NOTE PAYABLES

12 Months Ended

Dec. 31, 2011

NOTE 8. NOTE PAYABLES

On June 29, 2010, we issued $172,000 in aggregate principal amount of promissory bridge notes (the "June Notes") to six accredited investors (the “June Financing”). Net proceeds to the Company after the deduction of selling commissions and expenses of the June Financing were approximately $149,050. The June Notes mature on the first anniversary of the issuance date, June 30, 2011. In addition, the Company issued a total of 86,000 shares of its common stock, $0.01 par value, in connection with the June Financing, as well as warrants to purchase 172,000 shares of common stock, exercisable at $0.40 per share, representing 500 shares of common stock and 1,000 warrants issued for each $1,000 principal amount of June Notes purchased in connection with the June Financing. The warrants terminate, if not previously exercised, on the fifth anniversary of the date of grant. The June Notes accrue interest at the rate of ten percent (10%) per annum. All remaining principal and accrued interest is due and payable on the maturity date.

On July 21, 2010, we issued $177,000 in aggregate principal amount of promissory bridge notes (the "July Notes") to fifteen accredited investors (the “July Financing”). Net proceeds to the Company after the deduction of selling commissions and expenses of the July Financing were approximately $155,800. The July Notes mature on June 30, 2011. In addition, the Company issued a total of 88,500 shares of its common stock, $0.01 par value, in connection with the July Financing, as well as warrants to purchase 177,000 shares of common stock, exercisable at $0.40 per share, representing 500 shares of common stock and 1,000 warrants issued for each $1,000 principal amount of July Notes purchased in connection with the July Financing. The warrants terminate, if not previously exercised, on the fifth anniversary of the date of grant. The July Notes accrue interest at the rate of ten percent (10%) per annum. All remaining principal and accrued interest is due and payable on the maturity date.

On September 3, 2010, we issued $75,000 in aggregate principal amount of promissory bridge notes (the "September Notes", and collectively with the June Notes and July Notes, the “Bridge Notes”) to two accredited investors (the “September Financing”, and taken together with the June Financing and July Financing, the “Bridge Financing”). Net proceeds to the Company after the deduction of selling commissions and expenses of the September Financing were approximately $64,750. The September Notes mature on June 30, 2011. In addition, the Company issued a total of 37,500 shares of its common stock, $0.01 par value, in connection with the September Financing, as well as warrants to purchase 75,000 shares of common stock, exercisable at $0.40 per share, representing 500 shares of common stock and 1,000 warrants issued for each $1,000 principal amount of September Notes purchased in connection with the September Financing. The warrants terminate, if not previously exercised, on the fifth anniversary of the date of grant. The September Notes accrue interest at the rate of ten percent (10%) per annum. All remaining principal and accrued interest is due and payable on the maturity date.

In total, we issued $424,000 in aggregate principal amount of Bridge Notes in connection with the Bridge Financing to twenty-three accredited investors. Net proceeds to the Company after the deduction of selling commissions and expenses of the Bridge Financing were approximately $369,600. The Bridge Notes mature on June 30, 2011. In addition, the Company issued a total of 212,000 shares of its common stock, $0.01 par value, in connection with the Bridge Financing, as well as warrants to purchase 424,000 shares of common stock, exercisable at $0.40 per share, representing 500 shares of common stock and 1,000 warrants issued for each $1,000 principal amount of Bridge Notes purchased in connection with the Bridge Financing. The Company also issued 84,800 warrants to the placement agent as partial consideration for services rendered on the same terms as the warrants issued to investors in connection with the Bridge Financing. All warrants terminate, if not previously exercised, on the fifth anniversary of the date of grant. The Bridge Notes accrue interest at the rate of ten percent (10%) per annum. All remaining principal and accrued interest is due and payable on the maturity date.

On November 15, 2010, holders representing 100% of the outstanding principal value of the Bridge Notes issued in three separate closing in June, July and September of 2010 exchanged such securities at a fixed conversion price of $0.20 per share for an aggregate issuance of 2,638,812 shares of common stock of the Company. The outstanding principal value of the Bridge Notes included all accrued but unpaid interest through November 15, 2010 plus a partial interest make-whole amount equal to six months of additional interest. Pursuant to the original terms of the Bridge Notes, holders received a 15% exchange premium on the entire outstanding balance exchanged.

Notes payable consist of the following as of December 31, 2011 and December 31, 2010:

	December 31,			December 31,
	2011			2010

Amended and Restated Secured Promissory Note dated December 1, 2010, matures December 1, 2011 at an interest rate of 10% per annum. This note replaces the Secured Promissory Note dated September 30, 2009, which replaced the Fixed Asset Note, Component Inventory Note, Installment Note and Earn Out provision. The Company is required to make monthly payments of $17,350 each throughout 2011 in full satisfaction of the note.	$	-		$	194,718
Revolving Line of Credit of $500,000 from US Bank dated April 9, 2009 as amended July 15, 2010 at an interest rate of 3.5% plus the one-month LIBOR quoted by US Bank from Reuters screen LIBOR01.The Line of Credit matures July 15, 2011 and is secured by all of the receivables and inventory of NDS Nutrition Products, Inc. The Company pays interest only on a monthly basis on this Line of Credit.	$	437,089		$	437,089

Total of notes payable and advances	$	437,089		$	631,807

Less Current Portion:	$	(437,089	)	$	(631,807	)

Long-Term Portion:	$	-		$	-