FORM OF CONVERTIBLE NOTE


      THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
      REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED (THE
      "SECURITIES  ACT") OR APPLICABLE  STATE  SECURITIES  LAWS,  AND,
      ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT TO AN
      EFFECTIVE  REGISTRATION  STATEMENT FOR SUCH SECURITIES UNDER THE
      SECURITIES ACT AND APPLICABLE  STATE SECURITIES LAWS OR PURSUANT
      TO AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO THE COMPANY
      THAT  THERE IS AN  AVAILABLE  EXEMPTION  FROM  THE  REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT.

Subscription Amount: $XXX.XX                                  Irvine, California

                                                Subscription Date: _______, 2005

      FOR VALUE RECEIVED, NUWAY MEDICAL, INC., a corporation organized under the
laws of the  state of  Delaware  ("Borrower"),  promises  to pay to the order of
"Investor",  as  that  term is  defined  below  (hereafter,  together  with  any
subsequent  holder  hereof,  called  "Holder"),  at its  office  at  "Investor's
Address",  as that term is defined  below,  or at such other place as Holder may
direct, the "Subscription Amount", noted above (the "Loan"),  payable on January
31, 2007, or at an earlier date as provided herein (the "Maturity  Date").  This
Convertible Note is duly authorized issue of the Borrower (the "Issuer"), issued
on  the  Subscription  Date  (the  "Issuance  Date"),   and  designated  as  its
Convertible Note due January 31, 2007 (the "Note").

      The Borrower agrees to pay interest on the unpaid  principal amount of the
Loan from time to time  outstanding  hereunder at the following  rates per year,
compounded annually: (i) before maturity of the Loan, whether by acceleration or
otherwise,  at the rate per annum  equal to ten  percent  (10%);  (ii) after the
maturity of the Loan,  whether by  acceleration  or otherwise,  until paid, at a
rate per annum equal to fifteen percent (15%).

      Payments of both  principal  and  interest  are to be made in  immediately
available  funds in lawful money of the United  States of America,  or in Common
Stock of the Borrower as set forth below. In the event that the Borrower chooses
to pay the Note prior to the Maturity  Date,  the Borrower  shall give notice to
the Holder of such  election,  and the Holder shall have 10 days  thereafter  to
elect, if the Holder so chooses,  to convert the Note into Common Stock pursuant
to the terms below.

      Accrual of interest shall commence as of the Issuance Date. Interest shall
be payable by the Issuer,  at the Issuer's option,  in cash or in that number of
shares of Common stock of the Issuer (the "Common  Stock") (at a price per share
calculated pursuant to the conversion formula contained below), upon the earlier
to occur of (i) upon conversion of this Note pursuant to the conversion features
set forth below,  or (ii) upon an Event of Default as defined  below,  and if an
Event of Default occurs interest due hereunder shall be payable in cash or stock
as set forth  herein at the option of the  Holder.  Unless  otherwise  agreed in
writing by both  parties  hereto,  the  interest so payable  will be paid to the
person in whose name this Note (or one or more predecessor  Notes) is registered
on the records of the Issuer  regarding  registration  and transfers of the Note
(the "Note  Register"),  provided,  however,  that the Issuer's  obligation to a
transferee of this Note arises only if such transfer,  sale or other disposition
is made in accordance  with the terms and conditions  contained in the Agreement
and this Note.

<PAGE>

   The Note is subject to the following additional provisions:

      1. The Issuer shall be entitled to withhold from all payments of principal
and/or  interest  of this Note any amounts  required  to be  withheld  under the
applicable  provisions of the U.S. Internal Revenue Code of 1986, as amended, or
other applicable laws at the time of such payments.

      2. This Note has been issued subject to investment  representations of the
original  Holder hereof and may be  transferred  or exchanged only in compliance
with the Securities Act and applicable  state  securities laws and in compliance
with the  restrictions on transfer  provided in the Agreement.  Prior to the due
presentment  for such  transfer  of this  Note,  the Issuer and any agent of the
Issuer may treat the person in whose  name this Note is duly  registered  on the
Issuer's Note register as the owner hereof for the purpose of receiving  payment
as herein provided and all other purposes,  whether or not this Note is overdue,
and  neither  the Issuer nor any such agent  shall be  affected by notice to the
contrary.  The  transferee  shall be bound,  as the original  Holder by the same
representations and terms described herein and under the Agreement.

      3. The Holder or Issuer  may, at its  option,  subject to the  "Conversion
Contingencies"  (set forth below),  at any time convert the principal  amount of
this Note or any portion  thereof,  and any  accrued  interest  thereon,  into a
number  shares  of fully  paid and non  assessable  Common  Stock of the  Issuer
pursuant to the following  formula:  the  Subscription  Amount divided by $0.025
("Conversion  Shares").  The  right to  convert  the Note  may be  exercised  by
telecopying  an executed  and  completed  notice of  conversion  (the "Notice of
Conversion")  to the Holder or Issuer.  Each  business  day on which a Notice of
Conversion  is  telecopied in  accordance  with the  provisions  hereof shall be
deemed  a  "Conversion   Date".   The  Issuer  will  transmit  the  certificates
representing  Conversion  Shares  issuable  upon  such  conversion  of the  Note
(together with the  certificates  representing the Note not so converted) to the
Holder via express courier,  by electronic transfer (if applicable) or otherwise
within ten Business Days after the  Conversion  Date,  provided,  the Issuer has
received the original  Note being so converted  from the Holder.  If the Company
has not received the original Note being  converted  within three  Business Days
after   Conversion  Date,  then  the  Issuer  shall  transmit  the  certificates
representing  the Conversion  Shares  issuable upon such  conversion of the Note
(together with the  certificates  representing the Note not so converted) to the
Holder via express courier,  by electronic transfer (if applicable) or otherwise
within five business days after receipt of the original Notice of Conversion and
original Note being converted.  The Conversion of this note may require that the
Issuer amend its charter to increase the number of common shares  authorized and
therefore, the conversion may not take place prior to the Issuer's completion of
that  process.  Any  delay  due to such  circumstance  shall  not be an event of
default  under this Note.  Issuer  shall  promptly  take  action to affect  such
amendments to its charter.

      4. Conversion  Contingencies:  Notwithstanding anything else herein to the
contrary,  the Holder shall not have the right,  and the Company  shall not have
the  obligation,  to convert all or any  portion of this Note,  unless and until
each of the following events has first occurred:  (i) the Company's stockholders
have approved an increase in the number of shares of common stock  authorized by
the Company's Certificate of Incorporation in an amount not less than the amount
required  to permit all  warrants  issued in this  series to be  converted  into
shares of the  Company's  Common  Stock as provided  herein,  at a validly  held
meeting of stockholders at which a quorum is present and acting throughout;  and
(ii) the  Company has filed with the  Secretary  of State of State of Delaware a
Certificate of Amendment to the Company's  Certificate of Incorporation to amend
its  Certificate  of  Incorporation  to increase  the number of shares of common
stock authorized by the Company's Certificate of Incorporation.

                                      -2-
<PAGE>

      5. The principal  amount of this Note, and any accrued  interest  thereon,
shall be  reduced  as per that  principal  amount  indicated  on the  Notice  of
Conversion upon the proper receipt by the Holder of such  Conversion  Shares due
upon such Notice of Conversion.

      6. The number of Conversion Shares shall be adjusted as follows:

            a. If the Issuer shall at any time subdivide its outstanding  shares
      of Common  Stock  into a greater  number  of shares of Common  Stock,  the
      number  of  Conversion   Shares  in  effect   immediately  prior  to  such
      subdivision shall be proportionately  increased,  and conversely,  in case
      the  outstanding  shares of Common Stock shall be combined  into a smaller
      number  of  shares  of  Common  Stock,  the  Conversion  Price  in  effect
      immediately prior to such combination shall be proportionately reduced.

      7. No provision of this Note shall alter or impair the  obligation  of the
Issuer,  which is  absolute  and  unconditional,  upon an Event of  Default  (as
defined below), to pay the principal of, and interest on this Note at the place,
time, and rate, and in the coin or currency herein prescribed.

      8. Events Of Default.  Each of the following occurrences is hereby defined
as an "Event of Default":

            a.  Nonpayment.  The  Borrower  shall  fail to make any  payment  of
      principal,  interest,  or other amounts payable hereunder when and as due;
      or

            b.  Dissolutions,  etc. The Borrower or any subsidiary shall fail to
      comply with any  provision  concerning  its  existence or any  prohibition
      against dissolution, liquidation, merger, consolidation or sale of assets;
      or

            c.  Noncompliance  with this  Agreement.  The Borrower shall fail to
      comply in any material  respect with any provision  hereof,  which failure
      does not otherwise  constitute an Event of Default, and such failure shall
      continue for ten (10) days after the occurrence of such failure; or

            d.   Bankruptcy.   Any   bankruptcy,   insolvency,   reorganization,
      arrangement,   readjustment,    liquidation,   dissolution,   or   similar
      proceeding,  domestic or foreign, is instituted by or against the Borrower
      or any of its  subsidiaries,  or the  Borrower or any of its  subsidiaries
      shall take any step toward, or to authorize, such a proceeding; or

            e. Insolvency.  The Borrower shall make a general assignment for the
      benefit of its  creditors,  shall  enter into any  composition  or similar
      agreement,  or  shall  suspend  the  transaction  of all or a  substantial
      portion of its usual business.

      9. If one or more "Events of Default"  shall occur,  then,  or at any time
thereafter,  and in each and every such case, unless such Event of Default shall
have been waived in writing by the Holder  (which  waiver shall not be deemed to
be a waiver of any  subsequent  default)  or cured as  provided  herein,  at the
option of the Holder, and in the Holder's sole discretion,  the Holder may elect
to consider this Note (and all interest  through such date)  immediately due and
payable.  In order to so elect,  the Holder must deliver  written  notice of the

                                      -3-
<PAGE>

election and the amount due to the Borrower via certified  mail,  return receipt
requested,  at the Borrower's  address as set forth herein (or any other address
provided to the Holder),  and  thereafter  the Borrower  shall have ten business
days upon  receipt to cure the Event of  Default,  pay the Note,  or convert the
amount due on the Note pursuant to the conversion formula set forth above. It is
agreed  that in the event of such  action,  such  Holder  shall be  entitled  to
receive all reasonable  fees,  costs and expenses  incurred,  including  without
limitation  such  reasonable  fees  and  expenses  of  attorneys.   The  parties
acknowledge  that a change in control of the Issuer shall not be deemed to be an
Event of Default as set forth herein.

      10. In case any  provision  of this  Note is held by a court of  competent
jurisdiction  to be excessive in scope or  otherwise  invalid or  unenforceable,
such provision shall be adjusted rather than voided, if possible,  so that it is
enforceable to the maximum extent possible,  and the validity and enforceability
of the  remaining  provisions  of this Note will not in any way be  affected  or
impaired thereby.

      11. This Note does not entitle the Holder  hereof to any voting  rights or
other rights as a stockholder of the Issuer prior to the conversion  into Common
Stock thereof, except as provided by applicable law. If, however, at the time of
the surrender of this Note and conversion the Holder hereof shall be entitled to
convert this Note, the Conversion  Shares so issued shall be and be deemed to be
issued to such  holder  as the  record  owner of such  shares as of the close of
business on the Conversion Date.

      IN WITNESS WHEREOF, the Issuer has caused this Convertible Term Note to be
duly executed by an officer thereunto duly authorized.

NUWAY MEDICAL, INC.


By
  ---------------------------------
Name: Dennis Calvert, its President


ACKNOWLEDGED AND ACCEPTED:


      Investor Name (print):
                            --------------------------


      Investor Signature:
                         -----------------------------

      Address:
                         -----------------------------

                         -----------------------------

                                      -4-
<PAGE>

                              NOTICE OF CONVERSION

   (To be Executed by the Registered Holder in order to Convert the Note)


   The  undersigned  hereby  irrevocably  elects to convert  ___________  of the
principal  amount of the above Note into  ___________  Shares of Common Stock of
NuWay Medical,  Inc.  according to the conditions hereof, as of the date written
below.


Date of Conversion:
                   -----------------------


Signature:
          --------------------------------

Name:
     -------------------------------------

Address:
        ----------------------------------
        ----------------------------------


Date of Conversion:
                   -----------------------


Signature:
          --------------------------------

Name:
     -------------------------------------

Address:
        ----------------------------------
        ----------------------------------


                                      -1-