Form
      of
      Notes issued in 2004 and 2005 Private Placement Offerings


**FORM
        OF**
 **PROMISSORY
        NOTE ISSUED WITH RESPECT TO**
 **2004
        AND 2005 PRIVATE PLACEMENT OFFERINGS**
 
 
 **$_____________**
              ,
                  2004/5**Date**
  ****
 
 
 FOR
        VALUE
        RECEIVED, Tankless Systems Worldwide, Inc., a Nevada corporation ("Borrower"),
        promises to pay ________________________, or his assignee, the principal
        sum of **___________________________** Dollars
        ($_____________), plus annual interest at the rate of ten percent (10%).
        Interest on this Promissory Note shall be due and payable on April __, 2004,
        July __, 2004, October __, 2004 and January __, 2005. This Promissory Note
        shall
        mature and the principal amount hereof shall be due and payable on  [1
        yr
        from date of issue]  .
        Said
        principal and interest shall be payable at 14500 N. Northsight Boulevard,
        Suite
        101, Scottsdale, Arizona 85260, or at such other place as the payee, or legal
        holder or owner (hereinafter referred to as the "Holder") of this Promissory
        Note may from time to time designate in writing.
 
 As
        additional interest to Holder, upon payment of the principal sum hereof the
        Borrower shall issue to the Holder restricted shares of Borrower's Common
        Stock
        equal to one-half share for each $1.00 advanced by Holder pursuant to this
        Promissory Note.
 
 The
        principal of this Promissory Note may be prepaid in whole or in part at any
        time
        without penalty. Any partial prepayment shall be applied against the accrued
        interest outstanding, if any, and shall not extend or postpone the due date
        of
        the principal and interest described above, unless the Holder of this Promissory
        Note shall otherwise agree in writing.
 
 If
        the
        Maker shall, prior to the maturity date of this Promissory Note, as set forth
        in
        the first paragraph hereof, issue shares of its common stock for cash in
        an
        amount in excess of $500,000 in the aggregate (“Equity Financing”), then in such
        event, the maturity date of this Promissory Note shall automatically accelerate,
        without the necessity of any action on the part of the Holder, and the principal
        amount hereof, together with all accrued but unpaid interest hereon, shall
        be
        immediately due and payable out of the proceeds of such Equity Financing.
 
 It
        is
        agreed that if this Promissory Note is not paid when due as described herein,
        the Holder hereof shall be issued, on or before twenty-one (21) days following
        its maturity date, restricted shares of Borrower's Common Stock at the value
        of
        $1.00 per share as full payment of the outstanding principal and accrued
        interest on this Promissory Note (i.e., 25,000 shares for $25,000 of principal).
        [Note: Beginning with Bridge Loans made after August 15, 2004, this paragraph
        was not included in the Promissory Notes issued.]
 
  
  The
        maker
        and endorsers hereof severally waive presentment for payment, protest, notice
        of
        non-payment and of protest, and agree to any extension of time of payment
        and
        partial payments before, at or after maturity, and if this Promissory Note
        or
        interest thereon is not paid when due, or suit is brought, agree to pay all
        reasonable costs of collection, including a reasonable amount of money for
        attorney's fees.
 
 This
        Promissory Note shall be construed and interpreted in accordance with the
        laws
        of the State of Arizona.
 
 IN
        WITNESS WHEREOF, Tankless Systems Worldwide, Inc. has caused this Promissory
        Note to be executed on ______________, 2004/5 by its duly authorized President.
 
 
 
 
 Tankless
                Systems
                Worldwide, Inc.By:Thomas
                Kreitzer, Chief Executive Officer