TERMINATION, SETTLEMENT, AND FORBEARANCE AGREEMENT

               TERMINATION, SETTLEMENT, AND FORBEARANCE AGREEMENT

     THIS TERMINATION,  SETTLEMENT AND FORBEARNANCE  AGREEMENT (the "Agreement")
is made and entered into  effective  as of October 16, 2006,  between IN VERITAS
MEDICAL DIAGNOSTICS,  INC., a Colorado  corporation (the "Company"),  MONTGOMERY
EQUITY PARTNERS,  LTD. (the  "Montgomery")  and CORNELL CAPITAL  PARTNERS,  L.P.
("Cornell").  Montgomery and Cornell are collectively  referred to herein as the
"Buyers". All terms not otherwise defined herein shall have the meaning ascribed
to the in the Securities Purchase Agreement (as defined below).

     WHEREAS,  on September 7, 2005, the Company and  Montgomery  entered into a
Securities Purchase Agreement  ("Securities Purchase Agreement").  In connection
with the Securities  Purchase  Agreement and  contemporaneously  therewith,  the
Company and Montgomery also entered in an Investor Registration Rights Agreement
(the "Registration  Rights Agreement"),  Irrevocable Transfer Agent Instructions
along with  Corporate  Stock Transfer (the "Transfer  Agent  Instructions"),  an
Escrow  Agreement along with David Gonzalez,  Esq. (the "Escrow  Agreement"),  a
Pledge  and  Escrow  Agreement  along with David  Gonzalez,  Esq.  (the  "Pledge
Agreement"), and a Security Agreement (the "Security Agreement"). The Securities
Purchase Agreement,  Registration Rights Agreement, Transfer Agent Instructions,
Escrow Agreement,  Pledge Agreement,  Security Agreement,  Debenture (as defined
below) and all other agreements  entered into between the Company and Montgomery
in connection therewith are collectively  referred to herein as the "Transaction
Documents".

     WHEREAS,  on  September  7, 2005,  the Company and Cornell  entered  into a
Standby Equity Distribution  Agreement ("SEDA"). In connection with the SEDA and
contemporaneously therewith, the Company and Cornell entered into a Registration
Rights Agreement (the "SEDA Registration Rights  Agreement"),  a Placement Agent
Agreement along with Monitor Capital, Inc. (the "Placement Agent Agreement") and
an  Escrow  Agreement  along  with  David  Gonzalez,   Esq.  (the  "SEDA  Escrow
Agreement").   The  SEDA,  SEDA  Registration  Rights  Agreement,   SEDA  Escrow
Agreement,  and Placement Agent Agreement are collectively referred to herein as
the "SEDA Transaction Documents".

     WHEREAS,  the Company  wishes to repay all principal and accrued and unpaid
interest due to  Montgomery  as of the date hereof  under that  certain  Secured
Convertible  Debenture  (the  "Debenture")  which  the  Company  issued  to  the
Montgomery  on  September  7, 2005 under the terms and  conditions  as set forth
herein.

     WHEREAS,  the Company  acknowledges  that an event of default has  occurred
under the  Debenture  as a result of (i) the  Registration  Statement  not being
declared effective within 120 days after filing thereof,  and (ii) the Company's
breach of its  obligations  to make payments of principal and interest under the
Debenture (collectively, the "Existing Defaults").

     NOW,  THEREFORE,  in consideration  of the mutual promises,  conditions and
covenants contained herein and other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:

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1.   In consideration for the  accommodations  made by Montgomery to the Company
     set forth herein,

     a.   Repayment  of the  Debenture.  The  Company  shall pay  Montgomery  an
          aggregate of $348,000.00  (the "Funds")  which  represents all amounts
          owed by the Company to  Montgomery  under the Debenture as of the date
          hereof including outstanding principal and interest. The Company shall
          pay  the  Funds  to  Montgomery  monthly  at the  rate  of  $29,000.00
          ("Monthly  Payment") per calendar month,  with the first payment being
          due and payable on November 15, 2006 and each subsequent payment being
          due and payable on the first  business  day of each  subsequent  month
          until  the  Funds  are  repaid in full.  The  parties  agree  that the
          Redemption Premium shall not be applied to the payment of the Funds by
          the Company.

     b.   All amounts owed, together with interest accrued and accruing thereon,
          and fees,  costs,  expenses  and  other  charges  (including,  without
          limitation,  the  Funds)  (collectively,  the  "Obligations")  now  or
          hereafter payable by the Company to Montgomery under the Debenture and
          the Transaction  Documents are unconditionally owing by the Company to
          Montgomery,  without  offset,  setoff,  defense or counterclaim of any
          kind, nature or description  whatsoever.  All terms of the Transaction
          Documents  not modified by this  Agreement  shall remain in full force
          and  effect.  An event of default on any  Transaction  Document  shall
          constitute an Event of Default on all other Transaction Documents.

     c.   The Company hereby  acknowledges,  confirms and agrees that Montgomery
          has and  shall  continue  to have  valid,  enforceable  and  perfected
          first-priority  liens  upon  and  security  interests  in the  Pledged
          Property and the Pledged  Shares  (each as defined in the  Transaction
          Documents)  heretofore  granted  pursuant  to  any  and  all  security
          agreements,  pledge  agreements,  or  otherwise  granted to or held by
          Montgomery.

     d.   In reliance upon the representations,  warranties and covenants of the
          Company  contained  in this  Agreement,  and  subject to the terms and
          conditions  set forth herein,  Montgomery  hereby waives on a one-time
          basis only the  Existing  Defaults  and further  agree to forbear from
          exercising its rights and remedies under the Transaction  Documents or
          applicable law in respect of or arising out of the Existing  Defaults,
          subject to the  conditions,  amendments  and  modifications  contained
          herein for the period (the  "Forbearance  Period")  commencing  on the
          date  hereof  and  continuing  for so long as the  -------------------
          following  conditions are m