Exhibit 10.20


                                PROMISSORY NOTE

$50,000                                                        DECEMBER 29, 2006
                                                                PORTLAND, OREGON


     FOR VALUE RECEIVED, Converted Organics Inc., a Delaware corporation
("Maker"), promises to pay to the order of Paulson Investment Company, Inc.
("Holder") the principal sum of Fifty Thousand and no/100ths Dollars
($50,000.00) (the "Obligation"). Interest on the Obligation shall accrue until
the Obligation is paid in full at the rate of ten percent (10%) per annum. The
Obligation and interest shall be payable in lawful money of the United States,
at Portland, Oregon or such other place as Holder hereof may designate.

     Interest shall be computed on the basis of a 365-day year or 366-day year,
as applicable, and actual days lapsed. Maker shall have the right to prepay at
any time in advance of maturity, without premium or penalty, all or any part of
the principal amount of this Promissory Note or interest thereon. Payments
shall be first applied to outstanding interest and thereafter to the principal.

     This Promissory Note shall be payable as follows:

     1.  If before January 29, 2007, this Promissory Note shall become due and
         payable in full at the time of the closing of the proposed public
         offering of securities of Maker pursuant to that certain Registration
         Statement on Form SB-2 (SEC File No. 333-135174) to be underwritten by
         a syndicate managed by Holder, (the "Offering").

     2.  If after January 29, 2007, and the Offering has not closed or this
         Promissory Note has not been paid in full, this Promissory Note shall
         become due and payable in full thirty (30) days after any written or
         oral demand for payment by Holder.


    Maker waives diligence, presentment, demand, protest, and notice of any kind
whatsoever. The non-exercise by Holder of any of Holder's rights hereunder in
any instance shall not constitute a waiver thereof in that or any subsequent
instance.

     Maker shall pay upon demand any and all expenses, including reasonable
attorney fees, incurred or paid by Holder without suit or action in attempting
to collect funds due under this Promissory Note. In the event an action is
instituted to enforce or interpret any of the terms of this Promissory Note
including, but not limited to, any action or




participation by Maker in, or in connection with, a case or proceeding under the
U.S. Bankruptcy Code or any successor statute, the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before and after trial,
on appeal, and on review whether or not taxable as costs, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.

     This Promissory Note is to be construed in all respects and enforced
according to the laws of the State of Oregon.

     By order of and upon the authorization of the Board of Directors of
Converted Organics Inc.:

                                             "MAKER"

                                             CONVERTED ORGANICS INC.

                                             By: /s/ Edward Gildea
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                                             Its:  President & CEO
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