Document:

BINDING LETTER OF AGREEMENT - MARCH 1, 2005

     EAPI ENTERTAINMENT, INC. (Name to be changed to Organic Recycling
     Technologies Inc.)

     AND

     MILVERTON CAPITAL CORPORATION

Milverton  Capital  Corporation  (the  "Consultant")  as a consultant to Organic
Recycling  Technologies  Inc. (name to be changed from EAPI Entertainment, Inc.)
(the  "Company")  agree  as  follows:

1)   The  Consultant  and  the  Company  agree  that based upon the work need to
     be  completed  within  the  Company,  the  Company  agrees  to  trigger the
     consultant  a  fee of CDN $835,000. This fee represents all work to date up
     until March 31, 2005.
2)   The  Company  and  the  consultants  agree  that  a new binding contract is
     to  be  prepared  to  effective  April  1,  2005 going forward. This master
     consulting contract will define all services.
3)   The  various  consultants  will  continue  to  provide  the administration,
     records  maintenance and support of Organic Recycling Technologies Inc. and
     its  various  subsidiaries  for  review  and  approval  by  the  management
     executive committee and the Board of Directors;
4)   The  various  consultants  will  continue  to  provide  accounting work for
     the  company  and ensure completion of the annual and quarterly filings for
     review  and  by  the  management  executive  committee  and  the  Board  of
     Directors;
5)   The  various  consultants  will  continue  to  provide  the  individual and
     team support and assistance with marketing and public relations for Organic
     Recycling  Technologies  Inc.  for  review  and  approval by the management
     executive committee and the Board of Directors;
6)   The various consultants will continue to supply their talents and extensive
     network  of  recycling,  waste  management,  venture capitalist and finance
     contacts  and the marketing and public relations network developed over the
     past  years  to  Organic  Recycling  Technologies  Inc.;

REQUIREMENTS:

     A)   Master  Consulting  contract  with Organic Recycling Technologies Inc.
          (Name  to  be  changed  from  EAPI  Entertainment,  Inc.);
          (i)  Scope of work required for each consultant;

                                                                               1
<PAGE>
          (ii) Contract including a monthly fee;
         (iii) Contract term recommended as 5 year contract;
          (iv) Confidentiality and non-disclosure terms, that all information of
               the  Company  is  confidential  and  can not be disclosed without
               corporate  authorization;

IN WITNESS WEREOF the parties have agreed to the above letter of understanding
on the day and year first above written.

Agreed to by Milverton Capital Corporation:

/s/ Rene  Branconnier

_____________________________________
Authorized signature

March 1, 2005

_____________________________________
Date

Agreed to by EAPI Entertainment, Inc. (Name to be changed to Organic Recycling
Technologies Inc.):

/s/ Ralph Petruzzo

_____________________________________
Authorized Signature

March 1, 2005

_____________________________________
Date

                                                                               2THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.  THESE SECURITIES MAY NOT
BE  SOLD  OR  OFFERED  FOR  SALE  EXCEPT  PURSUANT  TO AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  AND  ANY  APPLICABLE  STATE  SECURITIES  LAWS  OR AN
APPLICABLE  EXEMPTION  FROM  SUCH  REQUIREMENTS.

                          $100,000.00 PRINCIPAL AMOUNT

                                DERMISONICS, INC.

                  8.0% CONVERTIBLE DEBENTURE DUE MARCH 14, 2006

     THIS DEBENTURE is issued by DERMISONICS, INC., a corporation duly organized
and  existing  under  the  laws  of  the State of Nevada (the "Company"), and is
designated as the Company's 8.0% Convertible Debenture Due March 14, 2006, in an
aggregate  principal  amount  equal  to  One Hundred Thousand U.S. Dollars (U.S.
$100,000.00)  (the  "Debenture").

     FOR  VALUE  RECEIVED,  the  Company  promises  to  pay  to  OSBORN PARTNERS
INTERNATIONAL,  LTD.,  the  initial  holder  hereof,  or  its  order  (including
successors-in-interest, the "Holder"), the principal sum of One Hundred Thousand
U.S.  Dollars  (U.S.  $100,000.00)  on  a  date one year from the execution date
hereof,  being  March  14, 2006 (the "Maturity Date") and to pay interest on the
principal  sum  outstanding  under  this  Debenture  (the "Outstanding Principal
Amount"),  at  the  rate  of  8.0%  per  annum.

     All  principal  and  interest  shall be due on the Maturity Date.  Interest
shall  accrue  daily  commencing  on  the  date  hereof and shall continue until
payment  in  full  of  all  amounts  due  under this Debenture.  The interest so
payable will be paid to the person in whose name this Debenture is registered on
the records of the Company regarding registration and transfers of the Debenture
(the "Debenture Register").  The Maturity Date may be extended at the discretion
of the Holder on a month-to-month basis for up to one year by written instrument
executed  by Holder.  Approval of any extension by Holder does not oblige Holder
to  approve  any  further  extension.

     The  principal of, interest on, and default payments (referred to below) in
respect  of  this  Debenture  are payable in such coin or currency of the United
States  as  of  the  time  of  payment is legal tender for payment of public and
private  debts,  at  the address last appearing on the Debenture Register of the
Company  as  designated  in  writing  by  the  Holder  hereof from time to time.

     This  Debenture  is  subject  to  the  following  additional  provisions:

                                     Page 1
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     1.     DENOMINATION. The Debentures are exchangeable for an equal aggregate
            ------------
principal  amount  of Debentures of different denominations, as requested by the
Holder  surrendering  the  same.  No  service  charge  will  be  made  for  such
registration  or  transfer  or  exchange.

     2.     TRANSFERS.  This  Debenture  may  be transferred or exchanged in the
            ---------
United  States  only  in  compliance with the Securities Act of 1933, as amended
(the  "Act")  and  applicable  state  securities  laws, or applicable exemptions
therefrom.  Prior to due presentment for transfer of this Debenture, the Company
may  treat  the  person  in  whose name this Debenture is duly registered on the
Company's  Debenture  Register  as the owner hereof for the purpose of receiving
payment  as  herein  provided,  whether  or  not  this  Debenture  is  overdue.

     3.     DEFINITIONS.  For  purposes  hereof  the following definitions shall
            -----------
apply:

          "Change  in  Control Transaction" shall mean the occurrence of (x) any
          ---------------------------------
consolidation  or  merger  of  the Company with or into any other corporation or
other  entity  or  person  (whether  or  not  the  Company  is  the  surviving
corporation),  or any other corporate reorganization or transaction or series of
related  transactions in which in excess of 50% of the Company's voting power is
transferred  through  a  merger,  consolidation,  tender  offer  or  similar
transaction,  or  (y)  any person (as defined in Section 13(d) of the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange Act")), together with its
affiliates and associates (as such terms are defined in Rule 405 under the Act),
beneficially  owns  or is deemed to beneficially own (as described in Rule 13d-3
under  the  Exchange Act without regard to the 60-day exercise period) in excess
of  50%  of  the  Company's  voting  power.

          "Closing  Date"  shall  mean  the  date  of  original issuance of this
          ---------------
Debenture.

          "Common Stock" shall mean the common stock of the Company.
          --------------

          "Conversion Notice" shall have the meaning set forth in Section 4(d).
          -------------------

          "Conversion Price" shall have the meaning set forth in Section 4(b).
          ------------------

          "Holder Conversion Date" shall have the meaning set forth in
          ------------------------
Section 5(c).

          "Trading Day" shall mean a day on which the Common Stock is traded on
          -------------
the principal exchange on which the Common Stock has been listed (or any similar
organization  or  agency  succeeding  such  market  or  exchange's  functions of
reporting prices).

                                     Page 2
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     4.     CONVERSION AT THE OPTION OF THE HOLDER. The Holder of this Debenture
            --------------------------------------
shall have the following conversion rights.

          (a)     Holder's Right to Convert. At any time subsequent to issuance,
                  -------------------------
the  Outstanding  Principal Amount (plus accrued but unpaid interest and default
payments)  under this Debenture shall be convertible in whole or in part, at the
option  of the Holder hereof, into fully paid, validly issued, and nonassessable
shares  of  Common  Stock. If this Debenture is converted in part, the remaining
portion  of  this  Debenture not so converted shall remain entitled to be repaid
and to the conversion rights provided herein.

          (b)     Conversion Price for Holder Converted Shares.  The Outstanding
                  --------------------------------------------
Principal Amount (plus accrued but unpaid interest and default payments) of this
Debenture  that  is  converted  into shares of Common Stock at the option of the
Holder  shall be convertible into fully paid and non-assessable shares of Common
Stock  of the Company, at a conversion price equal to the lesser of (i) $.60 per
share  (as  adjusted  for  any stock splits, stock dividends and similar events)
(the  "Conversion Price"), or (ii) the number of shares of Common Stock equal to
60%  of  the  five-day average closing price of the Common Stock once the Common
Stock  has  exceeded  an  average  daily  trading volume of 100,000 shares for a
period  of  10  consecutive  trading  days  (the  "Reset  Conversion  Price").

          (c)     Mechanics  of  Conversion.  In order to convert this Debenture
                  -------------------------
(in  whole  or  in  part) into full shares of Common Stock, the Holder (i) shall
give  written notice in the form of Exhibit "1" hereto (the "Conversion Notice")
by facsimile to the Company at such office that the Holder elects to convert the
principal  amount  (plus  accrued  but  unpaid  interest  and  default payments)
specified  therein,  which  such  notice  and election shall be revocable by the
Holder at any time prior to its receipt of the Common Stock upon conversion, and
(ii)  as  soon as practicable after such notice, shall surrender this Debenture,
duly  endorsed, by either overnight courier or two-day courier, to the principal
office  of  the  Company;  provided,  however,  that  the  Company  shall not be
                           --------   -------
obligated  to  issue  certificates  evidencing  the  shares  of the Common Stock
issuable  upon  such  conversion  unless  either  the  Debenture  evidencing the
principal  amount  is  delivered to the Company as provided above, or the Holder
notifies  the Company that such Debenture(s) have been lost, stolen or destroyed
and  promptly  executes  an  agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection with such lost,
stolen  or destroyed Debentures. If a Holder is converting less than the maximum
number  of  shares it may convert under its Debenture, the Company shall reissue
the  Debenture  with  the  appropriate  remaining  principal  amount  as soon as
practicable  after  the  Company  shall  have  received the Holder's surrendered
Debenture.

                                     Page 3
<PAGE>
               The  Company  shall  issue and deliver within one business day of

the  delivery  to  the  Company  of  such  Conversion  Notice, to such Holder of
Debenture(s)  at the address of the Holder, or to its designee, a certificate or
certificates  for the number of shares of Common Stock to which the Holder shall
be  entitled  as  aforesaid, together with a calculation of the Conversion Price
and  a  Debenture  or  Debentures  for  the  principal  amount of Debentures not
submitted  for conversion. The date on which the Conversion Notice is given (the
"Holder Conversion Date") shall be deemed to be the date the Company received by
facsimile  the  Conversion Notice, and the person or persons entitled to receive
the  shares  of  Common Stock issuable upon such conversion shall be treated for
all  purposes  as the record holder or holders of such shares of Common Stock on
such date.

               In  lieu  of  delivering  physical  certificates representing the
Common  Shares  issuable  upon  conversion of Debentures, provided the Company's
transfer  agent  is  participating  in the Depository Trust Company ("DTC") Fast
Automated  Securities Transfer ("FAST") program, upon request of the holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit  the  Common Shares issuable upon conversion or exercise to the Holder,
by  crediting  the account of Holder's prime broker with DTC through its Deposit
Withdrawal  Agent  Commission  ("DWAC")  system.  The  time periods for delivery
described  above  shall  apply  to  the electronic transmittals through the DWAC
system.  The  parties agree to coordinate with DTC to accomplish this objective.
The  conversions  pursuant to Sections 5 and 6 shall be deemed to have been made
immediately  prior  to  the close of business on the Holder Conversion Date. The
person  or  persons  entitled  to  receive  the Common Shares issuable upon such
conversion  shall be treated for all purposes as the record holder or holders of
such Common Shares at the close of business on the Holder Conversion Date.

          (d)     Limitations  on Right to Convert. In no event shall the Holder
                  --------------------------------
be  permitted  to  convert  principal of this Debenture in excess of that amount
upon the Conversion of which:

               (i)     the  number  of  Conversion  Shares to be issued pursuant
to  such  Conversion,  when added to the number of shares of Common Stock issued
pursuant  to  all prior Conversions of the Debenture, would exceed 19.99% of the
number  of  shares  of  Common Stock outstanding on the Closing Date (subject to
equitable  adjustment  from  time  to time for the events described in Section 5
below)  (the  "Cap  Amount"), except that such limitation shall not apply in the
               -----------
event  that the Company obtains the approval of the holders of a majority of the
Company's  outstanding Common Stock ("Stockholder Approval") for the issuance of
                                      --------------------
Common  Stock  in excess of the Cap Amount. In the event that, as a result of an
adjustment  or  reset  to  the  Conversion Price, the number of shares of Common
Stock  issuable upon conversion of the entire principal amount of this Debenture
outstanding  on  the  effective date of such adjustment or reset exceeds the Cap
Amount (without regard to any other limitations

                                     Page 4
<PAGE>
on  such  Conversion  that  may  be imposed by the terms of this Debenture), the
Holder  shall  have the right, upon delivery of written notice to the Company at
any  time on or after the effective date of such adjustment or reset, to require
the  Company to redeem the amount of principal of this Debenture that the Holder
would  be  unable  to  convert as a result of the limitation imposed hereby at a
redemption  price equal to the amount of such principal plus all unpaid interest
                                                        ----
and  other amounts accrued on this Debenture.  Such redemption shall be effected
on  or  before  the  fifth Business Day following receipt by the Company of such
written  notice by delivery of immediately available funds in the amount of such
redemption price to the Holder.  In the event of a sale of other transfer of all
or any portion of this Debenture to a third party, such party shall be allocated
a  pro rata share of the Cap Amount and shall be deemed to assume the rights and
obligations  provided  by  the  terms  of  this  Section  4(e)(i);  or

               (ii)     (x)  the  number  of  Conversion  Shares  to  be  issued
pursuant  to  such  Conversion  plus  (y)  the  number of shares of Common Stock
                                ----
beneficially  owned  by  the Holder (other than Common Stock which may be deemed
beneficially  owned  except  for  being subject to a limitation on conversion or
exercise analogous to the limitation contained in this subsection (e)(ii)) would
exceed  9.99%  of  the  number  of  shares  of  Common  Stock  then  issued  and
outstanding,  it  being  the  intent  of the Corporation and the Holder that the
Holder not be deemed at any time to have the power to vote or dispose of greater
than 9.99% of the number of shares of Common Stock issued and outstanding at any
time.  Nothing  contained  herein  shall  be deemed to restrict the right of the
Holder  to  convert such excess principal amount at such time as such Conversion
will  not  violate  the  provisions  of this subsection (e)(ii). As used herein,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities  Exchange  Act of 1934, as amended, and the rules thereunder.  To the
extent  that  the  limitation  contained in this subsection (e)(ii) applies, the
Company  may  rely  on  the  Holder's determination of whether principal of this
Debenture  is  convertible  pursuant  to the terms hereof, the Company having no
obligation  whatsoever  to verify or confirm the accuracy of such determination,
and  the  submission  of a Conversion Notice by the Holder shall be deemed to be
the  Holder's  representation  that  the  principal  amount specified therein is
convertible pursuant to the terms hereof.  The holders of Common Stock are to be
deemed  third-party  beneficiaries  of  the  limitation  imposed  hereby  and,
accordingly,  this  subsection  may  not  be  amended without the consent of the
holders  of a majority of the shares of Common Stock then outstanding; provided,
                                                                       --------
however,  that  the  Holder  shall  have  the  right, upon written notice to the
-------
Company,  to  waive  the provisions of this subsection (e)(ii) in the event that
(a)  a  Change  of  Control  Transaction  is  announced  or  effected  or  (b) a
Liquidation  Event  (as  defined  below)  occurs.

     5.     CONVERSION  UPON  MATURITY.
            --------------------------

          (a)     At the Maturity Date, the Outstanding Principal Amount of, and
all  accrued  and unpaid interest on, and default payments and all other amounts
owing

                                     Page 5
<PAGE>
under,  all  Debentures  outstanding  at such time shall be paid in full in cash
without  notice  unless the Holder has elected to convert to Common Stock of the
Company  in  accordance  with  the  terms  of  the  Debentures.

          (b)     In  the event of conversion to Common Stock, the Company shall
issue  and deliver within 10 business days after delivery to the Company of this
Debenture,  or  after  receipt of the agreement and indemnification described in
Section 4(d) above, to the Holder of the Debenture at the address of the Holder,
or  to  its  designee, a certificate or certificates for the number of shares of
Common  Stock  to  which the Holder shall be entitled hereunder, together with a
calculation  of  the Conversion Price. The person or persons entitled to receive
the  shares  of  Common Stock issuable upon such conversion shall be treated for
all  purposes  as the record holder or holders of such shares of Common Stock on
the Maturity Date.

     6.     COMPANY'S  RIGHT  OF  REDEMPTION.  Notwithstanding  anything  to the
            --------------------------------
contrary  in  this  Agreement,  the  Company shall have the right to redeem this
Debenture  at  any time during the period after the Common Stock has exceeded an
average  daily  trading  volume of 100,000 shares for a period of 10 consecutive
trading  days until the Maturity Date, in whole or in part, on 15 business days'
notice  to the Holder, subject to the Holder's conversion rights being exercised
prior  to  the redemption date set forth in the redemption notice to the Holder.

     7.     STOCK  SPLITS;  DIVIDENDS;  ADJUSTMENTS;  REORGANIZATIONS.
            ---------------------------------------------------------

          (a)     If  the  Company,  at  any  time  while  the  Debentures  are
outstanding,  (i) shall pay a stock dividend or otherwise make a distribution or
distributions  on  any  equity  securities  (including investments or securities
convertible into or exchangeable for such equity securities) in shares of Common
Stock,  (ii)  issue  any  securities  payable  in  shares of Common Stock, (iii)
subdivide the outstanding shares of Common Stock into a larger number of shares,
(iv) combine outstanding shares of Common Stock into a smaller number of shares,
the  Conversion  Price  shall be multiplied by a fraction of which the numerator
shall  be the number of shares of Common Stock outstanding before such event and
of  which  the  denominator  shall  be  the  number  of  shares  of Common Stock
outstanding  after such event. Any adjustment made pursuant to this Section 8(a)
shall  become  effective immediately after the record date for the determination
of  shareholders  entitled  to  receive  such dividend or distribution and shall
become  effective  immediately  after  the  effective  date  in  the  case of an
issuance, a subdivision or a combination.

          (b)     (1)     In  the  event  that  at any time or from time to time
after  the  Closing  Date,  the Common Stock issuable upon the conversion of the
Debentures is changed into the same or a different number of shares of any class
or  classes  of  stock,  whether  by  merger,  consolidation,  recapitalization,
reclassification or otherwise (other

                                     Page 6
<PAGE>
than  a subdivision or combination of shares or stock dividend or reorganization
provided  for elsewhere in this Section 7), then and as a condition to each such
event  provision  shall be made in a manner reasonably acceptable to the Holders
of  Debentures so that each Holder of Debentures shall have the right thereafter
to  convert  such  Debenture  into  the  kind  of  stock  receivable  upon  such
recapitalization,  reclassification  or  other  change  by  holders of shares of
Common  Stock,  all  subject  to further adjustment as provided herein.  In such
event,  the  formulae  set  forth  herein for conversion and redemption shall be
equitably adjusted to reflect such change in number of shares or, if shares of a
new  class  of  stock  are  issued,  to reflect the market price of the class or
classes  of  stock  issued  in  connection with the above described transaction.

                  (2)     If  at any time or from time to time after the Closing
Date  there is a capital reorganization of the Common Stock, including by way of
a  sale  of  all or substantially all of the assets of the Company (other than a
recapitalization,  subdivision,  combination,  reclassification  or  exchange of
shares  provided  for  elsewhere  in  this  Section 7), then, as a part of and a
condition to such reorganization, provision shall be made in a manner reasonably
acceptable  to  the  Holders  of  the  Debentures  so  that  the  Holders of the
Debentures  shall  thereafter  be  entitled  to  receive  upon conversion of the
Debentures  the  number  of  shares  of stock or other securities or property to
which  a  holder  of  the  number  of  shares  of  Common Stock deliverable upon
conversion would have been entitled on such capital reorganization.

          (c)     Whenever  any  element  of  the  Conversion  Price is adjusted
pursuant  to Section 7(a) or (b), the Company shall promptly mail to each Holder
of  the  Debentures,  a  notice  setting  forth  the Conversion Price after such
adjustment  and  setting  forth  a  brief  statement of the facts requiring such
adjustment.

          (d)     In the event of any setting by the Company of a record date of
the  holders  of  any  class  of  securities  for the purpose of determining the
holders  thereof who are entitled to receive any dividend or other distribution,
any  security  or right convertible or exchangeable into or entitling the holder
thereof  to receive additional shares of Common Stock, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall deliver
to  each  Holder  of  Debentures  at  least  20 days prior to the date specified
therein,  a  notice  specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution, security or right and the amount
and character of such dividend, distribution, security or right.

     8.     RESERVATION OF SHARES; FRACTIONAL SHARES.  The Company hereby agrees
            ----------------------------------------
that  at  all  times  there  shall be reserved for issuance and/or delivery upon
conversion  of this Debenture and issuance of Common Stock such number of shares
of  its  Common  Stock  (to  the  extent  determinable) as shall be required for
issuance  and  delivery upon conversion of this Debenture and issuance of Common
Stock.  No  fractional  shares  of

                                     Page 7
<PAGE>
Common  Stock  or  scrip representing fractional shares of Common Stock shall be
issuable hereunder.  The number of shares of Common Stock that are issuable upon
any  conversion  shall  be  rounded  up  to  the  nearest  whole  share.

     9.     NO  REISSUANCE  OF  THE  DEBENTURE.  No  Debentures  acquired by the
            ----------------------------------
Company  by  reason  of  redemption,  purchase,  exchange  or otherwise shall be
reissued,  and  all  such  Debentures  shall  be  retired.

     10.     WAIVERS  OF  DEMAND,  ETC.  The  Company  hereby  expressly  and
             -------------------------
irrevocably  waives  demand  and  presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of acceleration or intent
to  accelerate,  bringing  of suit and diligence in taking any action to collect
amounts  called  for hereunder and will be directly and primarily liable for the
payment  of all sums owing and to be owing hereon, regardless of and without any
notice,  diligence,  act or omission as or with respect to the collection of any
amount  called  for  hereunder.

     11.     REPLACEMENT  DEBENTURE.  In  the event that any Holder notifies the
             ----------------------
Company  that  its Debenture(s) have been lost, stolen or destroyed, replacement
Debenture(s)  identical in all respects to the original Debenture(s) (except for
registration  number  and  Outstanding  Principal Amount, if different than that
shown  on  the  original  Debenture(s)), shall be issued to the Holder, provided
that  the  Holder  executes  and delivers to the Company an agreement reasonably
satisfactory  to  the Company to indemnify the Company from any loss incurred by
it  in  connection  with  such  Debenture.

     12.     PAYMENT  OF  EXPENSES;  ISSUE TAXES.  The Company agrees to pay all
             -----------------------------------
debts  and  expenses,  including  attorneys'  fees, which may be incurred by the
Holder  in  enforcing  the  provisions  of  this Debenture and/or collecting any
amount  due  under  this Debenture or the Purchase Agreement.  The Company shall
pay  any  and  all  issue  and  other  taxes (excluding any income, franchise or
similar  taxes) that maybe payable in respect of any issue or delivery of shares
of  Common  Stock  on  conversion  of  any  Debenture  pursuant  hereto.

     13.     DEFAULTS/LIQUIDATED  DAMAGES.
             ----------------------------

          (a)     If  one or more of the following described "Events of Default"
shall  occur:

               (i)     (A)  The  Company  shall  default  in  the  payment  of
principal,  interest  and  all  other  amounts due on this Debenture, or (B) The
Company  shall  have  breached  or be in breach of any representation, warranty,
covenant or agreement made by the Company in the Purchase Agreement; or

                                     Page 8
<PAGE>
               (ii)     A trustee, liquidator or receiver shall be appointed for
the  Company  or  for a substantial part of its property or business without its
consent and shall not be discharged within 30 days after such appointment; or

               (iii)     Any  governmental  agency  or  any  court  of competent
jurisdiction  at the instance of any governmental agency shall assume custody or
control  of  the whole or any substantial portion of the properties or assets of
the  Company  and  shall  not  be  dismissed  within  30  days  thereafter;  or

               (iv)     Bankruptcy,  reorganization,  insolvency  or liquidation
proceedings  or other proceedings, or relief under any bankruptcy law or any law
for  the  relief  of  debt shall be instituted by or against the Company and, if
instituted  against the Company shall not be dismissed within 30 days after such
institution,  or  the  Company shall by any action or answer approve of, consent
to,  or  acquiesce  in any such proceedings or admit to any material allegations
of,  or  default  in  answering  a  petition  filed  in  any  such  proceeding
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) at the option of
the  Holder  and  in  the  Holder's sole discretion, the Holder may consider the
Debenture  immediately  due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in  any  other  instruments  contained  to the contrary notwithstanding, and the
Holder  may  immediately, and without expiration of any period of grace, enforce
any  and  all  of  the Holder's rights and remedies provided herein or any other
rights  or  remedies  afforded  by  law.  In  such event, the Debenture shall be
redeemed  at  a  redemption price per Debenture equal to 120% of the Outstanding
Principal  Amount of the Debenture, plus accrued but unpaid interest and default
payments on the Debenture at an interest rate of 13% as a default interest rate.

     14.     REGISTRATION  RIGHTS.
             --------------------

          (a)     As  used in this Debenture, the following terms shall have the
following  meanings:

               (i)     "Business  Day"  shall mean a day, Monday through Friday,
                        -------------
on  which  banks are generally open for business in New York, New York.

               (ii)     "Person" shall mean any person, individual, corporation,
                         ------
  limited  liability  company,  partnership,  trust  or  other
nongovernmental  entity  or  any  governmental agency, court, authority or other
body  (whether  foreign,  federal,  state,  local  or  otherwise).

                                     Page 9
<PAGE>
               (iii)     The  terms  "register," "registered" and "registration"
                                      --------    ----------       ------------
refer  to  the registration effected by preparing and filing with the Securities
and  Exchange Commission (the "SEC") a registration statement in compliance with
the Act, and the declaration or ordering by the SEC of the effectiveness of such
registration  statement.

               (iv)     "Registrable  Securities"  shall  mean  The  term
                         -----------------------
"Registrable  Securities"  shall  mean:  (A) the Common Stock issued or issuable
upon  conversion of Holder's Debenture; and (B) Common Stock or other securities
of  the  Company issued (or issuable upon the conversion) as a dividend or other
distribution  with respect to Common Stock; excluding in all cases, however, any
Registrable  Securities  sold to the public pursuant to a registration under the
Act  or  an  applicable  exemption  therefrom.

               (v)     "Registration  Expenses" shall mean all expenses incurred
                        ----------------------
by  the  Company  in  complying  with  Section  14(b) hereof, including, without
limitation,  all registration, qualification and filing fees, printing expenses,
escrow  fees,  fees  and  expenses of counsel for the Company, blue sky fees and
expenses  and the expense of any special audits incident to, or required by, any
such  registration  (but  excluding  the aggregate fees of legal counsel for all
Holders).

          (b)     The  Company  shall  not  later  than  180 days after the date
hereof (the "Filing Date"), (i) use its reasonable best efforts to file with the
SEC  a registration statement (the "Registration Statement") with respect to the
resale of the Registrable Securities and use its reasonable best efforts to have
such  Registration  Statement declared effective by the SEC within 240 days from
the  date  hereof and (ii) cause such Registration Statement to remain effective
for  the  Registration  Period  (as  hereafter  defined).

          (c)     All  Registration  Expenses  incurred  in  connection with any
registration,  qualification,  exemption or compliance pursuant to Section 14(b)
shall  be  borne  by  the  Company.

          (d)     In  the  case of the registration, qualification, exemption or
compliance  effected  by  the  Company  pursuant  to this Debenture, the Company
shall,  upon  reasonable  request,  inform  Holder  as  to  the  status  of such
registration,  qualification,  exemption  and  compliance.  At  its  expense the
Company  shall:

               (i)     use  its  reasonable  best  efforts  to  keep  such
registration,  and  any  qualification,  exemption  or  compliance  under  state
securities  laws  which  the  Holders  reasonably request the Company to obtain,
continuously  effective  as  to all Registrable Securities until the earlier of:
(i)  the  Holder having completed the distribution of the Registrable Securities
described  in  the Registration Statement relating thereto; or (ii) with respect
to  any Holder, such time as all Registrable Securities then held by such Holder
may  be  sold  in  compliance  with  Rule  144  under  the  Act

                                    Page 10
<PAGE>
within  any  three-month period.  The period of time during which the Company is
required  hereunder  to keep the Registration Statement effective is referred to
herein  as  "the  Registration  Period";

               (ii)     advise  the  Holder:

                    (A)     when  the  Registration  Statement  or any amendment
thereto  has  been filed with the SEC and when the Registration Statement or any
post-effective  amendment  thereto  has  become  effective;

                    (B)     of  any  request  by  the  SEC  for  amendments  or
supplements  to the Registration Statement or the prospectus included therein or
for  additional  information;

                    (C)     of  the  issuance  by  the  SEC  of  any  stop order
suspending  the effectiveness of the Registration Statement or the initiation of
any  proceedings  for  such  purpose;

                    (D)     of  the  receipt  by the Company of any notification
with  respect  to  the  suspension  of  the  qualification  of  the  Registrable
Securities  included  therein  for sale in any jurisdiction or the initiation or
threatening  of  any  proceeding  for  such  purpose;  and

                    (E)     of  the  happening  of  any  event that requires the
making  of  any changes in the Registration Statement or the prospectus so that,
as  of  such  date, the statements therein are not misleading and do not omit to
state  a  material  fact  required to be stated therein or necessary to make the
statements  therein  (in  the  case  of  the  prospectus,  in  the  light of the
circumstances  under  which  they  were  made)  not  misleading;

               (iii)     make  every  reasonable effort to obtain the withdrawal
of  any  order suspending the effectiveness of any Registration Statement at the
earliest  possible  time;

               (iv)     furnish  to Holder, without charge, at least one copy of
such  Registration  Statement  and  any  post-effective  amendment or supplement
thereto,  including  financial  statements  and schedules, and, if the Holder so
requests in writing, all exhibits (excluding those incorporated by reference) in
the  form  filed  with  the  SEC;

               (v)     during  the  Registration  Period,  deliver  to  Holder,
without charge, a reasonable number of copies of the prospectus included in such
Registration  Statement  and  any  amendment or supplement thereto as Holder may
reasonably  request;  and  the  Company consents to the use, consistent with the
provisions  hereof, of the prospectus and any amendment or supplement thereto by
the  Holder  in  connection

                                    Page 11
<PAGE>
with  the  offering  and  sale  of  the  Registrable  Securities  covered by the
prospectus  and  any  amendment  or  supplement  thereto;

               (vi)     during  the Registration Period, deliver to Holder, upon
request, (A) a copy of the full Registration Statement (excluding exhibits); (B)
all  exhibits  excluded by the parenthetical to the immediately preceding clause
(A);  and (C) such other documents as may be reasonably requested by the Holder;

               (vii)     prior  to any public offering of Registrable Securities
pursuant  to  the  Registration  Statement,  register  or  qualify  or obtain an
exemption  for  the offer and sale under the securities or blue sky laws of such
jurisdictions  as  Holder  reasonably  requests  in  writing,  provided that the
Company  shall  not  for  any  such  purpose be required to qualify generally to
transact  business  as a foreign corporation in any jurisdiction where it is not
so  qualified  or  to  consent  to  general  service  of  process  in  any  such
jurisdiction,  and  do  any and all other acts or things reasonably necessary or
advisable  to enable the offer and sale in such jurisdictions of the Registrable
Securities  covered  by  the  Registration  Statement;

               (viii)     cooperate  with  the  Holder  to facilitate the timely
preparation  and delivery of certificates representing Registrable Securities to
be  sold pursuant to the Registration Statement, free of any restrictive legends
to  the  extent  not  required  at  such time as determined by the Company after
consultation with legal counsel and in such denominations and registered in such
names  as  Holder  may  request;

               (ix)     upon the occurrence of any event contemplated by Section
14(d)(ii)(E)  above,  the  Company  shall  promptly  prepare  a  post-effective
amendment  to  the  Registration  Statement  or  a  supplement  to  the  related
prospectus, or file any other required document so that, as thereafter delivered
to  purchasers  of  the  Registrable Securities included therein, the prospectus
will  not  include  any untrue statement of a material fact or omit to state any
material  fact  necessary  to  make  the statements therein, in the light of the
circumstances  under  which  they  were  made,  not  misleading;  and

               (x)     use its reasonable best efforts to comply in all material
respects  with  all  applicable  rules  and  regulations  of  the  SEC, and make
generally  available  to  the  Holder  not later than 45 days (or 90 days if the
fiscal quarter is the fourth fiscal quarter) after the end of its fiscal quarter
in  which  the  first anniversary date of the effective date of the Registration
Statement  occurs,  an  earnings  statement satisfying the provisions of Section
11(a)  of  the  Act.

          (e)     [RESERVED].

          (f)     (i)     To  the  extent  permitted  by  law, the Company shall
indemnify  each  Holder, each underwriter of the Registrable Securities and each
person  controlling  such Holder and each such underwriter within the meaning of
Section  15  of

                                    Page 12
<PAGE>
the Act, with respect to which any registration, qualification or compliance has
been  sought  pursuant  to this Debenture, against all claims, losses, expenses,
costs,  damages and liabilities (or action in respect thereof), including any of
the  foregoing incurred in settlement of any litigation, commenced or threatened
(subject  to  Section  14(f)(iii)  below),  arising  out  of or based on (i) any
untrue  statement  (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus or offering circular, or any amendment or
supplement  thereof,  incident  to  any  such  registration,  qualification  or
compliance,  or  based  on any omission (or alleged omission) to state therein a
material  fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made, or
(ii) any viola-tion or alleged violation by the Company of the Act, the Exchange
Act,  or  any  rule or regulation promulgated under the Act or the Exchange Act,
and  shall reimburse each Holder, each underwriter of the Registrable Securities
and  each  person  controlling  such  Holder  and  each  such  underwriter,  for
reasonable  legal  and  other  expenses,  in  connection  with  investigating or
defending  any  such  claim,  loss,  damage,  liability  or  action  as and when
incurred;  provided that the Company shall not be liable in any such case to the
extent  that  any  untrue statement or omission or allegation thereof is made in
reliance  upon  and  in  conformity  with  written  information furnished to the
Company  by  or  on  behalf  of  such  Holder  or  underwriter  and stated to be
specifically  for  use in preparation of such registration statement, prospectus
or offering circular; provided that the foregoing indemnity agreement is subject
to  the  condition  that,  insofar as it relates to any such untrue statement or
alleged untrue statement or omission or alleged omission made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC  at  the time the registration statement becomes effective or in the amended
prospectus  filed  with  the  SEC  pursuant  to Rule 424(b) of the Act or in the
prospectus  subject to completion under Rule 434 of the Act, which together meet
the  requirements  of  Section  10(a)  of the Act (the "Final Prospectus"), such
indemnity  agreement shall not inure to the benefit of any such Holder, any such
underwriter  or  any  such controlling person, if a copy of the Final Prospectus
furnished  by  the  Company  to the Holder for delivery was not furnished to the
person  or  entity asserting the loss, liability, claim or damage at or prior to
the  time  such furnishing is required by the Act and the Final Prospectus would
have  cured  the  defect  giving  rise to such loss, liability, claim or damage.
Notwithstanding  any  provision  herein  to  the  contrary,  the  Company  shall
reimburse  each  Holder, upon such Holder's demand, for all reasonably necessary
expenses and costs which are incurred, as and when incurred, by such Holder as a
result  of  the indemnification claims described in this Section 14(f)(i).  Such
demand  may  be  made  from  time  to  time  prior  to  resolution of the claim.

               (ii)     Holder will severally, if Registrable Securities held by
such  Holder  are  included  in  the  securities  as to which such registration,
qualification  or  compliance  is being effected, indemnify the Company, each of
its  directors  and officers, each underwriter of the Registrable Securities and
each  person  who  controls  the Company and each underwriter of the Registrable
Securities  within  the  meaning  of

                                    Page 13
<PAGE>
Section  15 of the Act, against all claims, losses, expenses, costs, damages and
liabilities  (or  actions  in  respect  thereof), including any of the foregoing
incurred  in  settlement  of any litigation, commenced or threatened (subject to
Section  14(f)(iii)  below), arising out of or based on any untrue statement (or
alleged  untrue  statement)  of  a  material  fact contained in any registration
statement,  prospectus  or  offering  circular,  or  any amendment or supplement
thereof, incident to any such registration, qualification or compliance or based
on  any omission (or alleged omission) to state therein a material fact required
to  be stated therein or necessary to make the statements therein not misleading
in  light  of  the circumstances in which they were made, and will reimburse the
Company,  such  directors  and  officers,  each  underwriter  of the Registrable
Securities  and  each person controlling the Company and each underwriter of the
Registrable  Securities  for  reasonable  legal  and any other expenses or costs
reasonably  incurred  in  connection  with  investigating  or defending any such
claim,  loss,  damage,  liability  or  action  as  incurred, in each case to the
extent,  but  only  to  the  extent,  that  such untrue statement or omission or
allegation  thereof  is  made  in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Holder and stated to
be  specifically  for  use  in  preparation  of  such  registration  statement,
prospectus  or offering circular; provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a  current copy of the prospectus or offering circular was not made available to
the  Holder  and  such current copy of the prospectus or offering circular would
have cured the defect giving rise to such loss, claim, expense, costs, damage or
liability.  Notwithstanding  the foregoing, in no event shall a Holder be liable
for  any  such claims, losses, expenses, costs, damages or liabilities in excess
of the proceeds received by such Holder in that offering, except in the event of
fraud  by  such  Holder.

               (iii)     Each  party  entitled  to  indemnification  under  this
Section  14(f) (the "Indemnified Party") shall give notice to the party required
to  provide  indemnification  (the  "Indemnifying  Party")  promptly  after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought,  and  shall  permit  the Indemnifying Party to assume the defense of any
such  claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,
shall  be  approved  by  the  Indemnified  Party  (whose  approval  shall  not
unreasonably  be  withheld),  and  the Indemnified Party may participate in such
defense  with  its  own  counsel  at such Indemnified Party's expense unless the
named parties to any proceeding covered hereby (including any impleaded parties)
include both the Company or any others the Company may designate and one or more
Indemnified  Persons,  and  representation  of  the Indemnified Persons and such
other  parties  by  the  same  counsel  would  be inappropriate due to actual or
potential  differing  interests  between  them,  and  provided  further that the
failure  of  any  Indemnified  Party to give notice as provided herein shall not
relieve  the  Indemnifying Party of its obligations under this Debenture, unless
such  failure  is  materially prejudicial to the Indemnifying Party in defending
such  claim  or  litigation.

                                    Page 14
<PAGE>
An  Indemnifying  Party  shall  not be liable for any settlement of an action or
claim  effected  without  its  written  consent  (which  consent  will  not  be
unreasonably  withheld).

               (iv)     If  the  indemnification  provided  for  in this Section
14(f)  is  held  by  a  court  of competent jurisdiction to be unavailable to an
Indemnified  Party  with  respect to any loss, liability, claim, damage, cost or
expense  referred  to  therein,  then  the  Indemnifying  Party,  in  lieu  of
indemnifying  such  Indemnified Party thereunder, shall contribute to the amount
paid  or  payable by such Indemnified Party as a result of such loss, liability,
claim,  damage,  cost or expense in such proportion as is appropriate to reflect
the  relative  fault  of  the  Indemnifying  Party  on  the  one hand and of the
Indemnified  Party  on  the other in connection with the statements or omissions
which  resulted  in such loss, liability, claim, damage, cost or expense as well
as  any  other  relevant  equitable  considerations.  The  relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to,  among  other  things,  whether  the untrue or alleged untrue statement of a
material  fact  or  the omission to state a material fact relates to information
supplied  or which should have been supplied by the Indemnifying Party or by the
Indemnified  Party  and  the  parties'  relative  intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such statement or omission.

          (g)     With  a view to making available to the Holder the benefits of
certain  rules  and  regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company shall
use  its  reasonable  best  efforts:

               (i)     to  make  and keep public information available, as those
terms  are  understood  and  defined  in  Rule  144 under the Act, at all times;

               (ii)     to  file with the SEC in a timely manner all reports and
other  documents  required  of  the  Company  under  the  Exchange  Act;  and

               (iii)     so long as a Holder owns any Registrable Securities, to
furnish  to  such  Holder upon any reasonable request a written statement by the
Company  as  to  its compliance with Rule 144 under the Act, and of the Exchange
Act,  and  a  copy of the most recent annual or quarterly report of the Company,
and  such  other  reports  and  documents  of  the  Company  as  such Holder may
reasonably  request  in  availing  itself  of  any rule or regulation of the SEC
allowing  a  Holder  to  sell  any  such  securities  without  registration.

     15.     SAVINGS CLAUSE.  In case any provision of this Debenture 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

                                    Page 15
<PAGE>
provisions  of  this  Debenture  will  not  in  any  way be affected or impaired
thereby,  and  such provision shall remain effective in all other jurisdictions.

     16.     ENTIRE AGREEMENT.  This Debenture and the agreements referred to in
             ----------------
this  Debenture  constitute  the  full  and  entire  understanding and agreement
between  the Company and the Holder with respect to the subject hereof.  Neither
this  Debenture  nor  any  term  hereof  may  be  amended, waived, discharged or
terminated  other  than  by  a  written instrument signed by the Company and the
Holder.

     17.     ASSIGNMENT,  ETC.  The  Holder  (but  not  the Company) may without
             -----------------
notice,  transfer  or  assign  this  Debenture  or  any  interest herein and may
mortgage,  encumber  or  transfer  any  of its rights or interest in and to this
Debenture  or any part hereof and, without limitation, each assignee, transferee
and  mortgagee  (which  may  include any affiliate of the Holder) shall have the
right  to  transfer  or assign its interest.  Each such assignee, transferee and
mortgagee  shall have all of the rights of the Holder under this Debenture.  The
Company  agrees  that,  subject to compliance with the Purchase Agreement, after
receipt  by  the Company of written notice of assignment from the Holder or from
the  Holder's assignee, all principal, interest and other amounts which are then
and thereafter become due under this Debenture shall be paid to such assignee at
the place of payment designated in such notice.  This Debenture shall be binding
upon  the  Company  and  its  successors  and  affiliates and shall inure to the
benefit  of  the  Holder  and  its  successors  and  assigns.

     18.     NO  WAIVER.  No  failure on the part of the Holder to exercise, and
             ----------
no  delay  in exercising any right, remedy or power hereunder shall operate as a
waiver  thereof,  nor  shall any single or partial exercise by the Holder of any
right,  remedy  or  power hereunder preclude any other or future exercise of any
other  right,  remedy  or  power.  Each  and every right, remedy or power hereby
granted  to  the  Holder  or  allowed  it  by  law  or  other agreement shall be
cumulative  and  not  exclusive of any other, and may be exercised by the Holder
from  time  to  time.

     19.     NOTICES.  The Company shall distribute to the Holders of Debentures
             -------
copies  of  all  notices,  materials,  annual  and  quarterly  reports,  proxy
statements, information statements and any other documents distributed generally
to  the  holders  of shares of Common Stock of the Company, at such times and by
such  method  as  such  documents are distributed to such holders of such Common
Stock,  but  shall  not  directly  or  indirectly  provide  material  non-public
information  to  the  Holder  without  such  Holder's  prior  written  consent.

     20.     MISCELLANEOUS.  Unless  otherwise  provided  herein,  any notice or
             -------------
other  communication  to  a  party  hereunder  shall be sufficiently given if in
writing  and  personally  delivered,  facsimiled  or  mailed  to  said  party by
certified  mail,  return  receipt  requested, at its address set forth herein or
such  other  address  as  either  may  designate

                                    Page 16
<PAGE>
for  itself  in  such  notice to the other and communications shall be deemed to
have  been  received when delivered personally or, if sent by mail or facsimile,
then  when actually received by the party to whom it is addressed.  Whenever the
sense  of  this  Debenture  requires,  words  in the singular shall be deemed to
include  the  plural  and  words  in  the  plural shall be deemed to include the
singular.  Section  headings  are  for convenience only and shall not affect the
meaning  of  this  document.

     21.     GOVERNING  LAW;  CONSENT  TO JURISDICTION.  This Debenture shall be
             -----------------------------------------
governed  by and construed and enforced in accordance with the laws of the State
of New York applicable to contracts to be executed and performed entirely within
such  state.  The  Company  (i)  hereby  irrevocably  submits  to  the exclusive
jurisdiction  of  the  state and federal court located in New York, New York for
the purposes of any suit, action or proceeding arising out of or related to this
Debenture  and  (ii)  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 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 Company consents to process being served in any such suit, action
or  proceeding  by  mailing  a copy thereof to such party as provided herein and
agrees that such service shall constitute good and sufficient service of process
and  notice thereof.  Nothing in this section shall affect or limit any right to
serve  process  in  any  other  manner  permitted  by  law.

     IN  WITNESS  WHEREOF,  the  Company  has  caused this instrument to be duly
executed  by  an  officer  thereunto  duly  authorized.

                                       DERMISONICS,  INC.

                                       By:
                                           -------------------------------------
                                           Bruce H. Haglund, Chairman

                                       Dated:
                                              ----------------------------------

                                    Page 17
<PAGE>
                                   EXHIBIT "1"
            (Executed by Registered Holder to Convert the Debenture)

                                CONVERSION NOTICE

                                       FOR

                  8.0% CONVERTIBLE DEBENTURE DUE MARCH 14, 2006

     The  undersigned, as Holder of the 8.0% Convertible Debenture Due March 14,
2006  of  DERMISONICS, INC. (the "Company"), in the outstanding principal amount
of U.S. $100,000.00 (the "Debenture"), hereby irrevocably elects to convert that
portion  of  the outstanding principal amount of the Debenture shown on the next
page into shares of Common Stock, $.01 par value per share (the "Common Stock"),
of  the  Company  according  to  the conditions of the Debenture, as of the date
written  below.  The undersigned hereby requests that share certificates for the
Common  Stock to be issued to the undersigned pursuant to this Conversion Notice
be  issued  in the name of, and delivered to, the undersigned or its designee as
indicated  below.  If shares are to be issued in the name of a person other than
the  undersigned,  the  undersigned  will  pay  all  transfer taxes payable with
respect  thereto.  No  fee  will  be  charged  to the Holder for any conversion,
except  for  transfer  taxes,  if  any.

Conversion Information:

Name of Holder:          ---------------------------------------------------
                                          (Print Name)

                         By:
                             -----------------------------------------------
                             (Signature)

                             -----------------------------------------------
                             (Title, if applicable)

Address of Holder:       ---------------------------------------------------

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

Issue Common Stock to:   ---------------------------------------------------

At::                     ---------------------------------------------------

                              Exhibit "1" - Page 1
<PAGE>
                         ---------------------------------------------------

                         Electronically transmit and credit Common Stock to:

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

                         At: -----------------------------------------------

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

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

                         Applicable Conversion Price: ----------------------

                THE COMPUTATION OF THE NUMBER OF COMMON SHARES TO
                 BE RECEIVED IS SET FORTH ON THE FOLLOWING PAGE.

                              Exhibit "1" - Page 2
<PAGE>
             COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED:

A.   Outstanding  Principal  Amount  converted:                             $___
B.  Accrued, unpaid interest on Outstanding Principal Amount converted:     $___
C.  Default  payments  due  Holder:                                         $___
                                                                            ____
TOTAL  DOLLAR  AMOUNT  CONVERTED  (TOTAL  OF  A  +  B  +  C)                $___
                                                                            ====

CONVERSION  PRICE:

                                                                            $
Number of Shares of Common Stock  =  Total dollar amount converted     =
                                     -----------------------------
                                     Conversion  Price                      $
NUMBER  OF  SHARES  OF  COMMON  STOCK   =  _____

If  the  conversion  is not being settled by DTC, please issue and deliver _____
certificate(s)  for  shares  of  Common  Stock  in  the  following  amount(s):

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

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

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

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

Please  issue  and  deliver  _____  new  Debenture(s)  in the following amounts:

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

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

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

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                              Exhibit "1" - Page 3

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