Exhibit 10.48 Balmore SA Convert Note 2-13-06


    Exhibit
      10.48

    


    THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO DALRADA FINANCIAL CORP. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    


    Principal
      $1,380,960                                                 Issue
      Date: February 13, 2006

    


    SECURED
      CONVERTIBLE NOTE

    


    FOR
      VALUE
      RECEIVED, DALRADA FINANCIAL CORP., a Delaware corporation (hereinafter called
      "Borrower"), hereby promises to pay to BALMORE,
      S.A.,P.O. Box 146, Road Town Tortola, BVI, (the "Holder") or order, without
      demand, the sum of One Million Three Hundred Eighty Thousand Nine Hundred Sixty
      Dollars ($1,380,960), with unpaid accrued interest, on February 13, 2008 (the
      "Maturity Date"), or sooner as described herein.

    


    This
      Note
      has been entered into pursuant to the terms of a subscription agreement between
      the Borrower and the Holder, dated of even date herewith (the “Subscription
      Agreement”), and shall be governed by the terms of such Subscription Agreement.
      Unless otherwise separately defined herein, all capitalized terms used in this
      Note shall have the same meaning as is set forth in the Subscription Agreement.
      The following terms shall apply to this Note:

    


    ARTICLE
      I

    


    GENERAL
      PROVISIONS

    


    1.1 Interest
      Rate.
      Subject
      to Section 5.6 hereof, interest payable on this Note shall accrue from the
      Issue
      Date at a rate per annum (the "Interest Rate") equal to fifteen percent (15%)
      per year on the outstanding principal balance, compounded annually. Interest
      on
      the Principal Amount shall first be payable on April 1, 2006 and on the first
      day of each month thereafter and on the same day of the month each three months
      thereafter and on the Maturity Date, whether by acceleration or
      otherwise.

    


    1.2 Conversion
      Privileges.
      The
      Conversion Privileges set forth in Article II shall remain in full force and
      effect immediately from and after the occurrence of an Event of Default as
      described in Article III and the Subscription Agreement and until the Note
      is
      paid in full. The Note and any outstanding sums due in connection herewith
      shall
      be payable in full on the Maturity Date, unless previously converted into Common
      Stock in accordance with Article II hereof, provided, that if an Event of
      Default has occurred, the Holder may extend the Maturity Date for up to a time
      period equal to the duration of the Event of Default.

    


    1.3 Default
      Interest Rate.
      A
      default interest rate of eighteen percent (18%) per annum shall apply to amounts
      owed hereunder which are not paid on their respective due dates.

     

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    ARTICLE
      II

    


    CONVERSION
      RIGHTS

    


    The
      Holder shall have the right to convert the outstanding principal and interest
      due under this Note into Shares of the Borrower's Common Stock, no par value
      per
      share (“Common Stock”) as set forth below.

    


    2.1. Conversion
      into the Borrower's Common Stock.

    


    (a) Subject
      to the terms of this Note, the Holder shall have the right from and after the
      occurrence of an Event of Default, whether or not such Event of Default is
      cured, and then at any time until this Note is fully paid, to convert any
      outstanding and unpaid principal portion of this Note, and accrued interest,
      at
      the election of the Holder (the date of giving of such notice of conversion
      being a "Conversion Date") into fully paid and nonassessable shares of Common
      Stock as such stock exists on the date of issuance of this Note, or any shares
      of capital stock of Borrower into which such Common Stock shall hereafter be
      changed or reclassified, at the conversion price as defined in Section 2.1(b)
      hereof (the "Conversion Price"), determined as provided herein. Upon delivery
      to
      the Borrower of a completed Notice of Conversion, a form of which is annexed
      hereto, Borrower shall issue and deliver to the Holder within three (3) business
      days from the Conversion Date (such third day being the “Delivery Date”) that
      number of shares of Common Stock for the portion of the Note converted in
      accordance with the foregoing. At the election of the Holder, the Borrower
      will
      deliver accrued but unpaid interest on the Note through the Conversion Date
      directly to the Holder on or before the Delivery Date. The number of shares
      of
      Common Stock to be issued upon each conversion of this Note shall be determined
      by dividing that portion of the principal of the Note and interest to be
      converted, by the Conversion Price.

    


    (b)  Subject
      to adjustment as provided in Section 2.1(c) hereof and the Subscription
      Agreement, the Conversion Price per share shall be seventy-five percent (75%)
      of
      the average of the five lowest volume weighted average prices of the Common
      Stock as reported by Bloomberg L.P. for the Principal Market for the twenty
      trading days preceding a Conversion Date.

    


    (c) 
      The
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion determined pursuant to Section 2.1(a), shall be subject to
      adjustment from time to time upon the happening of certain events while this
      conversion right remains outstanding, as follows:

    


    A. Merger,
      Sale of Assets, etc. If the Borrower at any time shall consolidate with or
      merge
      into or sell or convey all or substantially all its assets to any other
      corporation, this Note, as to the unpaid principal portion thereof and accrued
      interest thereon, shall thereafter be deemed to evidence the right to purchase
      such number and kind of shares or other securities and property as would have
      been issuable or distributable on account of such consolidation, merger, sale
      or
      conveyance, upon or with respect to the securities subject to the conversion
      or
      purchase right immediately prior to such consolidation, merger, sale or
      conveyance as if the Holder had converted this Note immediately prior to such
      event. The foregoing provision shall similarly apply to successive transactions
      of a similar nature by any such successor or purchaser. Without limiting the
      generality of the foregoing, the anti-dilution provisions of this Section shall
      apply to such securities of such successor or purchaser after any such
      consolidation, merger, sale or conveyance.

    


    B. Reclassification,
      etc. If the Borrower at any time shall, by reclassification or otherwise, change
      the Common Stock into the same or a different number of securities of any class
      or classes that may be issued or outstanding, this Note, as to the unpaid
      principal portion thereof and accrued interest thereon, shall thereafter be
      deemed to evidence the right to purchase an adjusted number of such securities
      and kind of securities as would have been issuable as the result of such change
      with respect to the Common Stock immediately prior to such reclassification
      or
      other change as if the Holder had converted this Note immediately prior to
      such
      event.

     

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    C. Stock
      Splits, Combinations and Dividends. If the shares of Common Stock are subdivided
      or combined into a greater or smaller number of shares of Common Stock, or
      if a
      dividend is paid on the Common Stock in shares of Common Stock, the Conversion
      Price shall be proportionately reduced in case of subdivision of shares or
      stock
      dividend or proportionately increased in the case of combination of shares,
      in
      each such case by the ratio which the total number of shares of Common Stock
      outstanding immediately before such event bears to the total number of shares
      of
      Common Stock outstanding immediately after to such event..

     

    D. Share
      Issuance. So long as this Note is outstanding, if the Borrower shall issue
      or
      agree to issue any shares of Common Stock except for the Excepted Issuances
      for
      a consideration less than the Conversion Price in effect at the time of such
      issue, then, and thereafter successively upon each such issue, the Conversion
      Price shall be reduced to such other lower issue price. For purposes of this
      adjustment, the issuance of any security carrying the right to convert such
      security into shares of Common Stock or of any warrant, right or option to
      purchase Common Stock shall result in an adjustment to the Conversion Price
      upon
      the issuance of the above-described security and again upon the issuance of
      shares of Common Stock upon exercise of such conversion or purchase rights
      if
      such issuance is at a price lower than the then applicable Conversion Price.
      The
      reduction of the Conversion Price described in this paragraph is in addition
      to
      other rights of the Holder described in this Note and the Subscription
      Agreement.

    


    (d) Whenever
      the Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower
      shall promptly mail to the Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

    


    (e) During
      the period the conversion right exists, Borrower will reserve from its
      authorized and unissued Common Stock required to be reserved as set forth in
      the
      Subscription Agreement. Borrower represents that upon issuance, such shares
      will
      be duly and validly issued, fully paid and non-assessable. Borrower agrees
      that
      its issuance of this Note shall constitute full authority to its officers,
      agents, and transfer agents who are charged with the duty of executing and
      issuing stock certificates to execute and issue the necessary certificates
      for
      shares of Common Stock upon the conversion of this Note.

    


    2.2 Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part as described in Section
      2.1(a) hereof and the Subscription Agreement. Upon partial conversion of this
      Note, a new Note containing the same date and provisions of this Note shall,
      at
      the request of the Holder, be issued by the Borrower to the Holder for the
      principal balance of this Note and interest which shall not have been converted
      or paid.

    


    2.3 Maximum
      Conversion.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Note in connection with that number of shares of Common Stock which would be
      in
      excess of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock
      issuable in connection with the unconverted portion of the Note, and (iii)
      the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Holder and
      its affiliates of more than 9.99% of the outstanding shares of Common Stock
      of
      the Borrower on such Conversion Date. For the purposes of this Section 2.3,
      beneficial ownership shall be determined in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
      Subject to the foregoing, the Holder shall not be limited to aggregate
      conversions of only 9.99% and aggregate conversion by the Holder may exceed
      9.99%. The Holder shall have the authority and obligation to determine whether
      the restriction contained in this Section 2.3 will limit any conversion
      hereunder and to the extent that the Holder determines that the limitation
      contained in this Section applies, the determination of which portion of the
      Notes are convertible shall be the responsibility and obligation of the Holder.
      The Holder may waive the conversion limitation described in this Section 2.3,
      in
      whole or in part, upon and effective after 61 days prior written notice to
      the
      Borrower. The Holder may decide whether to convert a Note or exercise this
      Warrant to achieve an actual 9.99% ownership position.

     

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    ARTICLE
      III

    


    EVENT
      OF DEFAULT

    


    The
      occurrence of any of the following events of default ("Event of Default") shall,
      at the option of the Holder hereof, make all sums of principal and interest
      (to
      the extent accrued) then remaining unpaid hereon and all other amounts payable
      hereunder immediately due and payable, upon demand, without presentment, or
      grace period, all of which hereby are expressly waived, except as set forth
      below:

    


    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of principal, interest or other sum due
      under this Note when due and such failure continues for a period of ten (10)
      business days after the due date.

    


    3.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of the
      Subscription Agreement or this Note in any material respect and such breach,
      if
      subject to cure, continues for a period of ten (10) business days after written
      notice to the Borrower from the Holder.

    


    3.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Subscription Agreement, or in any agreement, statement or certificate given
      in
      writing pursuant hereto or in connection therewith shall be false or misleading
      in any material respect as of the date made and the Closing Date.

    


    3.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business; or such a receiver or trustee shall otherwise
      be appointed without the consent of the Borrower and is not dismissed within
      forty-five (45) days of appointment.

    


    3.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      Borrower or any of its property or other assets for more than $50,000, and
      shall
      remain unvacated, unbonded or unstayed for a period of forty-five (45)
      days.

    


    3.6 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower and if instituted against Borrower are
      not
      dismissed within forty-five (45) days of initiation.

     

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    3.7 Delisting.
      Delisting of the Common Stock from any Principal Market without relisting on
      another Principal Market within five days of such delisting; failure to comply
      with the requirements for continued listing on any Principal Market for a period
      of fifteen consecutive trading days; or notification from any Principal Market
      that the Borrower is not in compliance with the conditions for such continued
      listing on such Principal Market and Borrower’s failure to be in compliance
      within five days of such notice.

    


    3.8 Non-Payment.
      A
      payment default by the Borrower under any one or more obligations in an
      aggregate monetary amount in excess of $50,000 for more than twenty days after
      the due date, unless the Borrower is contesting the validity of such obligation
      in good faith.

    


    3.9 Stop
      Trade.
      An SEC
      or judicial stop trade order or Principal Market trading suspension that lasts
      for five or more consecutive trading days.

    


    3.10 Failure
      to Deliver Common Stock or Replacement Note.
      Borrower's failure to timely deliver Common Stock to the Holder pursuant to
      and
      in the form required by this Note and Sections 7 and 11 of the Subscription
      Agreement, or, if required, a replacement Note.

    


    3.11 Non-Registration
      Event.
      The
      occurrence of a Non-Registration Event as described in Section 11.4 of the
      Subscription Agreement.

    


    3.12 Reservation
      Default.
      Failure
      by the Borrower to have reserved for issuance upon conversion of the Note the
      amount of Common stock as set forth in this Note and the Subscription
      Agreement.

    


    3.13 Approval
      Default.
      The
      occurrence of an Approval Default as described in Section 9(s) of the
      Subscription Agreement.

    


    3.14 Cross
      Default.
      A
      default by the Borrower of a material term, covenant, warranty or undertaking
      of
      any other agreement to which the Borrower and Holder are parties, or the
      occurrence of a material event of default under any such other agreement which
      is not cured after any required notice and/or cure period.

    


    ARTICLE
      IV

    


    SECURITY
      INTEREST

    


    4. Security
      Interest/Waiver of Automatic Stay.
      This
      Note is secured by a security interest granted to the Collateral Agent for
      the
      benefit of the Holder pursuant to a Security Agreement, as delivered by Borrower
      to Holder. The Borrower acknowledges and agrees that should a proceeding under
      any bankruptcy or insolvency law be commenced by or against the Borrower, or
      if
      any of the Collateral (as defined in the Security Agreement) should become
      the
      subject of any bankruptcy or insolvency proceeding, then the Holder should
      be
      entitled to, among other relief to which the Holder may be entitled under the
      Transaction Documents and any other agreement to which the Borrower and Holder
      are parties (collectively, "Loan Documents") and/or applicable law, an order
      from the court granting immediate relief from the automatic stay pursuant to
      11
      U.S.C. Section 362 to permit the Holder to exercise all of its rights and
      remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER
      11
      U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
      OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
      INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER
      TO
      ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
      APPLICABLE LAW. The Borrower hereby consents to any motion for relief from
      stay
      that may be filed by the Holder in any bankruptcy or insolvency proceeding
      initiated by or against the Borrower and, further, agrees not to file any
      opposition to any motion for relief from stay filed by the Holder. The Borrower
      represents, acknowledges and agrees that this provision is a specific and
      material aspect of the Loan Documents, and that the Holder would not agree
      to
      the terms of the Loan Documents if this waiver were not a part of this Note.
      The
      Borrower further represents, acknowledges and agrees that this waiver is
      knowingly, intelligently and voluntarily made, that neither the Holder nor
      any
      person acting on behalf of the Holder has made any representations to induce
      this waiver, that the Borrower has been represented (or has had the opportunity
      to he represented) in the signing of this Note and the Loan Documents and in
      the
      making of this waiver by independent legal counsel selected by the Borrower
      and
      that the Borrower has discussed this waiver with counsel.

     

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    ARTICLE
      V

    


    MISCELLANEOUS

    


    5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    


    5.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Borrower to: Dalrada
      Financial Corp., 9449 Balboa Avenue, Suite 211, San Diego, CA 92123, Attn:
      Brian
      Bonar, CEO,
      telecopier: (858) 613-1311, with a copy by telecopier only to: Owen M.
      Naccarato, Esq., Naccarato & Associates, 18301 Von Karman Avenue, Suite 430,
      Irvine, CA 92612, telecopier: (949) 851-9262, and (ii) if to the Holder, to
      the
      name, address and telecopy number set forth on the front page of this Note,
      with
      a copy by telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue,
      Suite 1601, New York, New York 10176, telecopier number: (212)
      697-3575.

    


    5.3 Amendment
      Provision.
      The
      term "Note" and all reference thereto, as used throughout this instrument,
      shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

     

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    5.4 Assignability.
      The
      obligations of Borrower under this Note are not assignable without the consent
      of the Holder. This Note shall be binding upon the Borrower and its successors
      and assigns, and shall inure to the benefit of the Holder and the permitted
      assigns of the Note.

    


    5.5 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York. Any action brought by either party against the other concerning
      the
      transactions contemplated by this Agreement shall be brought only in the civil
      or state courts of New York or in the federal courts located in the State and
      county of New York. Each
      of
      the Borrower, Holder and any signator hereto in his personal capacity hereby
      waives, and agrees not to assert in any such suit, action or proceeding, any
      claim that it is not personally subject to the jurisdiction in New York of
      such
      court, that the suit, action or proceeding is brought in an inconvenient forum
      or that the venue of the suit, action or proceeding is improper.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs.

    


    5.6 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

    


    5.7 Shareholder
      Status.
      The
      Holder shall not have rights as a shareholder of the Borrower with respect
      to
      unconverted portions of this Note. However, the Holder will have all the rights
      of a shareholder of the Borrower with respect to the shares of Common Stock
      to
      be received by Holder after delivery by the Holder of a Conversion Notice to
      the
      Borrower.

    


    


    


    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

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    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the 13th day of February, 2006.

    


    DALRADA
      FINANCIAL CORP.

    


    /s/
      Brian
      Bonar

    


    By:________________________________

    Name:
      

    Title:
      

     

    WITNESS:

    


    


    


    ______________________________________

     

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    NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Registered Holder in order to convert the Note)

    


    


    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by Dalrada Financial Corp. on February
      13, 2006 into Shares of Common Stock of Dalrada Financial Corp. (the "Borrower")
      according to the conditions set forth in such Note, as of the date written
      below.

    


    


    


    Date
      of
      Conversion:____________________________________________________________________

    


    


    Conversion
      Price:______________________________________________________________________

    


    


    Shares
      To
      Be
      Delivered:_________________________________________________________________

    


    


    Signature:____________________________________________________________________________

    


    


    Print
      Name:__________________________________________________________________________

    


    


    Address:_____________________________________________________________________________

    


    ____________________________________________________________________________

    
 

     

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