  In order to assure the  presence  of the
necessary  quorum and to vote on the matters to come before the Annual  Meeting,
please  indicate your choices on the enclosed Proxy and date, sign and return it
promptly in the postage prepaid envelope provided. The signing and delivery of a
Proxy by no means prevents one from attending the Annual Meeting.

                                         By order of the Board of Directors,



                                         Luis A. Mostacero
                                         Vice President of Finance, Treasurer
                                         and Secretary
July __, 2006.



                                       18

                        PARADIGM MEDICAL INDUSTRIES, INC.

                    PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
                                  July __, 2006

                      THIS PROXY SOLICITED ON BEHALF OF THE
                              BOARD OF DIRECTORS OF
                        PARADIGM MEDICAL INDUSTRIES, INC.


The undersigned  hereby appoints Randall A. Mackey and Raymond P.L.  Cannefax or
either of them, each with full power of substitution,  as proxies to vote at the
Annual Meeting of Shareholders to be held on Friday,  August 18, 2006, beginning
at 10:00 a.m., Mountain Daylight Time, at the corporate headquarters of Paradigm
Medical  Industries,  Inc. at 2355 South 1070 West, Salt Lake City, Utah, and at
all adjournments thereof, all shares of common stock which the undersigned would
be entitled to vote on matters set forth below, if personally present:


1.   ELECTION OF DIRECTORS,  NOMINEES:  KEITH D. IGNOTZ, RANDALL A. MACKEY, JOHN
     C. PINGREE AND DR. DAVID M. SILVER.

     |_|   FOR  all nominees listed (except as indicated in writing to the
           contrary below)

     |_|   WITHHOLD AUTHORITY to vote for all nominees listed below

Instruction:  To withhold  authority to vote for any individual  nominee,  write
that nominee's name here:

___________________________________________________________________________


2.   APPROVAL OF AMENDMENT TO THE CERTIFICATE OF  INCORPORATION  TO INCREASE THE
     NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 250,000,000 TO 800,000,000
     SHARES.


     |_|   FOR                      |_|   AGAINST             |_|   ABSTAIN

3.   APPROVAL  OF  AMENDMENT  TO THE 1995  STOCK  OPTION  PLAN TO  AUTHORIZE  AN
     ADDITIONAL 1,300,000 SHARES OF COMMON STOCK

     |_|   FOR                      |_|   AGAINST             |_|   ABSTAIN

4.   RATIFICATION OF APPOINTMENT OF CHISHOLM, BIERWOLF & NILSON AS THE COMPANY'S
     INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2006.

     |_|   FOR                      |_|   AGAINST             |_|   ABSTAIN

5.   IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
     MEETING.
     _________________________________________________________________________

THIS PROXY WHEN  PROPERLY  EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY
DIRECTION  IS  INDICATED,  WILL BE VOTED FOR THE  NOMINEES IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4. In their  discretion,  the proxies are  authorized to vote
upon  such  other  matters  as may  properly  come  before  the  meeting  or any
adjournment(s) thereof.

DATED ______________________________, 2006.

SIGNATURE: ________________________________________________________________

(This proxy should be marked,  dated and signed by each  shareholder  exactly as
such shareholder's name appears hereon and returned promptly. Persons signing in
a fiduciary capacity should so indicate.  If shares are held by joint tenants or
as community property,  both should sign. If a corporation,  please sign in full
corporation name by the President or by an authorized  corporate  officer.  If a
partnership, please sign in partnership name by an authorized person).