NOTES PAYABLE

3 Months Ended

Jun. 30, 2011

NOTES PAYABLE

NOTES PAYABLE

NOTE 7- NOTES PAYABLE

Notes Payable - Related Parties

Funds are advanced to the Company from various related parties including Scott A. Haire, the Company's Chairman, and entities controlled by him.  Other shareholders may fund the Company as necessary to meet working capital requirements and expenses.  The following is a summary of amounts due to related parties, including terms of the debt, and the interest accrued as of June 30, 2011:

Related party	Nature of relationship	Terms of the agreement	Principal amount
H.E.B., LLC, a Nevada limited liability company	Scott Haire is the managing member of HEB.	Unsecured, two separate $1,000,000 open lines of credit, no maturity date, and interest at 10% per annum.  Accrued interest at June 30, 2011 is $255,652.  Aggregate amount of line available at June 30, 2011 is $1,582,525.	$ 417,475
SWCC	Investor  in eHealth	Dated 7/21/06, no stated interest rate and no maturity date.	21,900
Wound Management Technologies, Inc.	Scott Haire is an officer and director of both WMT and VHGI.	Unsecured note with interest accrued at a rate of 10% per annum with no maturity date. Accrued interest at June 30, 2011 is $3,682.	145,664
Commercial Holding AG, LLC	Commercial Holding AG, LLC has  provided previous lines of credit to affiliates of VHGI.	Unsecured note with interest accrued at a rate of 10% per annum with no maturity date. Accrued interest at June 30, 2011 is $94,366.	142,600
MAH Holdings, LLC	MAH Holdings, LLC has provided previous lines of credit to affiliates of VHGI.	Unsecured, two separate $500,000 lines of credit, no maturity date with an interest rate of 10% per annum. Accrued interest at June 30, 2011 is $3,108.  Aggregate amount of line available at June 30, 2011 is $908,225.	91,775
Total			$819,414

Convertible Notes Payable

On April 4, 2011 and May 27, 2011, the Company executed convertible promissory notes with the same terms to the same unrelated party in the amounts of $50,000 and $30,000, respectively.  The principal and accrued interest on each note, at 8% per annum, is due nine months from date of execution.

In accordance with ASC Topic No. 470-20-25-4, the intrinsic value of the embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the debt equal to the intrinsic value of that feature to additional paid in capital.  A discount in the amount of $66,476 was calculated as the total value of the beneficial conversion feature, which is being amortized over the term of the notes.  The remaining unamortized balance as of June 30, 2011 is $49,699.

During late 2009 and 2010, the Company executed a total of $205,000 in convertible promissory notes with the same lender and with similar terms.  During the first quarter of 2011, $50,000 of the debt and $2,000 of the accrued interest owed to this lender was converted to 1,181,818 shares of the Company’s common stock and a loss on settlement was recognized of $40,091 related to this debt conversion.   For the year ended December 31, 2010, $130,000 of the debt was converted to 2,255,041 shares of the Company’s common stock and a loss on settlement was recognized of $98,955 related to the debt conversion.

The applicable discount recorded upon execution of the prior year notes is amortized over the note term using the effective interest method.  The unamortized discount balance at June 30, 2011 is $832.  The total balance owed to this lender at June 30, 2011 is $54,468, net of the discount, and the amount of accrued interest is $2,313, as of this same date.

Notes Payable

On June 8, 2010, the Company executed a promissory note as part of the purchase of the mining lease rights from Western Sierra (see Note 3 – “Mining Lease Rights”).  The principal balance of the promissory note was $240,000 when issued and interest accrued on the principal at 6% per annum up to the due date.   Subsequent to the due date, interest accrued on the principal balance at 10% per annum.  On October 22, 2010, this promissory note was paid in full.  On September 8, 2010, per the terms of the Mining Agreement (see Note 3 – “Mining Lease Rights”), an additional promissory note was issued to Western Sierra by the Company in the principal amount of $240,000 at an interest rate of 10% per annum.  Total accrued interest as of June 30, 2011 on both promissory notes is $10,902.  The principal balance due to this lender was paid as of March 31, 2011.

On June 30, 2011, the Company executed a promissory note to Samax Family Limited Partnership in the amount of $12,500 at 10% interest.  The Company granted 25,000 shares of common stock to be issued in July 2011. The note is due September 30, 2011.

Debentures

On December 17, 2008, the Company issued convertible debentures which were all converted into shares of the Company’s common stock as of June 30, 2010 with no remaining debenture balance as of December 31, 2010.