NOTE 4. NOTES PAYABLE

6 Months Ended

Sep. 30, 2011

NOTE 4. NOTES PAYABLE

Principal amounts of notes payable consist of the following at September 30, 2011 and March 31, 2011:

	September 30, 2011		March 31, 2011
12% Notes payable, past due	$	185,000	$	185,000
10% Note payable, past due		5,000		5,000
Law Firm Note		44,610		--
Tonaquint Note		360,186		--
Total Notes Payable	$	594,796	$	190,000

12% NOTES

From August 1999 through May 2005, we entered into various borrowing arrangements for the issuance of notes payable from private placement offerings (the "12% Notes"). At September 30, 2011, 12% Notes with a principal balance of $185,000 are outstanding, all of which are past due, in default, and bearing interest at the default rate of 15%. At September 30, 2011, interest payable on the 12% Notes totaled $284,439.

10% NOTES

At September 30, 2011, one 10% Note in the amount of $5,000, which is past due and in default, remained outstanding. At September 30, 2011, interest payable on this note totaled $6,000.

Management's plans to satisfy the remaining outstanding balance on these 12% and 10% Notes include converting the notes to common stock at market value or repayment with available funds.

TONAQUINT NOTE

On June 28, 2011, we entered into a Termination Agreement with Tonaquint, Inc. (See Note 5) under which both parties agreed that in consideration of the termination of a warrant, the waiving of all fees, penalties, the creation of the selling program and other factors, we agreed to issue an unsecured non-convertible promissory note (the "New Note") in the principal amount of $360,186, which provides for annual interest at a rate of 6%, payable monthly in either cash or our stock, at our option. The New Note has a maturity date of April 30, 2012. At September 30, 2011, interest payable on this note totaled $1,672.

LAW FIRM NOTE

On August 2 2011, we entered into a Promissory Note with our intellectual property law firm for the amount of $49,610, which represented the amount we owed to that firm. The Promissory Note calls for monthly payments of $5,000 from August 2011 through December 2011. We made the August 2011 payment, which reduced that balance at September 30, 2011 to $44,610. The note bears interest at 10% per annum. At September 30, 2011, interest payable on this note totaled $789. Subsequent to September 30, 2011 we made the September 2011 payment.