X0202 4 2008-02-20 0 0001366340 Converted Organics Inc. COIN 0000704159 PAULSON CAPITAL CORP 811 SW NAITO PARKWAY SUITE 200 PORTLAND OR 97204 0 0 1 1 See Footnote (1) 0000898196 PAULSON CHESTER L F 811 SW NAITO PARKWAY SUITE 200 PORTLAND OR 97204 0 0 1 1 See Footnote (1) 0000897686 PAULSON JACQUELINE M 811 SW NAITO PARKWAY SUITE 200 PORTLAND OR 97204 0 0 1 1 See Footnote (1) Common Stock 2008-02-20 4 X 0 11077 6.60 A 11077 I See Footnote Underwriter Warrants (Right to buy units) 6.60 2008-02-20 4 X 0 9113 0.00 D 2008-02-13 2012-02-12 Common Stock and Warrants 29303 611609 I See Footnote Class A Warrants (Right to buy Common Stock) 8.25 2008-02-20 4 X 0 9113 6.60 A 2007-02-13 2012-02-12 Common Stock 9113 620722 I See Footnote Class B Warrants (Right to buy Common Stock) 11.00 2008-02-20 4 X 0 9113 6.60 A 2007-02-13 2012-02-12 Common Stock 9113 629835 I See Footnote Form filed by more than one reporting person. In addition to Paulson Capital Corp. (PLCC), the following are reporting parties: Chester L.F. Paulson, Jacqueline M. Paulson, Paulson Family LLC (LLC) and Paulson Investment Company, Inc. (PICI). These reporting parties collectively own over 10%. The address for each of the reporting parties is the same as that provided for PLCC. PICI is a registered broker-dealer and a wholly owned subsidiary of PLCC. Mr. and Mrs. Paulson are controlling managers of the LLC, which is a controlling shareholder of PLCC, which is the parent company of PICI. Mr. and Mrs. Paulson and the LLC expressly disclaim any beneficial ownership of securities held in the name of PLCC and PICI. These transactions result form the exercise of 9,113 underwriter warrants at a price of $6.60 per underwriter warrant. One (1) underwriter warrant is exercisable into one (1) share of common stock, one (1) class "A" warrant, and one (1) class "B" warrant. In addition, the issuer has declared four (4) separate 5% stock dividends on the common stock. Therefore, Paulson Investment Company, Inc. received 11,077 shares of common stock, 9,113 shares of class "A" warrants, and 9,113 shares of class "B" warrants. Harry L. Striplin, Attorney-in-Fact for Chester L.F. Paulson 2008-02-20 Harry L. Striplin, Authorized Agent for Paulson Capital Corp. 2008-02-20 Harry L. Striplin, Authorized Agent for Paulson Investment Co., Inc. 2008-02-20 Harry L. Striplin, Authorized Agent for Paulson Family LLC 2008-02-20 Harry L. Striplin, Attorney-in-Fact for Jacqueline M. Paulson 2008-02-20