**AGREEMENT
TO CONVERT LOAN TO STOCK**
 
 This
agreement ("Agreement") dated effective as of September 28, 2004 is between
Paulson Investment Company, Inc. ("Paulson") and microHelix, Inc.
("Company").
 
 **RECITALS**
 
 A.  Company
borrowed funds in the original principal amount of $200,000 from Paulson under a
Cash Advance Agreement dated March 28, 2003 (the "Loan").
 
 B.  The
outstanding balance payable to Paulson under the Loan on September 28, 2004 is
$113,941.55, including all accrued but unpaid interest (the "Unpaid
Balance").
 
 C.  Paulson
and Company wish to convert the Unpaid Balance into shares of the Company's
Common Stock at a conversion rate of $0.41 per share.
 
 **AGREEMENT**
 
 1.  Paulson
and Company agree to convert the Unpaid Balance under the Loan into 277,907
shares of Company's Common Stock (the "Shares") at a conversion rate of $0.41
per share on September 28, 2004. All Shares are validly issued, fully paid and
nonassessable. Paulson agrees that upon issuance of the Shares the Loan is paid
in full.
 
 2.  Paulson
is an "accredited investor" within the meaning of that term as defined in Rule
501(a) promulgated under the Securities Act of 1933, as amended (the "Act").
Paulson represents that the Shares are being acquired for investment for
Paulson's own account, not as a nominee or agent, and not with a view to the
resale or distribution of all or any part of the Shares; Paulson has no present
intention of selling, granting any participation in or otherwise distributing
all or any part of the Shares; and Paulson does not have any contract,
undertaking, agreement or arrangement with any person or entity to sell,
transfer or grant participations to such person or to any third party with
respect to any of the Shares.
 
 4.  Paulson
understands that the Shares have not been registered under the Act on the ground
that the issuance is exempt from registration under the Act pursuant to Section
4(2) of the Act, and that the Company's reliance on such exemption is predicated
on Paulson' representations set forth in this Agreement.
 
 5.  Paulson
has received all the information Paulson considers necessary or appropriate for
deciding whether to purchase the Shares. Paulson has had an opportunity to ask
questions and receive answers from Company regarding the terms and conditions of
the offering of the Shares and the business, properties, prospects, risks and
investing, and financial condition of Company and to obtain additional
information (to the extent Company possesses such information or could acquire
it without unreasonable effort or expense) necessary to verify the accuracy of
any information furnished to Paulson or to which Paulson had
access.
 
 
 
 6.  PAULSON
UNDERSTANDS THAT INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK,
SHOULD BE REGARDED AS HIGHLY SPECULATIVE, AND SHOULD BE UNDERTAKEN ONLY BY
PERSONS WHO CAN REASONABLY AFFORD A LOSS OF THEIR ENTIRE INVESTMENT.
 
 7.  Paulson
is experienced in evaluating and investing in private placement transactions of
shares of companies similar to Company and acknowledges that Paulson is able to
fend for itself, and has such knowledge and experience in financial and business
matters that Paulson is capable of evaluating the merits and risks of the
investment in the Shares. Paulson's financial situation is such that Paulson can
afford to bear the economic risk of holding the Shares for an indefinite period
of time, and Paulson can afford to suffer the complete loss of Paulson's
investment in the Shares.
 
 8.  Paulson
understands that the Shares may not be sold, transferred or otherwise disposed
of without registration under the Act or an exemption from the Act, and that in
the absence of an effective registration statement covering the Shares or an
available exemption from registration under the Act, the Shares must be held
indefinitely. In particular, Paulson is aware that the Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that rule are met, and that such conditions are not currently met.
 
 9.  This
Agreement will be governed by and construed in accordance with the laws of the
State of Oregon, excluding conflicts of laws principles thereunder.
 
 10.  This
Agreement may be executed in counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument. Facsimile transmission of any signed original document, and the retransmission
of any facsimile transmission, will be the same as delivery of any original
document. At the request of any party, the other party will confirm facsimile
transmission signatures by signing an original document.
  PAULSON INVESTMENT COMPANY, INC.:
    MICROHELIX, INC.:By/s/
      Chester L. F. Paulson
      
      ItsChairman
    By/s/
      Tyram H. Pettit
      Tyram H. Pettit
      President