Ingen Technologies, Inc. - FORM 10-Q/A

Attached files

file	filename
EX-31.1 - CERTIFICATION - Ingen Technologies, Inc.	ingen_ex3101.htm
EX-32.2 - CERTIFICATION - Ingen Technologies, Inc.	ingen_ex3202.htm
EX-32.1 - CERTIFICATION - Ingen Technologies, Inc.	ingen_ex3201.htm
EX-31.2 - CERTIFICATION - Ingen Technologies, Inc.	ingen_ex3102.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 4 to

FORM 10-Q/A

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended: August 31, 2008

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

INGEN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Georgia	000-28704	84-1122431
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS Employer Identification Number)

35193 Avenue A, Suite C

Yucaipa, CA 92399

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: 800-259-9622

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes £ No R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £

Accelerated filer £

Non-accelerated filer £ (Do not check if a smaller reporting company)

Smaller reporting company R

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R

The number of shares outstanding of the registrant’s common stock as of September 24, 2010 was 7,999,999,964 shares with no par value per share.

TABLE OF CONTENTS

PART I. – FINANCIAL INFORMATION

Item 1.	Financial Statements for the quarter ended August 31, 2008	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	50
Item 4T.	Controls and Procedures

PART II. – OTHER INFORMATION

Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults upon Senior Securities	63
Item 4.	Submission of Matters to a Vote of Security Holders	63
Item 5.	Other Information	63
Item 6.	Exhibits	64

We have amended this Form 10-Q to restate our financial statements. We were required to restate our audited financial statements for the fiscal years ended May 31, 2007 and 2008 which were filed with the second amendment to our Form 10-K for the fiscal year ended May 31, 2008. The effects of these restatements effected the financial statements included in this Form 10-Q

PART I. - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS FOR QUARTER ENDED AUGUST 31, 2008

Ingen Technologies, Inc. and subsidiary

Consolidated Balance Sheets

August 31, 2008 and May 31, 2008

	Restated			Restated
	Unaudited			Audited
	August 31, 2008			May 31, 2008
ASSETS
Current assets
Cash	$	-		$	-
Accounts receivable		66			63
Inventories		74,715			74,830
Receivable of convertible debenture		75,000			-
Prepaid expenses		12,800			50,933
Total current assets		162,581			125,826

Property and equipment, net of accumulated depreciation		215,490			229,960

Other assets
Debt issue costs, net of accumulated amortization		140,343			157,027
Deposits		229,550			31,550
Total other assets		369,893			188,577

TOTAL ASSETS	$	747,964		$	544,363

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Cash overdraft	$	131		$	530
Accounts payable		235,819			212,242
Accrued expenses		699,125			501,750
Officer's loans		887,973			866,747
Short-term notes		82,500			82,500
Convertible notes payable, net of unamortized discount of $617,355 and $202,348		1,814,221			737,652
Current portion of long-term debt		14,539			14,539
Total current liabilities		3,734,308			2,415,960

Long-term liabilities
Loan payable		95,660			96,872
Convertible notes payable, net of unamortized discount of $513,745 and $951,792		246,255			1,079,755
Derivative liability		6,276,771			4,795,957
Total long-term liabilities		6,618,686			5,972,584

Total liabilities		10,352,994			8,388,544

Stockholders' deficit
Preferred stock, Series A, no par value, preferred liquidation value of $1.00 per share, 40,000,000 shares authorized and 38,275,960 issued and outstanding as of August 31, 2008, total liquidation preference of $38,275,960 issued and outstanding as of May 31, 2008, total liquidation preference of $38,275,960		1,000,536			1,000,536
Common stock, no par value, authorized 8,000,000,000 shares, 1,886 issued and outstanding as of August 31, 2008, 751 issued and outstanding as of May 31, 2008		5,353,113			5,145,143
Series A preferred stock subscription		2,000			2,000
Series A preferred stock subscription receivable		(220,000	)		(220,000	)
Accumulated deficit		(15,740,679	)		(13,771,860	)
Total stockholders' deficit		(9,605,030	)		(7,844,181	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	747,964		$	544,363

See notes to interim unaudited consolidated financial statements

Ingen Technologies, Inc.

Consolidated Statement of Operations (unaudited)

	For the quarters ended August 31,
	2008			2007

Sales	$	987		$	117,471

Cost of sales		115			67,413

Gross Profit		872			50,058

Selling, general and administrative expenses		275,810			763,378

Operating loss		(274,938	)		(713,320	)

Other expenses
Interest expense		(773,292	)		(839,832	)
Change in derivative liability		(920,589	)		(277,156	)

Net loss before provision for taxes		(1,968,819	)		(1,830,308	)

Provision for income taxes		-			10

Net loss	$	(1,968,819	)	$	(1,830,318	)

Basic and diluted net loss per share	$	(2,530.62	)	$	(3,030.32	)

Weighted average number of shares outstanding		778			604

See notes to interim unaudited consolidated financial statements

Ingen Technologies, Inc.

Consolidated Statement of Cash Flows (unaudited)

	For the quarters ended
	August 31,
	2008			2007
Cash flow from operating activities
Net loss	$	(1,968,819	)	$	(1,830,318	)
Depreciation and amortization		14,470			40,400
Amortization of debt issue costs		31,684			25,930
Expenses paid with stock and options		198,000			436,684
Note payable issued for services		30,000			-
Change in derivative liabilities		920,589			277,156
Non-cash interest expense and financing costs		583,264			723,733
(Increase) decrease in accounts receivable		(3	)		(78,090	)
(Increase) decrease in prepaid expenses		38,133			15,526
(Decrease) increase in accounts payable		23,577			(3,863	)
(Decrease) increase in accrued expenses		197,375			110,077
(Increase) decrease in deposit		(198,000	)		-
(Increase) decrease in inventory		115			10,642
Net cash used in operating activities		(129,615	)		(272,123	)

Cash flow from financing activities
Sale of common stock		-			74,800
Payments on loans		(1,212	)		(3,635	)
Proceeds from convertible notes payable		110,000			200,000
Proceeds from stockholder and officer loans		21,226			11,486
Repayments of stockholder and officer loans		-			(3,000	)
Net cash provided by financing activities		130,014			279,651

Net cash increase		399			7,528

Cash at beginning of period		(530	)		238

Cash at end of period	$	(131	)	$	7,766

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	-		$	800
Cash paid for interest expense	$	-		$	4,988

Supplemental disclosures of non cash financing activities:
Issuance of common stock to unrelated third party for deposit on media time	$	198,000		$	-
Value of issuance of warrants in connection with convertible debt	$	20,639		$	-
Beneficial conversion feature	$	491,649		$	428,343
Stock subscription receivable	$	-		$	45,000

See notes to interim unaudited consolidated financial statements

INGEN TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Ingen Technologies, Inc. is a medical device manufacturer with products registered with the United States Food & Drug Administration and holds a manufacturing license issued by the California Department of Health & Human Services in compliance with the manufacturing regulations in the state of California.

The Company has developed markets and distributes medical products, with applications in the respiratory device industry. Ingen Technologies is a Georgia corporation that is publicly traded on the NASDAQ OTC Pink Sheets under the stock symbol “IGNT.” Ingen Technologies, Inc. owns 100% of the capital stock of Ingen Technologies, Inc., a Nevada corporation, and this subsidiary was incorporated on June 10, 1999.

The Company's flagship product is its Oxyview® line of products. These products include Oxyview®, Oxyview Nasal Cannula and Oxyview Pulse Oximeter. The Oxyview® product line has multiple applications, inclusive but not limited to, the Home Care Medical Industry, Commercial Medical Industry, Government Services Administration and the Aircraft Industry.

According to 2007 CDC statistics, there are an estimated 23 million patients diagnosed with chronic obstructive pulmonary disease (COPD) in the United States and an estimated 600 million patients worldwide, according to the World Health Organization. There are also another estimated 12 million patients that are undiagnosed in the US. COPD is the fifth leading cause of death in the US and is one of the leading causes of death in the world. The majority of COPD patients require continued home oxygen therapy, which includes all of the required equipment supplied by the home suppliers of Durable Medical Equipment (DME). With the ongoing cuts of reimbursement for oxygen providers in the US, the home (DME) providers need to cut costs to stay in business. Oxyview® provides a substantial savings as a result of decreasing the number of unnecessary service calls for the home (DME) provider, as well as may prevent harm and malpractice issues related to equipment malfunction.

Oxyview® is a pneumatic metering device that displays and confirms the oxygen flow rate near the patient. The Oxyview® flow meter easily and quickly installs on to the oxygen tubing nearest the patient where oxygen flow matters the most. Without the Oxyview®, patients cannot confirm oxygen flow traveling through the oxygen tubing, and as a result there is an increase in unnecessary patient calls to their (DME) provider. Oxyview® also allows the home (DME) provider to trouble-shoot other equipment problems over the telephone which eliminates an on-site visit with the patient. More important, the Oxyview® provides the patient with more assurance that they are receiving adequate and prescribed oxygen flow. In most cases, the Oxyview® cost less than a single service call.

The Company introduced the new Oxyview® Nasal Cannula in May-2009. The Company offers both a reusable Oxyview® and a disposable Oxyview® attached to a nasal cannula. Oxyview® is reusable and the Oxyview® Nasal Cannula is a disposable soft-tip, latex free cannula that incorporates the Oxyview® in-line and requires no batteries, and pneumatically works all the time in any position with all liquid or gas O2 systems.

Corporate History: The Company was incorporated under the laws of the State of Colorado on August 3, 1989, under the name of Regional Equities Corporation. The principals of this new corporation decided to develop and operate a chain of restaurants, and in May of 1990 changed its name to Classic Restaurants and completed an initial public offering of units consisting of its Class A Common Stock and three separate classes of warrants. All of the warrants issued in connection with the offering expired without any being exercised. The Company developed two Florida based restaurants. Effective upon the close of trading on July 12, 1994, the Company effectuated a 1-for-10,000 reverse stock split of its Class A Common Stock. Effective on the close of trading on November 7, 1994, the Company effectuated a 10-for-1 forward stock split of its Class A and Class B Common Stock. In September 1995, the Company declared a 50% share dividend payable to the holders of record of its Class A and Class B Common Stock on October 13, 1995. At a special meeting of the stockholders of the Company held on April 13, 1998, the stockholders voted to close down the restaurants and approve a merger of the Company with and into Creative Recycling Technologies, Inc. ("CRTZ"), incorporated under the laws of the State of Georgia.

CRTZ developed a rubber tire recycling technology. The Company moved the state of incorporation from Colorado to Georgia. The merger became effective on April 14, 1998. As of the effective date of the merger, the Company ceased to exist as a separate legal entity, and CRTZ assumed, and became the owner of all of the liabilities and assets of the Company by operation of law. Under the Agreement and Plan of Merger, common and preferred stockholders received, for each share of common or preferred stock which they owned, one share of common or preferred stock in CRTZ which has the same rights, preferences and limitations as the shares which they owned immediately before the effective date of the merger. Effective upon the close of trading on April 14, 1998, the Company effectuated a 1-for-20 reverse stock split of its Class A and Class B Common Stock. The Company was dissolved on December 11, 1998 after a grievance regarding breach of the merger agreement of April 14, 1998, and there was no business activity until November of 2004.

On March 22, 2004, a merger agreement was approved between Creative Recycling Technologies (CRTZ) and Ingen Technologies, Inc., a private Nevada Corporation. Ingen Technologies, Inc. survived as the new subsidiary of Creative Recycling Technologies for the sole purpose of operating the new business. Creative Recycling Technologies changed its name to Ingen Technologies Inc., and remained a Georgia corporation, with completely new management and an active business plan in the medical devices industry, operated through the new subsidiary; “Ingen Technologies Inc.”, a Nevada Corporation, and wholly owned subsidiary of the public Company, Ingen Technologies Inc., a Georgia corporation.

The current subsidiary, Ingen Technologies, Inc., the Nevada corporation, was founded and incorporated by Scott R. Sand on June 10, 1999. Upon the effective date of the merger in March of 2004, Mr. Sand became the Chief Executive Officer and Chairman of the Board of Directors for both the public company and the subsidiary and continues to hold these positions today.

On December 5, 2005, the Company effected changes to the capital structure that reduced the number of authorized common shares from 500 million to 100 million. The number of authorized preferred shares remained unchanged at 40 million and was designated as Series-A Convertible Preferred Stock. The stockholders authorized a reverse split of common shares on a ratio of 40 into 1 and preferred shares on a ratio of 3 into 1.

On November 16, 2006, the Company purchased the intellectual property rights for Oxyview®. The Company had co-invented the Oxyview® product with a third party. The agreement gave the Company sole ownership of the product and intangible assets in the form of pending patents associated with Oxyview®, which is part of the Company's BAFI® line of products. Patents for Oxyview® are pending in the United States, Japan, and the European Communities. The Company was issued Oxyview® patent by the People's Republic of China on July 1, 2009. Oxyview® relates to flow meters which provide a visual signal for gas flow through a conduit. More particularly it relates to a flow meter which provides a visual cue viewable with the human eye, as to the flow of gas through a cannula which conventionally employs very low pressure and gas volume to a patient using the Oxyview®. The Company began selling Oxyview® in November of 2006.

On February 12, 2008, the stockholders approved a resolution to amend the Articles of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 750,000,000, and authorized a reverse split of common shares on a ratio of 600 into 1, effective on August 27, 2008; thereby reducing the number of issued and outstanding shares from 342,946,942 to 572,259. On March 18, 2009, the Company effectuated another reverse stock split. This additional reverse split was at a rate of one share for every three thousand (3,000) then outstanding. The cumulative effect of these two reverse stock splits was a rate of one share for every 1,800,000. The Series A Preferred stock was not affected by these reverse stock splits. The effects of the reverse stock splits have been adjusted for in these financial statements.

The stockholders also approved an increase in the number of authorized shares of common stock to 2.5 billion and an increase in the number of authorized shares of the Series-A preferred stock to 100 million. There was a change in the rights of the Series-A preferred stock to include special voting rights, giving them 10 votes per share (previously each share received one vote, on equal footing with the common stock). The Series-A preferred shares are now convertible into 10 shares of common stock (they previously were convertible at a rate of one for one).

On September 25, 2009, the stockholders authorized an increase of our authorized number of shares of common stock from 2.5 billion to 3.5 billion.

On April 12, 2010, the stockholders authorized an increase on our authorized number of shares of common stock from 3.5 billion to 8 billion.

In the opinion of Management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three months ended August 31, 2008 and 2007, have been made. The results of operations for the three months ended August 31, 2008 are not necessarily indicative of the operating results for the full year.

Principles of Consolidation and Presentation: The accompanying consolidated financial statements include the accounts of Ingen Technologies, Inc. and its subsidiary after elimination of all intercompany accounts and transactions. Certain prior period balances have been reclassified to conform to the current period presentation.

Use of estimates: The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses. Actual results may differ from these estimates.

Revenue Recognition: The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is probable. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company's historical experience. All orders are customized with substantial down payments. Products are released upon receipt of the remaining funds.

Cash Equivalents: For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments: The Company's financial instruments consist principally of cash, accounts receivable, inventories, accounts payable and borrowings. The Company believes the financial instruments' recorded values approximate current values because of their nature and respective durations. The fair value of embedded conversion options and stock warrants are based on a Black-Scholes fair value calculation. The fair value of convertible notes payable has been discounted to the extent that the fair value of the embedded conversion option feature exceeds the face value of the note. This discount is being amortized over the term of the convertible note.

Inventories: The Company carries its inventories at cost, inclusive of freight and sales taxes. The Company does not manufacture its own products. Ingen uses a contract manufacturer to process and package Oxyview®. Accent Plastics, Inc. is based in Corona-California and is ISO Certified to process and package Oxyview® in a clean-room environment.

Property and Equipment: Property and Equipment are valued at cost. Maintenance and repair costs are charged to expenses as incurred. Depreciation is computed on the straight-line method based on the following estimated useful lives of the assets: 3 to 5 years for computer, software and office equipment, and 5 to 7 years for furniture and fixtures.

Convertible Notes Payable and Derivative Liabilities: The Company accounts for convertible notes payable and warrants in accordance with Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard requires the conversion feature of convertible debt be separated from the host contract and presented as a derivative instrument if certain conditions are met. Emerging Issue Task Force (EITF) 00-19, "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock" and EITF 05-2, "The Meaning of "Conventional Convertible Debt Instrument" in issue No. 00-19" were also analyzed to determine whether the debt instrument is to be considered a conventional convertible debt instrument and classified in stockholders' equity.

All convertible notes payable were evaluated and determined not to be conventional convertible debt instruments and therefore, because of certain terms and provisions including liquidating damages under the associated registration rights agreement, embedded conversion options were bifurcated and accounted for as derivative liability instruments. The stock warrants issued in conjunction with the convertible notes payable were also evaluated and determined to be a derivative instrument and, therefore, classified as a liability on the balance sheet. The accounting guidance also requires that the conversion feature and warrants be recorded at fair value for each reporting period with changes in fair value recorded in the consolidated statements of operations.

A Black-Scholes valuation calculation was applied to both the conversion features and warrants at issuance dates and May 31, 2008 and August 31, 2008. The issuance date valuation was used for the effective debt discount that these instruments represent. The debt discount is amortized over the life of the debts using the effective interest method. The May 31, 2008 and August 31, 2008 valuations were used to record the fair value of these instruments at the end of the reporting period with any difference from prior period calculations reflected in the consolidated statement of operations.

Research and Development: Ingen incurred expenditures of $6,082 and $1,500 for research and development in the quarters ended August 31, 2007 and August 31, 2008, respectively. The Company expenses all research and development costs.

Income Taxes: Income tax expense is based on pretax accrual income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Net Loss Per Share: Basic net loss per share includes no dilution and is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted net loss per share does not differ from basic net loss per share since potential shares of common stock are anti-dilutive for all periods presented. Potential shares consist of Series A preferred stock and outstanding warrants.

In September, 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The statement defines fair value, determines appropriate measurement methods, and expands disclosure requirements about those measurements. SFAS No. 157 is effective for our fiscal year beginning June 1, 2008.

Management does not believe there would have been a material effect on the accompanying financial statements had any other recently issued, but not yet effective, accounting standards been adopted in the current period.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. The objective of this statement is to improve the relevance, comparability, and transparency of the financial statements by establishing accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The Company believes that this statement will not have any impact on its financial statements, unless it deconsolidates a subsidiary.

In March 2008, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 161, Disclosures about Derivative Instruments and Hedging Activities (an amendment to SFAS No. 133). This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and requires enhanced disclosures with respect to derivative and hedging activities. The Company will comply with the disclosure requirements of this statement if it utilizes derivative instruments or engages in hedging activities upon its effectiveness.

In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets ("FSP No. 142-3") to improve the consistency between the useful life of a recognized intangible asset (under SFAS No. 142) and the period of expected cash flows used to measure the fair value of the intangible asset (under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be considered when developing renewal or extension assumptions that are used to estimate an intangible asset's useful life under SFAS No. 142. The guidance in the new staff position is to be applied prospectively to intangible assets acquired after December 31, 2008. In addition, FSP No. 142-3 increases the disclosure requirements related to renewal or extension assumptions. The Company does not believe implementation of FSP No. 142-3 will have a material impact on its financial statements.

In May 2008, the FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles."

In May 2008, the FASB issued Statement No. 163, Accounting for Finance Guarantee Insurance Contracts – An Interpretation of FASB Statement No. 60. The premium revenue recognition approach for a financial guarantee insurance contract links premium revenue recognition to the amount of insurance protection and the period in which it is provided. For purposes of this statement, the amount of insurance protection provided is assumed to be a function of the insured principal amount outstanding, since the premium received requires the insurance enterprise to stand ready to protect holders of an insured financial obligation from loss due to default over the period of the insured financial obligation. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008.

In June 2008, the FASB issued FASB Staff Position Emerging Issues Task Force (EITF) No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions and Participating Securities ("FSP EITF No. 03-6-1"). Under FSP EITF No. 03-6-1, unvested share-based payment awards that contain rights to receive nonforfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. FSP EITF No. 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those years, and is not expected to have a significant impact on the Company's financial statements.

NOTE 2 - GOING CONCERN

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities and commitments in the normal course of business. In the near term, the Company expects operating costs to continue to exceed funds generated from operations. As a result, the Company expects to continue to incur operating losses and may not have sufficient funds to grow its business in the future. The Company can give no assurance that it will achieve profitability or be capable of sustaining profitable operations. As a result, operations in the near future are expected to continue to use working capital. The Company believes that this situation can be crippling unless revenues can be substantially increased and/or significant additional funding can be received in order to support the Company's operations until revenues exceed operating costs.

To successfully grow the business, the Company must decrease its cash burn rate, improve its cash position and its revenue base, and succeed in its ability to raise additional capital through a combination of primarily public or private equity offering or strategic alliances. The Company also depends on certain contractors and its CEO, and the loss of any of those contractors or the CEO, may harm the Company's business.

Additionally, as described in Note 5 below as of May 31, 2008 and August 31, 2008, the Company was technically in default under its convertible note agreements. On July 31, 2009, the Company stipulated to a $4.5 million judgment in favor of the note holders and is required to make weekly payments in the form of free trading stock and other cash payments should the Company be successful in raising capital in the future. The financial statements included herewith were not adjusted for this settlement.

The Company incurred a loss of $1,968,819 and for the quarter ended August 31, 2008, and as of that date, had an accumulated deficit of $15,740,679. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company depends upon capital to be derived from future financing activities such as subsequent offerings of its common stock, debt financing or loans from its officers and directors in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital.

Management has taken various steps to revise its operating and financial requirements, has obtained additional financing and has revised the repayment terms of existing notes payable. Management believes additional financing will be required to meet the Company's obligations and commitments for the next twelve months. The Company will continue its capital raising efforts through equity and debt financing. Management believes that with adequate funds it can increase sales of its products and move toward positive cash flow. Management has also devoted considerable effort during the period ended August 31, 2008 towards management of liabilities and improvement of the Company's operations.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment as of August 31, 2008 and May 31, 2008 is summarized as follow:

	As of August 31,			As of May 31,
	2008			2008

Vehicles	$	145,596		$	145,596
Furniture & Fixtures		31,705			31,705
Machinery & Equipment		188,709			188,709
Leasehold Improvements		41,606			41,606
		407,616			407,616
Less accumulated depreciation		(192,126	)		(177,656	)

Property and Equipment, net	$	215,490		$	229,960

NOTE 4 - ACCRUED EXPENSES

Accrued expenses at August 31, 2008 and May 31, 2008 consist of:

	As of August 31,		As of May 31,
	2008		2008
Accrued officer's compensation	$	39,000	$	-
Accrued interest expense		540,027		381,682
Accrued taxes		119,760		119,761
Accrued royalties payable		338		307

Total	$	699,125	$	501,750

NOTE 5 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES

Events of default under Note Agreements and Settlement Agreement: As of May 31, 2008 and August 31, 2008, the Company had committed various acts which constitute events of default under its Securities Purchase Agreements dated July 25, 2006, March 15, 2007 and July 15, 2007 (and the notes there under with total principal balances of $2,221,576 as of August 31, 2008). The investors commenced legal action against the Company in July of 2009. On July 31, 2009, the Company entered into a Settlement and Forbearance Agreement with the note holders. Under the terms of this Agreement, the Company stipulated to a judgment in the amount of $4.5 million. All warrants held by the note holders were cancelled. Further, the Company agreed to issue the greater of (a) 40 million shares or (b) twenty percent (20%) of the prior week’s total trading volume of free trading common stock to the note holders. The note holders also consented to the Company offering up to $4 million of securities for sale and agreed to forbear any collection efforts so long as one half of the net offering proceeds were paid to the note holders. As long as the Company delivers the shares due each week and makes payments of any offering proceeds to the note holders, they agreed to forbear enforcing the Judgment or enforcing any of their security interests through and until May 31, 2010. The Judgment amount of $4.5 million shall be reduced by any net proceeds from the disposition of the stock paid under this Settlement Agreement and by any other cash payments made by the Company.

CONVERTIBLE NOTE SUMMARIES

6% $225,000 CONVERTIBLE DEBT DATED JUNE 1, 2004

On June 1, 2004, the Company issued to MedOx Corporation, Inc. a note in the amount of $225,000 in consideration for services rendered under an agreement entered into on the same date. The note was issued with a 6% interest rate and a four-year term. This note was in default as of August 31, 2008 and interest is now accruing at the default rate of 15%.

6% $50,000 CONVERTIBLE DEBT DATED SEPTEMBER 4, 2005

On September 4, 2005, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The note was issued with a 6% interest rate and a one-year term. This note was in default as of August 31, 2008 and interest is now accruing at the default rate of 15%.

6% $50,000 CONVERTIBLE DEBT DATED FEBRUARY 19, 2006

On February 19, 2006, the Company issued to an individual a note in the amount of $50,000 in consideration for services rendered under an agreement entered into on the same date. The note was issued with a 6% interest rate and a two-year term. This note was in default as of August 31, 2008 and interest is now accruing at the default rate of 15%.

6% $1.5 MILLION CONVERTIBLE DEBT DATED JULY 25, 2006 (as of date of this report, this debt has been renegotiated as discussed below)

On July 25, 2006, the Company entered into a Security Purchase Agreement (the "Agreement") and agreed to issue and sell to Investors (i) callable secured convertible notes up to $2 million (only $1.5 million of this amount was funded), and (ii) warrants to acquire an aggregate of 20 million shares of the Company's common stock. The notes bore an interest at 6% per annum (with a default interest rate at 15% per annum), and matured three years from the date of issuance. The notes were convertible into the Company's common stock at the applicable percentage of the average of the lowest three trading prices for the Company's shares of common stock during the twenty trading day period prior to conversion. The applicable percentage was 50%.

Under certain circumstances, we were permitted to prepay the notes in the event that no event of default existed, there were a sufficient number of shares available for conversion, and the market price was at or below $0.10 per share. Prepayment of the convertible notes could have been made in cash equal to 140% of the outstanding principal and accrued interest (for prepayment occurring after the 60th day following the issue date of the notes). In addition, in the event that the reported average daily price of the common stock for each day of the month ending on any determination date was below $0.10, we could have repaid a portion of the outstanding principal amount of the notes equal to 101% of the principal amount divided by thirty-six plus one month's interest and this will stay all conversions for the month.

Events of default under the notes generally included failure to repay the principal or interest when due, failure to issue shares of common stock upon conversion by the holder, failure to timely file a registration statement or have such registration statement declared effective, breach of certain covenants or representation or warranty in the Securities Purchase Agreement or related convertible note, the assignment or appointment of a receiver to control a substantial part of our property or business, a money judgment, writ or similar process entered or filed against us in excess of $50,000 which continues for 20 days unless consented to by the holder, the commencement of a bankruptcy, insolvency, reorganization or liquidation proceeding against us without stay or the delisting of our common stock. Upon the occurrence of an event of default, the note holders may by written notice demand repayment in an amount equal to the greater of (i) the then outstanding principal amount of the convertible notes, together with unpaid interest and any outstanding penalties times 140% or (ii) the "parity value" of the default sum, where parity value means (a) the highest number of shares of common stock issuable upon conversion of the default sum, treating the trading day immediately preceding the prepayment date as the "conversion date" for the purpose of determining the lowest applicable conversion price (unless the event of default is a result of a breach in reference to a specific conversion date), multiplied by (b) the highest closing price for the common stock during the period beginning on the date of first occurrence of the event of default and ending one day prior to the prepayment date. In addition, we granted the Investors a security interest in substantially all of our assets and intellectual property pursuant to a Security Agreement and an Intellectual Property Security Agreement.

The Company paid a total of $208,200 in debt issuance costs on the $1.5 million that was received from the sale of the convertible notes. The debt issuance costs are being amortized over the term of the notes, which are due on July 25, 2009.

The terms of the notes under this Securities Purchase Agreement were amended on August 29, 2008. This amendment changed the applicable percentage for purposes of the conversion rate of the notes into common stock from 50% to 40%. Further, the interest rate on the notes was retroactively adjusted from 6% to 12% effective January 1, 2008.

The notes under this Securities Purchase Agreement were settled and renegotiated under a Forbearance Agreement dated July 31, 2009 as described below.

6% $50,000 CONVERTIBLE DEBT DATED JANUARY 1, 2007

On January 1, 2007, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The note was issued with a 6% interest rate and a two-year term.

6% $450,000 CONVERTIBLE DEBT DATED MARCH 15, 2007 (as of date of this report, this debt has been renegotiated as discussed below)

On March 15, 2007, we entered into a Securities Purchase Agreement with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (the "Investors") and agreed to issue and sell (i) callable secured convertible notes up to $450,000, and (ii) warrants to acquire an aggregate of 9 million shares of our common stock. These securities were issued to the same group of Investors as the $1.5 million convertible debt above. The callable secured convertible notes (4 notes, $450,000 total loan principal; 3 year term; 6% annual interest, 15% annual "default interest") are convertible into shares of our common stock at a variable conversion price based upon the applicable percentage of the average of the lowest three trading prices for the common stock during the twenty-day trading period prior to conversion. The "Applicable Percentage" means 50%; provided, however, that the Applicable Percentage shall be increased to (i) 55% in the event that a Registration Statement is filed within thirty days of the required filing and (ii) 60% in the event that the Registration Statement becomes effective within ninety days from the required filing.

The Company paid a total of $50,000 in debt issuance costs on the $450,000 that was received from the sale of the convertible notes. The debt issuance costs are being amortized over the term of the notes, which are due between March 15 and June 15, 2010.

The notes under this Securities Purchase Agreement were settled and renegotiated under a Forbearance Agreement dated July 31, 2009 as described below.

6% $110,000 CONVERTIBLE DEBT DATED MARCH 15, 2007 (as of date of this report, this debt has been renegotiated as discussed below)

On July 30, 2007, we issued a callable secured convertible note in the amount of $110,000. This note was issued under the same terms as the 6% $450,000 Convertible Debt described above (the March 15, 2007 Securities Purchase Agreement).

This note was settled and renegotiated under a Forbearance Agreement dated July 31, 2009 as described below.

6% $100,000 CONVERTIBLE DEBT DATED JUNE 16, 2008 (as of date of this report, this debt has been renegotiated as discussed below)

On June 16, 2008, we issued a callable secured convertible note in the amount of $100,000. This note was issued under the same terms as the 6% $450,000 Convertible Debt described above (the March 15, 2007 Securities Purchase Agreement).

This note was settled and renegotiated under a Forbearance Agreement dated July 31, 2009 as described below.

12% $100,000 CONVERTIBLE DEBT DATED AUGUST 29, 2008 (as of date of this report, this debt has been renegotiated as discussed below)

On August 29, 2008, we issued a callable secured convertible note in the amount of $100,000. This note was issued under the same terms as the 6% $450,000 Convertible Debt described above (the March 15, 2007 Securities Purchase Agreement). As of August 31, 2008, $75,000 of this amount was due to us and was received in September 2008.

This note was settled and renegotiated under a Forbearance Agreement dated July 31, 2009 as described below.

SETTLEMENT OF 6% $1.5 MILLION CONVERTIBLE DEBT DATED JULY 25, 2006, 6% $450,000 CONVERTIBLE DEBT DATED MARCH 15, 2007, 6% $110,000 CONVERTIBLE DEBT DATED MARCH 15, 2007, 6% $100,000 CONVERTIBLE DEBT DATED JUNE 16, 2008 and the 12% $100,000 CONVERTIBLE DEBT DATED AUGUST 29, 2008

In June 2009, the Investors commenced legal action against the Company for default under the notes. On July 31, 2009, the Company stipulated to a $4.5 million judgment in favor of the note holders and is required to make weekly payments in the form of free trading stock and other cash payments should the Company be successful in raising capital in the future. All warrants held by the note holders were cancelled. Further, Ingen agreed to issue the greater of (a) 40 million shares or (b) twenty percent (20%) of the prior week’s total trading volume of free trading common stock to the note holders. The note holders also consented to Ingen offering up to $4 million of securities for sale and agreed to forbear any collection efforts so long as one half of the net offering proceeds were paid to the note holders. As long as Ingen delivers the shares due each week and makes payments of any offering proceeds to the note holders, they agreed to forbear enforcing the Judgment or enforcing any of their security interests through and until May 31, 2010. The Judgment amount of $4.5 million shall be reduced by any net proceeds from the disposition of the stock paid under this Settlement Agreement and by any other cash payments made by Ingen. At the time of the Forbearance Agreement, the Company owed the note holders $2,256,507 in principal, $554,163 in accrued interest and an unrecorded loan of $5,714. The Company recorded an additional interest expense of approximately $1.75 million to record the difference between these balances and the $4.5 million stipulated judgment amount. As of May 31, 2010, the Company has made payments to the note holders of 1,182,489,170 shares of common stock. The note holders have netted proceeds of $2,563,866 from the sale of these shares, leaving a balance due of $1,936,134.

6% $200,000 CONVERTIBLE DEBT DATED MARCH 15, 2007

On March 15, 2007, the Company issued to MedOx Corporation, Inc. a note in the amount of $200,000 in consideration for services rendered under an agreement entered into on the same date. The note was issued with a 6% interest rate and a two-year term.

6% $50,000 CONVERTIBLE DEBT DATED MAY 15, 2007

On May 15, 2007, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The note was issued with a 6% interest rate and a two-year term.

6% $315,000 CONVERTIBLE DEBT DATED AUGUST 7, 2007

On August 7, 2007, the Company issued to an individual a note in the amount of $315,000 in consideration for services rendered under an agreement entered into on the same date. The note was issued with a 6% interest rate and a one-year term.

6% $50,000 CONVERTIBLE DEBT DATED MAY 1, 2008

On May 1, 2008, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The note was issued with a 6% interest rate and a 18-month term.

6% $30,000 CONVERTIBLE DEBT DATED JUNE 17, 2008

On June 17, 2008, the Company issued to an individual a note in the amount of $30,000 in consideration for services rendered under an agreement entered into on the same date. The note was issued with a 6% interest rate and a one-year term.

DERIVATIVE LIABILITIES

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $225,000 CONVERTIBLE DEBT DATED JUNE 1, 2004

The following tables describe the valuation of the conversion feature of the $225,000 6% convertible debenture entered into on June 1, 2004, using the Black Scholes pricing model on the date of the note:

	6/1/2004
Approximate risk free rate		3.86%
Average expected life	4 years
Dividend yield		0%
Volatility		292.58%
Estimated fair value of conversion feature on date of note issuance	$	448,997
Estimated fair value of conversion feature as of May 31, 2008	$	225,075
Estimated fair value of conversion feature as of August 31, 2008	$	225,196

The Company recorded the fair value of the conversion feature of $448,997, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $223,997 charged to expense. The discount was fully amortized as of May 31, 2008. For the quarters ended August 31, 2008 and 2007, the Company has reported $121 and $18,460, respectively, in other expense related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $50,000 CONVERTIBLE DEBT DATED SEPTEMBER 4, 2005

The following tables describe the valuation of the conversion feature of the $50,000 6% convertible debenture entered into on September 4, 2005, using the Black Scholes pricing model on the date of the note:

	9/4/2005
Approximate risk free rate		5.05%
Average expected life	1 year
Dividend yield		0%
Volatility		255.27%
Estimated fair value of conversion feature on date of note issuance	$	86,437
Estimated fair value of conversion feature as of May 31, 2008	$	54,731
Estimated fair value of conversion feature as of August 31, 2008	$	57,038

The Company recorded the fair value of the conversion feature of $86,437, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $36,437 charged to expense. The discount was fully amortized as of May 31, 2008. For the quarters ended August 31, 2007 and 2008, the Company has reported $191 in other income and $2,307 in other expense, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $50,000 CONVERTIBLE DEBT DATED FEBRUARY 19, 2006

The following tables describe the valuation of the conversion feature of the $50,000 6% convertible debenture entered into on February 19, 2006, using the Black Scholes pricing model on the date of the note:

	2/19/2006
Approximate risk free rate		4.57%
Average expected life	2 years
Dividend yield		0%
Volatility		302.50%
Estimated fair value of conversion feature on date of note issuance	$	97,837
Estimated fair value of conversion feature as of May 31, 2008	$	50,017
Estimated fair value of conversion feature as of August 31, 2008	$	50,044

The Company recorded the fair value of the conversion feature of $97,837, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $47,837 charged to expense. The discount was fully amortized as of May 31, 2008. For the quarters ended August 31, 2008 and 2007, the Company has reported $27 and $9,024 in other expense, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $1.5 MILLION CONVERTIBLE DEBT DATED JULY 25, 2006

As of May 31, 2008, the total derivative liability associated with the $1.5 million convertible notes was equal to $2,544,533. This balance was $2,821,957 as of May 31, 2007.

The following tables describe the valuation of the conversion feature of each tranche of the convertible debenture issued under the $1.5 million Securities Purchase Agreement, using the Black Scholes pricing model on the date of each note:

	7/27/2006		8/30/2006		1/24/2007
	Tranche		Tranche		Tranche
Approximate risk free rate		5.25%		4.80%		4.65%
Average expected life	3 years		3 years		2.5 years
Dividend yield		0%		0%		0%
Volatility		202.01%		201.26%		138.21%
Estimated fair value of conversion feature on date of notes	$	1,328,118	$	1,137,929	$	371,193
Estimated fair value of conversion feature as of May 31, 2008	$	1,150,465	$	1,042,134	$	351,934
Estimated fair value of conversion feature as of August 31, 2008	$	1,466,940	$	1,344,914	$	468,329

The Company recorded the fair value of the conversion feature, aggregate of $2,837,240, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received from each tranche, with the excess of $1,337,240 charged to expense. Amortization expense related to the conversion feature discount for the quarter ended August 31, 2008 was $84,508. Remaining unamortized discount as of that date was $501,695. For the quarter ended August 31, 2008, the Company has reported $735,650 in other expense related to changes in its derivative liability associated with these notes. For the quarter ended August 31, 2007, the Company has reported $36,374 in other income related to changes in its derivative liability associated with these notes.

DERIVATIVE LIABILITY ASSOCIATED WITH THE WARRANTS ISSUED IN CONNECTION WITH THE $1.5 MILLION CONVERTIBLE DEBT DATED JULY 25, 2006

The Company also granted warrants to purchase 20,000,000 shares of common stock in connection with the financing. The warrants are exercisable at $0.10 per share for a period of seven years, and were fully vested. Upon the effectuation of the reverse stock split on August 27, 2008, these warrants have been adjusted to purchase 33,334 shares of common stock at a price of $60.00 per share. Upon the effectuation of the reverse stock split on March 18, 2009, these warrants have been adjusted to purchase 12 shares of common stock at a price of $180,000 per share. The warrants were cancelled as part of a Settlement Agreement on July 31, 2009. The warrants were originally valued at $1,987,103 using the Black-Scholes Option Pricing Model with the following weighted-average assumptions used.

	7/26/2006
Approximate risk free rate		5.23%
Average expected life	7 years
Dividend yield		0%
Volatility		201.26%
Number of warrants granted		20,000,000
Estimated fair value of total warrants granted	$	1,987,478
Estimated fair value of warrants on May 31, 2008	$	11,189
Estimated fair value of warrants on August 31, 2008	$	2,566

The warrants were revalued as of the date of this report at a value of $2,566 using the Black-Scholes Option Pricing Model. For the quarters ended August 31, 2008 and 2007, the Company has reported $8,623 in other income and $401,438 in other income, respectively, related to changes in its derivative liability associated with these warrants.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $50,000 CONVERTIBLE DEBT DATED JANUARY 1, 2007

The following tables describe the valuation of the conversion feature of the $50,000 6% convertible debenture entered into on January 1, 2007, using the Black Scholes pricing model on the date of the note:

	1/1/2007
Approximate risk free rate		4.93%
Average expected life	2 years
Dividend yield		0%
Volatility		138.21%
Estimated fair value of conversion feature on date of note issuance	$	78,809
Estimated fair value of conversion feature as of May 31, 2008	$	72,350
Estimated fair value of conversion feature as of August 31, 2008	$	69,532

The Company recorded the fair value of the conversion feature of $78,809, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $38,809 charged to expense. The remaining unamortized discount as of August 31, 2008 was $9,454. For the quarters ended August 31, 2007 and 2008, the Company has reported $3,772 and $2,818 in other income, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $450,000 CONVERTIBLE DEBT DATED MARCH 15, 2007

The derivative liability associated with the $450,000 convertible notes was equal to $837,089.

The following tables describe the valuation of the conversion feature of each tranche of the convertible debenture that were issued as part of the $450,000 Securities Purchase Agreement, using the Black Scholes pricing model on the date of each note:

	3/15/2007		4/16/2007		5/15/2007		6/15/2007
	Tranche		Tranche		Tranche		Tranche
Approximate risk free rate		4.47%		4.80%		4.87%		5.13%
Average expected life	3 years		3 years		3 years		3 years
Dividend yield		0%		0%		0%		0%
Volatility		182.97%		193.30%		193.30%		235.23%
Estimated fair value of conversion feature on date of notes	$	237,789	$	218,638	$	218,638	$	214,099
Estimated fair value of conversion feature as of May 31, 2008	$	223,162	$	203,529	$	204,659	$	205,739
Estimated fair value of conversion feature as of August 31, 2008	$	282,184	$	261,582	$	262,797	$	263,930

The Company recorded the fair value of the conversion feature, aggregate of $889,164, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received from each tranche, with the excess of $489,164 charged to expense. The remaining unamortized discount as of August 31, 2008 was $256,546. For the quarter ended August 31, 2008, the Company has reported $233,406 in other expense related to changes in its derivative liability associated with these notes. For the quarter ended August 31, 2007, the Company has reported $31,309 in other income related to changes in its derivative liability associated with these notes.

DERIVATIVE LIABILITY ASSOCIATED WITH WARRANTS ISSUED IN CONNECTION WITH THE 6% $450,000 MILLION CONVERTIBLE DEBT DATED MARCH 15, 2007

The Company also granted warrants to purchase 9,000,000 shares of common stock in connection with the financing. The warrants are exercisable at $0.06 per share for a period of seven years, and were fully vested. Upon the effectuation of the reverse stock split on August 27, 2008, these warrants have been adjusted to purchase 15,000 shares of common stock at a price of $36.00 per share. Upon the effectuation of the reverse stock split on March 18, 2009, these warrants have been adjusted to purchase 5 shares of common stock at a price of $108,000 per share. The warrants were cancelled as part of a Settlement Agreement on July 31, 2009. The warrants were originally valued at $443,468 using the Black-Scholes Option Pricing Model with the following weighted-average assumptions used.

	3/15/2007
Approximate risk free rate		4.47%
Average expected life	7 years
Dividend yield		0%
Volatility		182.97%
Number of warrants granted		9,000,000
Estimated fair value of total warrants granted	$	443,468
Estimated fair value of warrants on May 31, 2008	$	5,035
Estimated fair value of warrants on August 31, 2008	$	1,155

The warrants were revalued as of the date of this report at a value of $1,115 using the Black-Scholes Option Pricing Model. For the quarters ended August 31, 2007 and 2008, the Company has reported $179,302 in other expense and $3,858 in other income, respectively, related to changes in its derivative liability associated with these warrants.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $200,000 CONVERTIBLE DEBT DATED MARCH 15, 2007

The following tables describe the valuation of the conversion feature of the $200,000 6% convertible debenture entered into on March 15, 2007, using the Black Scholes pricing model on the date of the note:

	3/15/2007
Approximate risk free rate		4.57%
Average expected life	2 years
Dividend yield		0%
Volatility		182.97%
Estimated fair value of conversion feature on date of note issuance	$	348,570
Estimated fair value of conversion feature as of May 31, 2008	$	310,632
Estimated fair value of conversion feature as of August 31, 2008	$	309,598

The Company recorded the fair value of the conversion feature of $348,570, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $148,570 charged to expense. The remaining unamortized discount as of that date was $61,085. For the quarters ended August 31, 2007 and 2008, the Company has reported $8,582 and $1,034 in other income, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $50,000 CONVERTIBLE DEBT DATED MAY 15, 2007

The following tables describe the valuation of the conversion feature of the $50,000 6% convertible debenture entered into on May 15, 2007, using the Black Scholes pricing model on the date of the note:

	5/15/2007
Approximate risk free rate		4.93%
Average expected life	2 years
Dividend yield		0%
Volatility		220.45%
Estimated fair value of conversion feature on date of note issuance	$	92,158
Estimated fair value of conversion feature as of May 31, 2008	$	81,718
Estimated fair value of conversion feature as of August 31, 2008	$	82,826

The Company recorded the fair value of the conversion feature of $92,158, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $42,158 charged to expense. The remaining unamortized discount as of August 31, 2008 was $19,604. For the quarters ended August 31, 2007 and 2008, the Company has reported $470 and $1,108 in other expense, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $110,000 CONVERTIBLE DEBT DATED JULY 15, 2007

The derivative liability associated with the $110,000 convertible note was equal to $207,132.

The following tables describe the valuation of the conversion feature of the $110,000 convertible debenture that was issued under the same terms as the $450,000 Securities Purchase Agreement, using the Black Scholes pricing model on the date of the note:

	7/15/2007
Approximate risk free rate		4.57%
Average expected life	3 years
Dividend yield		0%
Volatility		236.86%
Estimated fair value of conversion feature on date of note	$	214,244
Estimated fair value of conversion feature as of May 31, 2008	$	207,132
Estimated fair value of conversion feature as of August 31, 2008	$	265,351

The Company recorded the fair value of the conversion feature of $214,244 as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received, with the excess of $114,244 charged to expense. The remaining unamortized discount as of that date was $71,824. For the quarters ended August 31, 2007 and 2008, the Company has reported $1,727 in other income and $58,218 in other expense, respectively, related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $315,000 CONVERTIBLE DEBT DATED AUGUST 8, 2007

The following tables describe the valuation of the conversion feature of the $315,000 6% convertible debenture entered into on August 8, 2007, using the Black Scholes pricing model on the date of the note:

	8/8/2007
Approximate risk free rate		2.18%
Average expected life	1 year
Dividend yield		0%
Volatility		234.82%
Estimated fair value of conversion feature on date of note issuance	$	526,881
Estimated fair value of conversion feature as of May 31, 2008	$	396,478
Estimated fair value of conversion feature as of August 31, 2008	$	315,274

The Company recorded the fair value of the conversion feature of $526,881, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $211,881 charged to expense. The remaining unamortized discount as of August 31, 2008 was none. For the quarters ended August 31, 2007 and 2008, the Company has reported $15,471 and $81,202, respectively, in other income related to changes in its derivative liability associated with this note.

DERIVATIVE LIABILITY ASSOCIATED WITH THE 6% $30,000 CONVERTIBLE DEBT DATED JUNE 17, 2008

The following tables describe the valuation of the conversion feature of the $30,000 6% convertible debenture entered into on June 17, 2008, using the Black Scholes pricing model on the date of the note:

	6/17/2008
Approximate risk free rate		0.90%
Average expected life	1 year
Dividend yield		0%
Volatility		241.5275%
Estimated fair value of conversion feature on date of note issuance	$	50,639
Estimated fair value of conversion feature as of August 31, 2008	$	50,901

The Company recorded the fair value of the conversion feature of $50,639, as a discount to the convertible debt in the accompanying balance sheet up to the proceeds received with the excess of $20,639 charged to expense. The remaining unamortized discount as of August 31, 2008 was $25,517. For the quarters ended August 31, 2007 and 2008, the Company has reported none and $262, respectively, in other expense related to changes in its derivative liability associated with this note.

Summary of Convertible Notes Payable and Derivative Liabilities

The following is a summary of the convertible notes payable, derivative liability and unamortized note discount as of August 31, 2008:

			Change in Derivative			Unamortized
	Current		Income in			Debt Discount
	Conversion Value		Current period			as of 8/31/08
$1,500,000 Convertible Notes	$	3,280,183	$	735,650		$	501,695
$450,000 Convertible Notes		1,070,493		233,406			256,545
$110,000 Convertible Note - July 2007		265,351		58,218			71,824
$100,000 Convertible Note - June 2008		246,714		2,342			92,143
$100,000 Convertible Note - August 2008		247,233		(44	)		93,232
$225,000 Note dated June 1, 2004		225,196		121
$200,000 Note dated March 15, 2007		309,598		(1,034	)		61,085
$50,000 Note dated September 4, 2005		57,038		2,307
$50,000 Note dated January 1, 2007		69,532		(2,818	)		9,454
$50,000 Note dated May 15, 2007		82,826		1,108			19,604
$50,000 Note dated February 19, 2006		50,044		27
$315,000 Note dated August 8, 2007		315,274		(81,202	)
$30,000 Note dated June 17, 2008		50,901		262			25,517
July 2006 Warrants		2,566		(8,623	)		-
March 2007 Warrants		1,155		(3,858	)		-
June 2008 Warrants		2,667		(15,273	)		-
	$	6,276,771	$	920,589		$	1,131,100

Maturities of Notes Payable:

Future maturities of our convertible notes payable due during the years ended May 31 are as follow:

2008 (or past due)	$	325,000
2009		645,000
2010		1,776,576
2011 and beyond		445,000

Total	$	3,191,576

The total convertible notes payable due of $3,191,576 is shown on our balance sheet net of the unamortized debt discount of $1,131,100. The balance sheet amounts are shown as $1,814,221 of short term convertible notes payable (net of unamortized discount of $617,355, for a gross note amount of $2,431,576). The long-term convertible notes payable amount is shown on the balance sheet as $246,255 (net of unamortized discount of $513,745, for a gross note amount of $760,000).

NOTE 6 – LONG-TERM DEBT

The Company entered into a long-term note agreement to purchase a mobile demonstration unit for its Secure Balance product. The note was entered into on March 1, 2007. The original note balance was $116,096. The note has a term of 15 years and carries an interest rate of 9.5%. The monthly payments are $1,212. The note balance as of August 31, 2008 was equal to $110,199. The following summarizes the paydown:

	Required Payments		Principal		Interest
May 31, 2009	$	10,908	$	2,899	$	8,009
May 31, 2010		14,539		4,551		9,988
May 31, 2011		14,539		5,002		9,537
May 31, 2012		14,539		5,498		9,041
May 31, 2013		14,539		6,043		8,496
Thereafter		126,004		86,206		39,798

Total	$	195,068	$	110,199	$	84,869

In the quarter ended November 30, 2008, this mobile demonstration unit was repossessed and the debt was reduced by the proceeds from the sale. The subsequent sale by the lender left a balance due of $59,237 which was settled in the amount of $18,500 after the end of the fiscal year ended May 31, 2009.

NOTE 7 – EQUITY SECURITIES

Common Stock: On August 27, 2008, the Company effectuated a reverse stock split at a rate of one share for every six hundred (600) then outstanding. The Series A Preferred stock was not affected by this reverse stock split. On March 18, 2009, the Company effectuated another reverse stock split. This additional reverse split was at a rate of one share for every three thousand (3,000) then outstanding. The cumulative effect of these two reverse stock splits was a rate of one share for every 1,800,000. The Series A Preferred stock was not affected by these reverse stock splits. The effects of the reverse stock splits have been adjusted for in these financial statements.

Preferred Stock: the Company has authorized 100,000,000 shares of Series A Convertible Preferred Stock. The Series A stock is not entitled to dividends. The Company has the right but not the obligation to redeem each share of Series A stock at a price of $1.00 per share. In the event of voluntary or involuntary liquidation, dissolution, or winding up of the corporation, each share of Series A shall be entitled to receive from the assets of the Company $1.00 per share, which shall be paid or set apart before the payment or distribution of any assets of the corporation to the holders of the Common Stock or any other equity securities of the Company. Each share of Series A shall be entitled to vote on all matters with the holders of the Common Stock. Each share of Series A stock shall be entitled to ten votes. The holders of the Series A voting as a class shall be entitled to elect one person to serve on the Company's Board of Directors. The Series A is convertible into ten shares of fully paid and non-assessable share of Common Stock upon 65 days of written notice. The Series A stock shall not be affected by or subject to adjustment following any change to the amount of authorized shares of Common Stock or the amount of Common Stock issued and outstanding caused by any split or consolidation of the Company's Common Stock.

On May 21, 2006, the Company and a subscriber entered into an Investment Contract (the "Contract") in which the subscriber agreed to purchase 3 million shares of the Company's restricted series A preferred shares at a price of $0.0733 per share or $220,000. Under the Contract, these shares were to be registered by the Company on Form S-1. Such registration has never occurred. As of August 31, 2008, all 3 million shares of restricted series A preferred shares were issued and a subscription receivable of $220,000 was recorded against the Company's equity. In the quarter ended November 30, 2008, the Company wrote off this receivable as an expense for services rendered.

NOTE 8 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:

	For the quarters ended August 31,
	2008			2007

Numerator: Net loss	$	(1,968,819	)	$	(1,830,318	)

Denominator:
Weighted Average Number of Shares		778			604

Net loss per share - Basic and diluted	$	(2,530.63	)	$	(3,030.32	)

As the Company incurred a net loss for the three months ended August 31, 2008 and 2007, it has excluded from the calculation of diluted net loss per share all of the shares represented by potential conversion of the Series A preferred stock, potential exercise of the outstanding warrants and the conversion of the convertible notes outstanding.

NOTE 9 - SEGMENT INFORMATION

SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" requires that a publicly traded company must disclose information about its operating segments when it presents a complete set of financial statements. Since the Company has only one segment detailed information of the reportable segment is not presented.

NOTE 10 - RELATED PARTY TRANSACTIONS

The Company owed total loans to its CEO, Scott Sand, in the amount of $887,973 as of August 31, 2008. This amount included two notes entered into for past due compensation that totaled $865,000 and other direct payments of company expenses or other advances. One note is an interest-bearing instrument in the amount of $565,000 with an interest rate of 12%. In addition to the note amounts, the Company also has accrued salary expense payable to Mr. Sand in the amounts of $39,000 and accrued interest of $146,712 as of August 31, 2008. The total amount due to Mr. Sand as of August 31, 2008 was $1,073,685.

NOTE 11 - LEASE OBLIGATION

The Company leases its administrative office under an unsecured lease agreement which expires on April 1, 2011. The Company also maintains a corporate office under a month-to-month lease agreement. As of August 31, 2008, the remaining lease obligation is as follows:

Year Ending	Lease
August 31,	Obligation
2009	$	20,400
2010		20,400
2011		20,400
2012		11,900
	$	73,100

The total rent expense for the quarter ended August 31, 2008 was $6,680.

NOTE 12 - GUARANTEES

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company's businesses or assets; and (ii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship.

The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its balance sheet as of August 31, 2008.

NOTE 13 - MATERIAL CONTRACTS

We have entered into various agreements with third parties to perform certain services in connection with Secure Balance sales. These contracts require us to pay certain parties for commissions, services and/or equipment associated with the Secure Balance sales. We account for these services and/or equipment costs as cost of sales as the sales are booked. Among these contracts is an Exclusive Distribution Agreement for our Secure Balance product dated June 1, 2007 with Physical Rehabilitation Management Services, Inc. ("PRMS"). Under the terms of the agreement, we issued PRMS 500,000 shares of our restricted common stock at a price of $0.04 per share ($20,000 total). The term of the agreement is 5 years and we pay a 14% commission to PRMS on each sale of Secure Balance equipment.

NOTE 14 - SUBSEQUENT EVENTS

On September 1, 2008, the Company issued a convertible note to Robert Sand, the father of the Company’s CEO and Chairman, in the amount of $45,000 for services rendered to the Company. This note had an interest rate of 6% and is convertible into shares of common stock at a rate of 50% of the average of the lowest three trading prices during the twenty day trading period ending on the day prior to the conversion date.

On September 5, 2008, the Company amended its Securities Purchase Agreement dated as of June 16, 2008. Under the terms of this amendment, the conversion rate and interest rate of all convertible debentures have been adjusted. This amendment applies to the $1.5 million convertible debt entered into on July 25, 2006, the $450,000 convertible debt entered into on March 15, 2007, the $110,000 convertible note entered into on July 30, 2007 as well as the $500,000 Securities Purchase Agreement dated June 16, 2008 (the holders of these notes are collectively referred to as the “NIR Group”). The "Applicable Percentage" (as defined in each of the notes to be the rate at which the note holders can convert their debt into common stock) has been adjusted to 40%. This means that the convertible note holders can now convert their debt into stock at the average of the lowest three trading prices for the common stock during the twenty day trading period prior to conversion multiplied by 40%. Also the interest rate on all convertible notes has been adjusted from 6% to 12%. This interest rate adjustment is effective as of January 1, 2008. As of May 31, 2008, this interest rate adjustment would be applied to $2,031,547 in outstanding convertible debt. Further, the June 16, 2008 agreement to purchase up to $500,000 in Secured Callable Convertible Notes was amended so that future purchases shall occur "on such dates as shall be mutually agreed upon by the Company and the Buyers" instead of on the scheduled closing dates originally provided for in the agreement.

On September 15, 2008, the Company and its CEO Scott Sand were named in a civil case in the Superior Court of the County of San Bernardino. The filing was made by Citibank and sought damages of $13,589 stemming from past due credit card charges. This credit card was a corporate credit card guaranteed by Mr. Sand and both Mr. Sand and the Company were included in the filing. On October 14, 2008, Mr. Sand entered into a settlement agreement to pay a sum of $11,121 in three installments up through November 28, 2008. Although the Company did not meet the payment obligations in a timely fashion, the total amount due was settled in full in June 2009 with a payment of $12,243.94 and the matter is now resolved.

From November 2008 through December 2008, the Company issued 750 post-reverse shares of its common stock for services under an S-8 registration valued at $4,220.

From November 2008 through January 2009, one investor purchased 8,843 post-reverse shares of restricted common stock in several transactions for a total of $8,935.

In January 2009, the Company and its CEO Scott Sand were named in a civil case in the Superior Court of the County of San Bernardino. The filing was made by Citibank and sought damages of $7,562 stemming from past due credit card charges. This credit card was a corporate credit card guaranteed by Mr. Sand and both Mr. Sand and the Company were included in the filing. The Company settled this case by making a payment of $5,714 in June 2009.

In February 2009, the Company and its CEO Scott Sand were named in a civil case in the Superior Court of the County of San Bernardino. The filing was made by Citibank and sought damages of $8,421 stemming from past due credit card charges. This credit card was a corporate credit card guaranteed by Mr. Sand and both Mr. Sand and the Company were included in the filing. The Company settled this case by making a payment of $6,341 in June 2009.

In February of 2009, the Company was notified by the California State Board of Equalization of an obligation to pay sales taxes related to Secure Balance sales. The Board of Equalization determined that $112,594 was due from sales within the state of California from 2000-2006. The Company has included this liability in its restated financial statements. The amount was paid in full by June 2009.

In March 2009, the Company and its CEO Scott Sand were named in a civil case in the Superior Court of the County of San Bernardino. The filing was made by Citibank and sought damages of $6,508 stemming from past due credit card charges. This credit card was a corporate credit card guaranteed by Mr. Sand and both Mr. Sand and the Company were included in the filing. The Company settled this case by making a payment of $4,945 in June 2009.

On March 18, 2009, the Company effectuated another reverse stock split. This additional reverse split was at a rate of one share for every three thousand (3,000) then outstanding. The Series A Preferred stock was not affected by these reverse stock splits. The two reverse stock splits reduced the number of common shares outstanding from 300,835,942 to 751 as of May 31, 2008.

On March 19, 2009, CEO and Chairman Scott Sand converted 5,000,000 shares of his Series A Preferred stock into 50,000,000 post-reverse shares of common stock.

On May 1, 2009, CEO and Chairman Scott Sand converted 3,333,333 shares of his Series A Preferred stock into 33,333,330 post-reverse shares of common stock.

In May 2009, one investor purchased 20,110,780 post-reverse shares of restricted common stock in two transactions for a total of $40,000.

In May 2009, the Company and its CEO Scott Sand were named in a civil case in the Third District Court of Utah. The filing was made by Avanta Bank Corp and sought damages of $5,570 stemming from past due credit card charges. This credit card was a corporate credit card guaranteed by Mr. Sand and both Mr. Sand and the Company were included in the filing. The Company settled this case by making a payment of $2,500 in June 2009.

On June 3, 2009, the NIR Group filed a lawsuit against the Company for breach of contract under the terms of the notes. On July 31, 2009, the Company entered into a Settlement and Forbearance Agreement with the note holders. Under the terms of this Agreement, the Company stipulated to a judgment in the amount of $4.5 million. All warrants held by the note holders were cancelled. Further, the Company agreed to issue the greater of (a) 40 million shares or (b) twenty percent (20%) of the prior week’s total trading volume of free trading common stock to the note holders. The note holders also consented to the Company offering up to $4 million of securities for sale and agreed to forbear any collection efforts so long as one half of the net offering proceeds were paid to the note holders. As long as the Company delivers the shares due each week and makes payments of any offering proceeds to the note holders, they agreed to forbear enforcing the Judgment or enforcing any of their security interests through and until May 31, 2010. The Judgment amount of $4.5 million shall be reduced by any net proceeds from the disposition of the stock paid under this Settlement Agreement and by any other cash payments made by the Company. The judgment bears an interest rate of 9%. In August 2009, the Company issued 83,413,236 shares of its post-reverse common shares to the NIR Group for two weekly payments under the terms of the Settlement and Forbearance Agreement. In September 2009, the Company issued another 184,391,955 shares. These shares generated proceeds of $868,834 to the NIR Group, leaving a balance due of $3,631,166. The Company is attempting to increase its number of authorized shares from 2.5 billion to 3.5 billion to accommodate continued stock payments to the NIR Group.

On June 23, 2009, CEO and Chairman Scott Sand converted 1,000,000 shares of his Series A Preferred stock into 10,000,000 post-reverse shares of common stock.

From December 2008 through June 2009, the Company sold 641,523,551 post-reverse shares of common stock for a total of $996,990 in connection with an offering conducted under Regulation D in the state of Texas.

From November 2008 through July 2009, the Company issued 29,656,207 post-reverse shares of its restricted common stock for services valued at $275,481.

Subsequent to May 31, 2008 (from June 2008 through August 2009), the Company sold 10,650,000 shares of its Series A preferred stock to various investors for a total sum of $100,565.

The Company issued to Scott Sand two notes in the amounts of $300,000 and $565,000 for past due salary accrued from 1997-2004 on March 20, 2004 and April 2, 2007, respectively. Mr. Sand and the Company entered into four “Wrap-Around Agreements” with two investors from December 2008 through June 2009. Under the terms of these agreements, Mr. Sand sold the debt owed to him to the two entities for the face value of the notes. Simultaneously, the Company modified the notes formerly owed to Mr. Sand (now owed to the investors) to include a convertible feature allowing the investors to convert the notes into common stock at a 50% discount of the average “three deep bid” on the day of conversion. The interest rate on the notes was also adjusted to 15%. As of August 31, 2009, all of the principal balances original notes (a total of $865,000) were paid in full through the issuance of 458,892,638 reverse-split adjusted shares of common stock. From the proceeds received on the sale of these notes, Mr. Sand has loaned all $865,000 back to the Company as of July 1, 2009.

On September 1, 2009, the Company issued a $300,000 convertible debenture to Medox Corporation under a twelve month contract to provide the Company with sales and marketing assistance with its Oxyview® products. The contract has a one year term commencing on September 1, 2009.

On September 28, 2009, the Company increased its number of authorized shares of common stock from 2.5 billion to 3.5 billion.

In September 2009, the Company issued 20 million shares to two Series A preferred stockholders as conversions of 2 million shares of Series A preferred stock.

In September 2009, the Company issued 184,391,955 shares to the NIR Group as payments under the $4.5 million Settlement and Forbearance Agreement. In October 2009, the Company issued an additional 322,497,167 shares of its common stock to the NIR Group as payments under the Settlement agreement. These issuances reduced the liability owed to the NIR Group under the agreement to $2,495,089.

In October 2009, the Company issued 60,000,000 shares of its restricted shares to two entities for services rendered.

In October 2009, the Company issued 150,733,500 shares of common stock to pay convertible debt obligations.

In October 2009, the Company issued 20,000,000 shares of its common stock to a Series A preferred stockholder in conversion of 2,000,000 shares of Series A preferred stock.

In October 2009, the Company issued 50,000,000 shares to an entity to pay a $100,000 convertible note. This note was issued under a “Wrap-Around Agreement” between the note holder, the Company and its CEO, Scott Sand. The $100,000 was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

In November 2009, the Company issued 4,000,000 shares of its Series A preferred stock to three entities for services rendered to the Company.

In December 2009, the Company issued 3,000,000 shares of its Series A preferred stock to three entities for services rendered to the Company.

In December 2009, the Company issued 40,000,000 shares to the NIR Group as a payment under its Settlement and Forbearance Agreement on which approximately $2.5 million was owed as of the date of this issuance.

In January 2010, the Company issued an additional 97,628,114 shares to the NIR Group as payments under the $4.5 million Settlement and Forbearance Agreement (since the judgment is reduced by the actual proceeds the exact amount of the reduction is not known until all of the shares have been sold by the note holder).

In January 2010, the Company issued 191,185,184 shares to an entity to pay $200,000 on a convertible note. This note was part of the “Wrap-Around Agreement” between the note holder, the Company and its CEO, Scott Sand entered into in September 2009 in the amount of $796,423. The $796,423 was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

In January 2010, the Company issued 95,592,592 shares to two entities to pay $100,000 on two convertible notes. These notes were “Wrap-Around Agreements” between the note holders, the Company and its CEO, Scott Sand. The $100,000 was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

On January 20, 2010, the Company agreed to cancel a common share certificate held by Scott Sand. The share certificate for 83,333,425 shares of common stock was cancelled. The cancelled shares were valued at $158,333 and this amount was added to the balance due to Mr. Sand.

In February 2010, the Company issued 138,888,888 shares to an entity to pay $100,000 on a convertible note. This note was part of the “Wrap-Around Agreement” between the note holder, the Company and its CEO, Scott Sand entered into in September 2009 in the amount of $796,423. The $796,423 was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

In April 2010, the Company increased its number of authorized shares of common stock from 3.5 billion to 8 billion.

In April 2010, the Company issued 300,000,000 shares to an entity to pay $150,000 on a convertible note. This note was part of the “Wrap-Around Agreement” between the note holder, the Company and its CEO, Scott Sand entered into in September 2009 in the amount of $796,423. The $796,423 was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

In April 2010, the Company issued 175,000,000 shares to Medox Corporation to pay $78,750 to reduce the amount of accrued interest due on two convertible notes. The stock had a market value of $157,500 on the date of issuance.

In April and May 2010, the Company issued an additional 374,558,698 shares to the NIR Group as payments under the $4.5 million Settlement and Forbearance Agreement. The NIR Group netted $221,403 from the sale of this stock and the judgment amount was reduced accordingly.

In May 2010, the Company issued 104,000,000 shares to an entity to pay $50,000 on a convertible note. This note was part of a “Wrap-Around Agreement” between the note holder, the Company and its CEO, Scott Sand entered into in May 2010 in the amount of $50,000. The amount was originally owed to Mr. Sand for past due wages, accrued interest and for payments made by Mr. Sand on behalf of the Company. Under the terms of this agreement, Mr. Sand sold the debt owed to him to the unrelated third party for the face value of the amount owed. The Company then paid the note through the issuance of the stock.

In May 2010, the Company issued 400,000,000 shares to a convertible note holder to pay $120,000 on the convertible note. The stock had a market value of $200,000 on the dates of issuance.

On May 20, 2010, the Company issued 70,000,000 to an attorney in consideration for the cancellation of stock options held by the individual. The stock was valued at $49,000, the fair market value on the date of issuance.

In May 2010, the Company issued 461,333,334 shares in exchange for $118,400 under an offering under Regulation D. The Company had also issued an additional 33,333,333 shares for $10,000, but this transaction is being rescinded.

In the fiscal year ended May 31, 2010, the Company made cash payments of $183,752 to Mr. Sand for payments against the loans owed to him.

In June 2010, the Company issued an additional 40,000,000 shares to the NIR Group as payments under the $4.5 million Settlement and Forbearance Agreement. The NIR Group netted $11,802 from the sale of this stock and the judgment amount was reduced accordingly.

In June 2010, the Company issued 390,114,069 shares in exchange for $100,000 under an offering under Regulation D.

In July 2010, the Company issued 619,047,620 shares in exchange for $100,000 under an offering under Regulation D.

In July 2010, the Company issued 40,000,000 shares of common stock in conversion of 4,000,000 shares of Series A Preferred stock.

In July 2010, the Company issued 200,000,000 shares to a convertible note holder to pay $40,000 on the convertible note.

In August 2010, the Company issued 628,484,849 shares in exchange for $86,305 under an offering under Regulation D.

In August 2010, the Company issued 120,000,000 shares to a convertible note holder to pay $45,601 on the convertible note.

NOTE 15 - RESTATEMENT

Subsequent to the filing of the Form 10-Q for the quarter ended August 31, 2008, the Company discovered several errors in its financial statements. The comparative (as originally filed compared to the restated amounts) are summarized as follows, with references to the changes indicated in NOTE A below:

Ingen Technologies, Inc.

Consolidated Balance Sheets (Unaudited)

August 31, 2008 and May 31, 2008

	August 31, 2008										May 31, 2008
				As Originally			Effect							As Originally			Effect
	Restated			Reported			of Changes				Restated			Reported			of Changes
ASSETS
Current assets
Cash	$	-		$	-		$	-			$	-		$	-		$	-
Accounts receivable		66			66			-				63			63			-
Inventories		74,715			74,715			-				74,830			74,830			-
Receivable of convertible debenture		75,000			75,000			-				-			-			-
Prepaid expenses		12,800			12,800			-				50,933			50,933			-
Total current assets		162,581			162,581			-				125,826			125,826			-

Property and equipment, net of accumulated depreciation		215,490			215,490			-				229,960			229,960			-

Other assets
Debt issue costs, net of accumulated amortization		140,343			135,352			4,991		(1)		157,027			157,027			-
Patents, net of accumulated amortization		-			61,733			(61,733	)	(2)		-			62,855			(62,855	)	(11)
Deposits		229,550			229,550			-				31,550			31,550			-
Total other assets		369,893			426,635			(56,742	)			188,577			251,432			(62,855	)

TOTAL ASSETS	$	747,964		$	804,706		$	(56,742	)		$	544,363		$	607,218		$	(62,855	)

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Cash overdraft	$	131		$	131		$	-			$	530		$	530		$	-
Accounts payable		235,819			235,819			-				212,242			212,242			-
Accrued expenses		699,125			356,661			342,464		(3)		501,750			201,927			299,823		(12)
Officer's loans		887,973			22,973			865,000		(4)		866,747			1,747			865,000		(4)
Short-term notes		82,500			82,500			-				82,500			82,500			-
Convertible notes payable, net of unamortized discount		1,814,221			1,074,174			740,047		(5)		737,652			49,908			687,744		(13)
Current portion of long-term debt		14,539			14,539			-				14,539			14,539			-
Total current liabilities		3,798,967			1,786,797			2,012,170				2,415,960			563,393			1,852,567

Long-term liabilities
Loan payable		95,660			95,660			-				96,872			96,872			-
Convertible notes payable, net of unamortized discount		246,255			275,228			(28,973	)	(6)		1,079,755			1,079,755			-
Derivative liability		6,276,771			5,116,416			1,160,355		(7)		4,795,957			3,605,748			1,190,209		(14)
Total long-term liabilities		6,618,686			5,487,304			1,131,382				5,972,584			4,782,375			1,190,209

Stockholders' deficit
Preferred stock, Series A, no par value,		1,000,536			965,313			35,223		(8)		1,000,536			965,313			35,223		(8)
Common stock, no par value		5,353,113			5,349,023			4,090		(9)		5,145,143			5,141,052			4,091		(9)
Series A preferred stock subscription		2,000			2,000			-				2,000			2,000			-
Series A preferred stock subscription receivable		(220,000	)		(220,000	)		-				(220,000	)		(220,000	)		-
Accumulated deficit		(15,740,679	)		(12,565,731	)		(3,174,948	)	(10)		(13,771,860	)		(10,626,915	)		(3,144,945	)	(15)

Total stockholders' deficit		(9,605,030	)		(6,469,395	)		(3,135,635	)			(7,844,181	)		(4,738,550	)		(3,105,631	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	747,964		$	804,706		$	(56,742	)		$	544,363		$	607,218		$	(62,855	)

Ingen Technologies, Inc.

Consolidated Statement of Operations (Unaudited)

	For the quarters ended
	August 31, 2008										August 31, 2007
				As Originally			Effect							As Originally			Effect
	Restated			Reported			of changes				Restated			Reported			of changes

Sales	$	987		$	987		$	-			$	117,471		$	117,471		$	-

Cost of sales		115			115			-				67,413			67,413			-

Gross Profit		872			872			-				50,058			50,058			-

Selling, general and administrative expenses		275,810			276,933			(1,123	)	(16)		763,378			406,694			356,684		(22)

Operating loss		(274,938	)		(276,061	)		1,123				(713,320	)		(356,636	)		(356,684	)

Other (expenses)
Interest expense		(773,292	)		(661,673	)		(111,619	)	(17)		(839,832	)		(446,911	)		(392,921	)	(23)
Change in derivative liability		(920,589	)		(1,001,082	)		80,493		(18)		(277,156	)		(573,779	)		296,623		(24)

Net loss before taxes		(1,968,819	)		(1,938,816	)		(30,003	)	(19)		(1,830,308	)		(1,377,326	)		(452,982	)	(25)

Provision for income taxes		-			-			-				10			10			-

Net loss	$	(1,968,819	)	$	(1,938,816	)	$	(30,003	)	(19)	$	(1,830,318	)	$	(1,377,336	)	$	(452,982	)	(25)

Basic and diluted net loss per share	$	(2,530.63	)	$	(2.60	)	$	(2,558.03	)	(20)	$	(3,030.32	)	$	(0.04	)	$	(3,030.28	)	(20)

Weighted average number of shares outstanding		778			744,853			(744,075	)	(21)		604			37,766,443			(37,765,839	)	(21)

Ingen Technologies, Inc.

Consolidated Statement of Cash Flows (unaudited)

	For the quarters ended
	August 31, 2008										August 31, 2007
				As Originally			Effect							As Originally			Effect
	Restated			Reported			of changes				Restated			Reported			of changes
Cash flow from operating activities
Net loss	$	(1,968,819	)	$	(1,938,816	)	$	(30,003	)	(19)	$	(1,830,318	)	$	(1,377,336	)	$	(452,982	)	(25)
Depreciation and amortization		14,470			15,592			(1,122	)	(16)		14,470			14,470			-
Amortization of debt issue costs		31,684			31,675			9		(26)		25,930			25,930			-
Expenses paid with stock and options		198,000			-			198,000		(27)		436,684			80,000			356,684		(22)
Note payable issued for services		30,000			-			30,000		(28)								-
Change in derivative liabilities		920,589			1,001,082			(80,493	)	(18)		277,156			573,779			(296,623	)	(24)
Non-cash interest expense and financing costs		583,264			514,296			68,968		(29)		749,663			385,347			364,316		(31)
(Increase) decrease in accounts receivable		(3	)		(3	)		-				(78,090	)		(78,090	)		-
(Increase) decrease in prepaid expenses		38,133			38,133			-				15,526			15,526			-
(Decrease) increase in accounts payable		23,577			23,577			-				(3,863	)		(3,863	)		-
(Decrease) increase in accrued expenses		197,375			154,734			42,641		(30)		110,077			81,472			28,605		(32)
(Increase) decrease in deposit		(198,000	)		-			(198,000	)	(27)								-
(Increase) decrease in inventory		115			115			-				10,642			10,642			-
Net cash used in operating activities		(129,615	)		(159,615	)		30,000				(272,123	)		(272,123	)		-

Cash flow from financing activities
Sale of common stock		-			-							74,800			74,800
Payments on loans		(1,212	)		(1,212	)		-				(3,635	)		(3,635	)		-
Proceeds from convertible notes payable		110,000			140,000			(30,000	)	(28)		200,000			200,000			-
Proceeds from stockholder and officer loans		21,226			21,226							11,486			11,486
Repayments of stockholder and officer loans		-			-			-				(3,000	)		(3,000	)		-
Net cash provided by financing activities		130,014			160,014			(30,000	)			279,651			279,651			-

Net cash increase (decrease)		399			399			-				7,528			7,528			-

Cash at beginning of period		(530	)		(530	)		-				238			238			-

Cash at end of period	$	(131	)	$	(131	)	$	-			$	7,766		$	7,766		$	-

Note A

The Company was required to restate its financial statements for the years ended May 31, 2007 and 2008 and the quarter ended August 31, 2008 due to the convertible note agreements that were issued for services rendered to the Company or for notes issued to its CEO for past due salary. These were previously not reflected on the financial statements. The following is a summary of the notes and other adjustments:

A)On March 20, 2004, the Company issued a note to Scott Sand, its Chairman and CEO, in the amount of $300,000 for salary due from March 27, 1997 through March 28, 1998. This note was issued for work done in founding Ingen Technologies, Inc. (Nevada) and developing the BAFI® product concept. The note did not bear an interest rate and was stated to be due and payable on March 20, 2008. The Company adjusted its retained earnings due to the acquisition of Ingen (Nevada) as a result of this note.

B)On June 1, 2004, the Company issued to MedOx Corporation, Inc. a note in the amount of $225,000 in consideration for services rendered under an agreement entered into on the same date. The Company has recorded an expense in the amount of $225,000 in the fiscal year ended May 31, 2005 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a four-year term. The Company has accrued interest on the note for the years ended May 31, 2005, 2006, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $448,997. The note was discounted up to its face value and the remaining amount of $223,997 was deducted as additional interest expense. The discount has been amortized over the four-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

C) On September 4, 2005, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The Company has recorded an expense in the amount of $50,000 in the fiscal year ended May 31, 2006 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a one-year term. The Company has accrued interest on the note for the years ended May 31, 2006, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $86,437. The note was discounted up to its face value and the remaining amount of $36,437 was deducted as additional interest expense. The discount has been amortized over the one-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

D) On February 19, 2006, the Company issued to an unrelated accredited third party a note in the amount of $50,000 in consideration for services rendered under an agreement entered into on the same date. The Company has recorded an expense in the amount of $50,000 in the fiscal year ended May 31, 2006 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a two-year term. The Company has accrued interest on the note for the years ended May 31, 2006, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $97,837. The note was discounted up to its face value and the remaining amount of $47,837 was deducted as additional interest expense. The discount has been amortized over the two-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

E) On January 1, 2007, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The Company has recorded an expense in the amount of $50,000 in the fiscal year ended May 31, 2007 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a two-year term. The Company has accrued interest on the note for the years ended May 31, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $78,809. The note was discounted up to its face value and the remaining amount of $28,809 was deducted as additional interest expense. The discount has been amortized over the two-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

F)On March 15, 2007, the Company issued to MedOx Corporation, Inc. a note in the amount of $200,000 in consideration for services rendered under an agreement entered into on the same date. The Company has recorded an expense in the amount of $200,000 in the fiscal year ended May 31, 2007 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a two-year term. The Company has accrued interest on the note for the years ended May 31, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $348,570. The note was discounted up to its face value and the remaining amount of $148,570 was deducted as additional interest expense. The discount has been amortized over the two-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

G)On May 15, 2007, the Company issued to Xcel Associates, Inc. a note in the amount of $50,000 in consideration for services rendered under an Investor Relation’s Agreement entered into on the same date. The Company has recorded an expense in the amount of $50,000 in the fiscal year ended May 31, 2007 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a two-year term. The Company has accrued interest on the note for the years ended May 31, 2007 and 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $92,158. The note was discounted up to its face value and the remaining amount of $42,158 was deducted as additional interest expense. The discount has been amortized over the two-year term of the note. The convertible feature of the note has been revalued at the end of each fiscal year with changes booked as income or loss due to change in derivative liability on the statement of operations in each year.

H)On April 2, 2007, the Company issued a note to Scott Sand, its Chairman and CEO, in the amount of $565,000 for salary earned in 2003-2004. The note had a stated interest rate of 12% and was stated to be due and payable on April 3, 2012. The Company has adjusted the retained earnings of Ingen Technologies, Inc. (Nevada) by $300,000 upon the acquisition of the subsidiary on March 15, 2004. This amount relates to the compensation earned and accrued up until the acquisition date. The remaining $265,000 related to compensation earned and accrued for the fiscal year ended May 31, 2004. This amount has been deducted in the fiscal year ended May 31, 2004. As of May 31, 2004, the entire amount of $565,000 was booked as accrued compensation due to an officer. Upon the execution of the note for this amount on April 2, 2007, the accrued compensation was converted into a note due to an officer and reclassified on the balance sheet.

I)On August 7, 2007, the Company issued to an unrelated accredited third party a note in the amount of $315,000 in consideration for services rendered under an agreement entered into on the same date. This note replaced a $75,000 convertible note previously issued on June 1, 2006. Upon the issuance on the new note the original note had accrued interest of $5,913.The Company has recorded an expense in the amount of $315,000 in the fiscal year ended May 31, 2008 and also has adjusted its balance sheet as of the same date to include the convertible note. The note was issued with a 6% interest rate and a one-year term. The Company has accrued interest on the note for the year ended May 31, 2008. Upon the date of the issuance of the note a Black-Scholes valuation was conducted to determine the value of the convertible feature of the note and this feature was valued at $526,881. The note was discounted up to its face value and the remaining amount of $211,881 was deducted as additional interest expense. The discount has been amortized over the one-year term of the note. The convertible feature of the note has been revalued at the end of the fiscal year ended May 31, 2008 with changes booked as income or loss due to change in derivative liability on the statement of operations.

J)From 2000 through 2006, the Company failed to collect and remit sales taxes on the sales of its Secure Balance units within the state of California. The Board of Equalization of the State of California commenced an audit in 2009 and assessed that the Company owed $112,594 in back sales taxes, interest and penalties. Of this amount, $98,632 has been booked as an adjustment to the loss for the fiscal year ended May 31, 2006 and this same amount has been added as accrued sales taxes payable as of that date. Additional amounts of $8,681 and $4,098 have been booked in the fiscal years ended May 31, 2007 and May 31, 2008, respectively, representing the amounts of tax, interest and penalties due in those fiscal years. The Company paid the amount due in full, along with additional interest in June 2009. The total amount due as of May 31, 2008 and August 31, 2008 was $111,411.

K)The Company had capitalized $67,345 associated with the costs incurred in perfecting and acquiring the rights to certain patents relating to its Oxyview® product. When conducting an impairment analysis the Company believed that it should write off these costs.

L) Options to purchase 1 million shares of preferred stock at a price of $0.04 per share were issued to the Company’s general counsel in December 2006. These options were valued at $39,314. This value was not deducted in the original financial statements and has been deducted in the fiscal year ended May 31, 2007.

The Company failed to record debt issue costs of $5,000 associated with its convertible note payable issued in August 2008. This amount has now been recorded and amortization of $9 has been recorded on the debt issue costs, which has been charged to interest expense. The net effect is an increase of $4,991 in debt issuance costs as of August 31, 2008.

As described in (K) above, the Company conducted an impairment analysis on its previously capitalized patent costs. As of May 31, 2007, the Company determined that it was appropriate to write off these costs of $67,345. The Company had previously taken amortization expense totaling $5,612 through August 31, 2008. The net amount of $61,733 is shown as a reduction in intangibles on the balance sheet as of August 31, 2008.

3)	The increase in accrued expenses as of August 31, 2008 is comprised of the following:

Increase in sales taxes due as described in (J) above	$	111,411
Additional interest accrued on a short-term loan		5,000
Additional accrued interest on the notes described in (B)-(I) above		226,053
Total increase in accrued expenses as of August 31, 2008	$	342,464

4)	This increase represents the additional notes due to Scott Sand as described in (A) and (H) above for $300,000 and $565,000, respectively.

5)	This difference is summarized as follows:

Notes previously not included as described in (B) through (G) and (I) above	$	940,000
Note erroneously reported as long-term		30,000
Unamortized discount on notes above		(173,703	)
Note retired as result of the cancellation of the note described in (I), net of unamortized discount		(56,250	)
Total change in short-term convertible notes as of August 31, 2008	$	740,047

6)	This difference is summarized as follows:

Note originally reported as long-term convertible notes payable (see #5 above)	$	(30,000	)
Change in unamortized discount		( 3,873	)
Debt issuance costs erroneously not reported in original filing (see #1 above)		5,000
Total change in long-term convertible notes as of August 31, 2008	$	(28,873	)

7)	This amount represents the additional derivative liability associated with the notes described in (B) through (G) and (I) above.

8)	This amount is summarized as follows:

Additional amount charged to preferred stock as a result of the preferred stock options not previously reported as described in (L) above	$	39,314
Conversion of preferred stock to common stock not previously reported		(4,091	)
Total change in preferred stock as of August 31, 2008	$	35,223

9)	Conversion of preferred stock to common stock not previously reported (less $1 rounding) as described in #8 above.

10)	The total increase in accumulated deficit as of May 31, 2008 of $3,144,945 is detailed in (15) below. The total change in the deficit as a result of the changes in the financial statements for the quarter ended August 31, 2008 are summarized as follows:

Reduction of SG&A as a result of not amortizing the patent costs that were written off as described in (2) above	$	(1,123	)
Additional interest accrual as a result of accruing interest on notes described in (A)-(I) above		(180,251	)
Additional interest accrued on a short-term loan		(5,000	)
Change in amortization of note discount		75,878
Change in derivative liability not previously reported on notes described in (B) through (G) and (I) above		80,493
Total change in net loss for quarter ended August 31, 2008	$	(30,003	)

Total change in accumulated deficit through May 31, 2008	$	(3,144,945	)
Change in net loss for quarter ended August 31, 2008		(30,003	)

Total change in accumulated deficit as of August 31, 2008	$	(3,174,948	)

11)	This amount is the net difference of the cost of patents previously capitalized in the amount of $67,345 and the amortization of these patents of $4,490 previously expensed. The net result is a decrease in intangibles from $62,855 to none.

12)	This amount reflects the accrued interest on the notes listed above as of May 31, 2008 and the increase in the accrued sales taxes payable as a result of (H) above. The increase in these accrued amounts were expensed in the following fiscal years:

Additional interest accrued in the year ended May 31, 2005	$	13,500
Additional interest accrued in the year ended May 31, 2006		16,558
Additional interest accrued in the year ended May 31, 2007		37,862
Additional interest accrued in the year ended May 31, 2008		126,405
Accrued sales taxes payable adjustment relating to May 31, 2006		98,632
Accrued sales taxes payable adjustment relating to May 31, 2007		8,681
Accrued sales taxes payable adjustment relating to May 31, 2008		4,098
Accrued interest on retired note		(5,913	)

Total accrued expense adjustment as of May 31, 2008	$	299,823

13)	This increase represents the total of the notes described in (B), (C), (D), (E), (F), (G) and (I) above, net of any unamortized note discounts. The total face amount of the notes is $940,000 and the unamortized discount is $177,256 with a net amount of $762,744 as summarized below:

Convertible note dated June 1, 2004	$	225,000
Convertible note dated September 4, 2005		50,000
Convertible note dated February 19, 2006		50,000
Convertible note dated January 1, 2007		50,000
Less unamortized discount		(14,583	)
Convertible note dated March 15, 2007		200,000
Less unamortized discount		(79,167	)
Convertible note dated May 15, 2007		50,000
Less unamortized discount		(23,958	)
Convertible note dated August 7, 2007		315,000
Less unamortized discount		(59,548	)
Less note retired due to new note issuance		(75,000	)

Total net of unamortized discount	$	687,744

14)

This amount represents the increase in the derivative liability due to the additional convertible notes not previously included in the balance sheet as of May 31, 2008. The Company evaluated the convertible notes described in (B), (C), (D), (E), (F), (G) and (I) above and determined that they were not conventional convertible and, therefore, because of certain terms and provisions including liquidating damages under the associated registration rights agreement the embedded conversion option was bifurcated and has been accounted for as a derivative liability instrument. The increase in the derivative liability on each note is summarized as follows:

	Derivative liability
	as of May 31, 2008
$225,000 Note dated June 1, 2004	$	225,075
$200,000 Note dated March 15, 2007		310,632
$50,000 Note dated September 4, 2005		54,731
$50,000 Note dated January 1, 2007		72,350
$50,000 Note dated May 15, 2007		81,718
$50,000 Note dated February 19, 2006		50,017
$315,000 Note dated August 7, 2007		396,478
Less derivative liability associated with cancelled note		(792	)

Total increase in derivative liability as of May 31, 2008	$	1,190,209

15)

The increase in the accumulated deficit as of May 31, 2008 is a result of the increased expenses that resulted in the issuance of the convertible notes and the notes to the Company’s officer described in (A)-(I) above. The deficit was also affected by the changes in the derivative liability associated with the convertible feature of the notes. The following is a year-by-year summary of the increases in the Company’s losses:

Adjustments to the accumulated deficit of Ingen (Nevada) which changed the accumulated deficit after the merger on March 15, 2004:

Additional salary accrued to Scott Sand in 1997-1998	$	(300,000	)
Additional salary accrued to Scott Sand in 2003		(300,000	)
Additional salary accrued to Scott Sand in 2004		(265,000	)

Total adjustment to accumulated deficit in fiscal years ending May 31, 2004 and prior	$	(865,000	)

Adjustments to the accumulated deficit for the fiscal year ended May 31, 2005:

Increase in SG&A as a result of the agreement described in (B) above	$	(225,000	)
Accrued interest on note described in (B) above		(13,500	)
Black Scholes value of convertible feature exceeding face value of note (additional interest expense)		(223,997	)
Amortization of note discount recorded as additional Interest expense		(56,250	)
Decrease in derivative liability from issuance date to the end of the year (booked as other income)		9,410
Total change in loss for fiscal year ended May 31, 2005	$	(509,335	)

Adjustments to the accumulated deficit for the fiscal year ended May 31, 2006

Increase in SG&A as a result of the agreements described in (C) and (D) above	$	(100,000	)
Accrued interest on note described in (B) above		(13,500	)
Accrued interest on note described in (C) above	$	(2,217	)
Accrued interest on note described in (D) above		(842	)
Accrued sales taxes payable		(98,632	)
Black Scholes value of convertible feature exceeding face value of note described in (C) above		(36,437	)
Black Scholes value of convertible feature exceeding face value of note described in (D) above		(47,837	)
Amortization of note discounts		(115,292	)
Decreases in derivative liabilities in fiscal year		29,123

Total change in loss for fiscal year ended May 31, 2006	$	(385,634	)

Adjustments to the accumulated deficit for the fiscal year ended May 31, 2007

Increase in SG&A as a result of the agreements described in (E) (F) and (G) above	$	(300,000	)
Less: Amounts prepaid under agreements		143,056
Accrued interest on note described in (B) above		(13,500	)
Accrued interest on note described in (C) above		(6,375	)
Accrued interest on note described in (D) above		(3,000	)
Accrued interest on note described in (E) above		(1,250	)
Accrued interest on note described in (F) above		(2,500	)
Accrued interest on note described in (G) above		(125	)
Accrued interest to officer on note described in (H) above		(11,112	)
Black Scholes value of convertible feature exceeding face value of note described in (E) above		(28,809	)
Black Scholes value of convertible feature exceeding face value of note described in (F) above		(42,158	)
Black Scholes value of convertible feature exceeding face value of note described in (G) above		(148,570	)
Amortization of note discounts		(129,500	)
Sales tax adjustment		(8,681	)
Decreases in derivative liabilities in fiscal year		59,722
Write off patents described in (K) above		(67,345	)
Deduct value of options for preferred stock described in (L) above		(39,314	)

Total change in loss for fiscal year ended May 31, 2007	$	(599,461	)

Adjustments to the accumulated deficit for the fiscal year ended May 31, 2008

Increase in SG&A as a result of the agreements described in (I) above	$	(315,000	)
Less: Amount of retired note (replaced by note in (I))		75,000
Less: Accrued interest on retired note		5,537
Prepaid expenses as of beginning of year written off		(143,056	)
Sales tax adjustment in year ended May 31, 2008		(4,098	)
Accrued interest on note described in (B) above		(13,500	)
Accrued interest on note described in (C) above		(7,500	)
Accrued interest on note described in (D) above		(4,275	)
Accrued interest on note described in (E) above		(3,000	)
Accrued interest on note described in (F) above		(12,000	)
Accrued interest on note described in (G) above		(3,000	)
Accrued interest on note described in (I) above		(15,330	)
Accrued interest to officer on note described in (H) above		(67,800	)
Black Scholes value of convertible feature exceeding face value of note described in (I) above		(211,881	)
Amortization of note discounts		(491,383	)
Decreases in derivative liabilities in fiscal year		421,281
Add back of amortization of patents described in (L) above		4,490

Total change in loss for fiscal year ended May 31, 2008	$	(785,515	)

The total adjustment to the accumulated deficit as of May 31, 2008 is calculated by adding the above changes to the loss in each fiscal year:

Increase in loss for fiscal years May 31, 2004 and prior	$	(865,000	)
Increase in loss for the fiscal year ended May 31, 2005		(509,335	)
Increase in loss for the fiscal year ended May 31, 2006		(385,634	)
Increase in loss for the fiscal year ended May 31, 2007		(599,461	)
Increase in loss for the fiscal year ended May 31, 2008		(785,515	)

Total change in accumulated deficit as of May 31, 2008	$	(3,144,945	)

16)	This amount is a result of not amortizing the patent costs that were written off as described in (2) above. The Company had previously reported $1,123 in amortization in the quarter ended August 31, 2008.

17)

This is a combination of three items: i) Additional interest accrual of $180,251 as a result of accruing interest on notes described in (A)-(I) above; ii) An additional interest accrual on a short-term loan of $5,000; and iii) A decrease in the amortization of the debt discount based on the effective interest method (the Company had erroneously used a straight-line method in its original report).

Additional interest accrual as a result of accruing interest on notes described in (A)-(I) above	$	180,251
Additional interest accrued on a short-term loan		5,000
Change in amortization of note discount		(73,632	)
Change in interest expense for the quarter ended August 31, 2008	$	111,619

18)	Change in derivative liability of $80,493 not previously reported on notes described in (B) through (G) and (I) above.

19)	The total increase in loss for the quarter ended August 31, 2008 is summarized as follows:

Reduction of SG&A as a result of not amortizing the patent costs that were written off as described in (16) above	$	(1,123	)
Additional interest accrual as a result of accruing interest on notes described in (17) above		(111,619	)
Change in derivative liability not previously reported on notes described in (18) above		80,493
Total change in net loss for quarter ended August 31, 2008	$	(30,003	)

20)	The change in net loss per share is a result of the effect of the 3,000 for one reverse stock split that was effectuated on March 18, 2009. (The reverse stock split of 600 for one was already adjusted for in the originally stated balance).

21)

The change in weighted average number of shares outstanding is a result of the effect of the 3,000 for one reverse stock split that was effectuated on March 18, 2009. This effect isn’t precisely a reduction of 3,000:1 due to rounding up of fractional shares. (The reverse stock split of 600 for one was already adjusted for in the originally stated balance)

22)	The change in SG&A in the quarter ended August 31, 2007 represents the expensed amount of the contracts referenced in (43) and (45) above. The total increase is summarized as follows:

Value of convertible note issued for services	$	234,462
Current amortization of prepaid expenses under previously unrecorded contracts		122,222
Total Change in SG&A for quarter ended August 31, 2007	$	356,684

23)

The increase in interest expense for the quarter ended August 31, 2007 is a function of three factors: the accrued interest on the notes referred to in (43), (45) and (47) above; 2) the interest adjustment required as a result of the convertible feature of the new notes exceeding the face value of the notes (this amount was booked as additional interest expense as a financing cost); and 3) The amortization of the debt discount that was booked on the convertible notes which is being amortized over the term of the notes. The increase in interest expense for the quarter is summarized as follows:

Additional accrued interest	$	28,605
Interest adjustment due to derivative liability on new note		241,878
Additional amortization of debt discount		122,438
Total change in interest expense for quarter ended August 31, 2007	$	392,921

24)

This amount represents the change in the derivative liability due to the additional convertible notes not previously included in the balance sheet as of August 31, 2007. The Company performed a Black Scholes analysis on the convertible feature embedded within the notes and recorded the change in the value of $296,623 as other income in the quarter ended August 31, 2007.

25)	The total change in the loss for the quarter ended August 31, 2007 is the sum of (52), (53) and (54) above as summarized below:

Increase in SG&A as described in (22) above	$	(356,684	)
Change in interest expense as described in (23) above		(392,921	)
Change in income due to change in derivative liability as described in (24) above		296,623
Total change in net loss for quarter ended August 31, 2007	$	(452,982	)

26)	This change represents the additional amortization of the debt costs not previously recorded as described in (1) above.

27)	This amount represents an amount erroneously not reported on the original filing. The Company issued stock valued at $198,000 as a deposit under a contract for services. This amount was omitted from this line as an amount paid with stock and was not included as an increase in deposit.

28)	This amount was erroneously not reported as a note issued for services rendered in the original filing and it was erroneously reported as proceeds from convertible notes payable.

29)	This amount represents the difference in the amortization of the note discount in the quarter.

30)	This amount represents the additional accrued interest on notes described in (B)-(I) above. Interest was not previously accrued on these notes.

31)

The non-cash interest expense change in the quarter ended August 31, 2007 is a result of the additional amortization of the debt discount on previously unrecorded notes and the interest adjustment due to the derivative liability on the convertible notes discussed in (43) above. These interest components are described in (53) above and are summarized as follows:

Additional amortization of debt discount in quarter ended August 31, 2007	$	122,379
Interest adjustment due to derivative liability on new note		241,937
Total non-cash interest financing expense in quarter ended August 31, 2007	$	364,316

32)	The additional accrued expenses in the quarter ended August 31, 2007 represent the additional interest accrued on the previously unrecorded notes. This amount equals $28,605.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect management's current views with respect to future events and financial performance. In this report, the words "anticipates," "believes," "expects," "intends," "future," "may" and similar expressions identify forward-looking statements. These and other forward-looking statements are subject to certain risks and uncertainties, including those discussed in the Risk Factors section of this Item 2 and elsewhere in this Form 10-Q, that could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances occurring subsequent to the filing of the Form 10-QSB with the Securities and Exchange Commission.

OVERVIEW

Ingen Technologies, Inc. is an emerging medical device manufacturer registered with the US Food & Drug Administration and certified by the California Department of Health Services. The Company develops, markets and distributes medical technologies and products with applications in the respiratory device markets and the medical diagnostics market; as well as markets in emergency response, aviation, military and consumer markets. Ingen owns a variety of intellectual property, including domestic and foreign patents. Ingen’s products include Oxyview® and OxyAlert®, which are respiratory products; GasAlert, a commercial consumer product using the same technology as OxyAlert®; and Secure Balance, a private-label product that includes a vestibular function testing system and balance therapy system. Further, the company will distribute PogaMoonga, a natural energy drink for oxygen therapy patients and consumers.

Products:

Ingen Technologies manufactures the medical devices Oxyview® and OxyAlert®; which are products designed for the growing respiratory patient market in the USA and abroad. Oxyview® and OxyAlert® provide the respiratory clinicians, including pulmonologists, respiratory therapists and patient care technicians an innovative medical product that provides assurance and safety to home oxygen patients and hospitalized patients while monitoring oxygen flow during oxygen therapy. Patients using portable oxygen concentrators, home oxygen concentrators, liquid oxygen and oxygen gas can use Oxyview® and OxyAlert® to improve their oxygen delivery. The Oxyview® and OxyAlert® respiratory products have been accepted by various national respiratory foundations, including the National Home Oxygen Patient Association and the National Emphysema/COPD Foundation.

Oxyview®, patents pending, is a Class-I medical device as classified with the US Food and Drug Administration as an in-line oxygen flow meter that is powered by the flow of oxygen and requires no batteries. Oxyview® provides a visual cue to the patient or administrator, indicating the continuous flow and volume of oxygen during therapy. It allows the user to be sure that they are receiving the proper oxygen level and alerts them if adjustments need to be made. This device will simplify the oxygen therapy process and therefore, is aimed to preserve, otherwise, costs spent by insurance companies associated with unnecessary service calls. Oxyview® is reusable, requires no batteries, works all the time in any position with all liquid or gas oxygen delivery systems, and easily installs anywhere below the cannula nearest the patient where oxygen flow matters the most. Purchasers of Oxyview® since its introduction in early 2007 include oxygen suppliers, respiratory equipment manufacturers, medical supply stores and patients. In addition to Oxyview®, the company is set up to begin selling a natural energy drink referred to as PogaMoonga. This product is a natural drink processed from pomegranate, aloe vera and the leaves and seeds of the moringa tree. This product provides oxygen therapy patients, and consumers with a way to naturally increase their energy levels.

OxyAlert®, formerly named BAFI, is a multi-patented wireless digital pressure gauge with hand-remote, and audio/visual safety warning device used on stationary and remote oxygen delivery devices, such as concentrators and cylinders; used by patients, hospitals, commercial aircraft, military transport, and fire and safety equipment. OxyAlert® technology uses digital sensing and wireless RF data transfer technology so that users can access a hand-held remote to monitor the actual oxygen level from a reasonable distance. OxyAlert® increases safety, accuracy and convenience during oxygen therapy. OxyAlert® is now under an FDA 510k evaluation required before the FDA will classify the device.

GasAlert, patents pending, is a commercial consumer product using the same technology as OxyAlert®. This device will monitor and detect gas flow for home appliances, such as ovens, washer, dryer, refrigerator and outdoor plumbed barbeques. GasAlert uses the same technology as OxyAlert®, and its application is directed towards determining gas leaks. GasAlert will be marketed upon the US Food and Drug Administration’s classification and acceptance of OxyAlert®.

The Secure Balance product is a private-label product that includes a vestibular function testing system and balance therapy system. The vestibular (referencing organs in the inner ear) function testing system is manufactured by Interacoustics LTD. in Denmark and is referred to as the VNG. This is an accepted method among physicians to provide diagnostic testing of the inner-ear and central nervous system, in order to provide qualitative results that determine a diagnosis of a patients balance problem. The balance therapy system is manufactured by SportKAT, Inc. in San Diego, California. SportKAT provides private-label testing and balance therapy systems to others. This system is used to provide therapy to patients with balance problems through the use of computerized clinical software tools. We have our own trademark on Secure Balance. Our Secure Balance program provides balance testing/assessment equipment, education and training about balance and fall prevention to physicians and clinicians worldwide.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31, 2008 COMPARED TO THE THREE MONTHS ENDED AUGUST 31, 2007

We reported gross sales of $987 in the quarter ended August 31, 2008. Our total sales fell 99% from sales of $117,471 in the quarter ended August 31, 2007. Our sales decrease was attributable to management’s decision to move away from sales and marketing of our Secure Balance product. Our Secure Balance sales were $75,695 in the quarter ended August 31, 2007 and we did not sell any units of Secure Balance in the quarter ended August 31, 2008. We expect our total sales of Secure Balance to continue to be low as we focus the vast majority of our sales and marketing efforts on Oxyview® and as we move toward the introduction of our OxyAlert® product. Since we are not a manufacturer of any Secure Balance products, we have no control over competitive pricing or manufacturing costs. We determined that this could negatively affect margins and gross profits of our Secure Balance sales. We are focusing on Oxyview® because we are the manufacturer and we can control manufacturing costs and competitive pricing for its distribution, hospital group purchasing organizations and partnerships with its respiratory equipment manufacturers. We anticipate that our sales of Oxyview® will increase from the current quarter’s sales as we expand sales channels.

Our total sales of Oxyview® in the quarter ended August 31, 2008 were $788. This is a 98% decrease from our sales of Oxyview® in the quarter ended August 31, 2007. Our sales of Oxyview® in that quarter were $40,544. We had a one-time sale of $40,000 in the quarter ended August 31, 2007 which accounts for the difference between the two quarters. We have not had adequate resources to adequately market and advertise Oxyview® and have thus had very low sales. Should we secure additional financing, we anticipate that we can increase sales of Oxyview®.

Our sales of supplies were $60 in the quarter ended August 31, 2008, which was a decrease of 54.6% from the $132 sales of supplies in August 31, 2007.

We also recorded revenues from freight collected in the amount of $139 in the quarter ended August 31, 2008, which was a decrease of 87.4% from the $1,100 in freight collected in the quarter ended August 31, 2007. This decrease is a direct function of the sales decreases of Secure Balance.

Our total cost of sales was $115 in the quarter ended August 31, 2008 and our gross profit was $872 (a gross margin of 88.3%). We reported cost of sales of $67,413 in the quarter ended August 31, 2007 with a gross profit of $50,058 (a gross margin of 42.6%). We anticipate that our gross margin will continue to stay in the range of the current quarter as we continue to generate the bulk of our sales from our Oxyview® units, which generates a higher gross margin than our Secure Balance sales. In the quarter ended August 31, 2008, the cost of sales for our Oxyview® sales was $115 which generated a gross profit of $673 (a gross margin of 85.4%), this is compared to cost of sales of $10,642 in the quarter ended August 31, 2007 which generated a gross profit of $29,902 (a gross margin of 73.8%). Secure Balance sales in the quarter ended August 31, 2007 generated a gross margin of 25% (cost of sales of $56,771 generating a gross profit of $18,924).

Our selling, general and administrative expenses were $275,810 in the quarter ended August 31, 2008. This was a decrease of approximately 63.9% from the selling, general and administrative expenses of $763,378 reported in the quarter ended August 31, 2007. The decrease in SG&A is primarily attributable to lack of available capital to market our products.

The largest components of our SG&A are legal and professional services, travel associated with both sales and business development, outside services and salaries. Our advertising expense dropped from $19,969 in the quarter ended August 31, 2007 to zero in the quarter ended August 31, 2008. This drop in advertising expense is due to less available capital for advertising and a decrease in advertising of our Secure Balance product. We expect advertising expense to continue to be low until we secure additional capital to allocate to advertising and promoting of Oxyview®.

We spent $68,193 on legal and professional fees in the quarter ended August 31, 2008. This was an increase of 170% over the legal and professional fees of $25,207 in the quarter ended August 31, 2007. A large portion of our legal and professional fees related to the task of making various filings required by the SEC and responding to comments of the SEC relating to those filings. We anticipate continued legal and professional fees at approximately our current level of expense as we attempt our move to be listed on the OTC Bulletin Board.

Our travel expense decreased from $63,430 in the quarter ended August 31, 2007 to $40,172 in the quarter ended August 31, 2008 (a decrease of 36.7%). This drop in travel expense is due to less available capital for travel related to the promotion of our products and our company in general. We expect travel expense to increase when we secure additional capital to allocate to travel expense.

The amounts we paid for outside services decreased from $475,548 in the quarter ended August 31, 2007 to $61,276 in the quarter ended August 31, 2008 (a decrease of 87.1%). The bulk of our outside service expense in the quarter ended August 31, 2007 was due to issuing stock and convertible notes to individuals for services. We had no such issuances in the current quarter.

The amounts we paid for salaries decreased from $70,933 in the quarter ended August 31, 2007 to $61,743 in the quarter ended August 31, 2008 (a decrease of 13.0%). This decrease is due to our decreasing staff and paying part-time help on a contractor basis in the quarter ended August 31, 2008.

Our interest expense for the quarter ended August 31, 2008 was $773,292. This is an decrease of 7.9% from the interest expense of $839,891 in the quarter ended August 31, 2007. The vast majority of our interest expense related to the accounting treatment of the convertible feature of the notes payable. The interest expense relating to financing costs in the quarters ended August 31, 2008 and 2007 was $614,949 and $775,648, respectively. The interest expense relating to financing costs increased due to the new notes entered into in the current quarter. The interest expense accrued on the notes payable and other interest paid in the quarters ended August 31, 2008 and 2007 was $158,343 and $64,273, respectively. The interest accrued in the quarter ended August 31, 2008 increased dramatically compared to the quarter ended August 31, 2007 due to the interest expense adjustment associated with the September 5, 2008 amendment to the convertible notes. This amendment changed the interest expense on notes with a principal balance of $2,246,576 from 6% to 12%. This adjustment, because it was effective as of January 1, 2008, caused an interest adjustment of $82,683 due to this higher interest rate.

We recorded expense due to the change in our derivative liability in the amount of $920,589 in the quarter ended August 31, 2008. This is compared to an expense in the amount of $277,156 in the quarter ended August 31, 2007. This expense was a result of the Company's treatment of certain convertible notes payable and warrants. The Company is required to value the convertible feature of each convertible note and also value the warrants when they are issued. The valuation was done again as of August 31, 2008 and 2007. Any increases in these values, which are based on a Black Scholes valuation, have been recorded as expense and decreases are recorded as income.

We have not generated net profit to date and therefore have not paid any federal income taxes since inception. We paid $0 and $10 in state taxes in the quarters ended August 31, 2008 and 2007, respectively. We estimate that our federal tax net operating loss carryforward will be approximately $5.8 million as of May 31, 2008, the end of our last fiscal year. This carryforward was equal to $4.6 million as of May 31, 2007. The loss carryforward will begin to expire in 2019, if not utilized. Our ability to utilize our net operating loss and tax credit carryforwards may be limited in the event of a change in ownership.

LIQUIDITY AND CAPITAL RESOURCES

At August 31, 2008, our current assets totaled $162,581 (including, accounts receivable of $66, inventory of $74,715, receivable from our convertible debentures of $75,000 and prepaid expenses of $12,800). Total current liabilities were $3,734,308, consisting of $131 in a cash overdraft, $235,819 in accounts payable, $699,125 in accrued expense, $887,973 in an officer's loan, $1,814,221 of short-term convertible notes payable, $82,500 of short-term notes and $14,539 representing the current portion of long-term debt. We had $987 sales in the quarter ended August 31, 2008 and sales of convertible debentures on which we netted $110,000. Our finances were assisted by deferments from our CEO and Chairman Scott R. Sand. Mr. Sand accrued $39,000 in salary in the quarter.

At August 31, 2007, our current assets totaled $199,746 (including cash of $7,762, accounts receivable of $78,090, inventory of $74,953 and prepaid expenses of $38,940). Total current liabilities were $1,448,761, consisting of $80,654 in accounts payable, $476,394 in accrued expense, $8,350 in taxes payable, $957,828 in an officer's loan and $14,539 representing the current portion of long-term debt. We had $117,471 of sales in the quarter ended August 31, 2007, sales of convertible debentures on which we netted $200,000 and sales of common stock on which we netted $74,800. Our finances were assisted by deferments from our CEO and Chairman Scott R. Sand. Mr. Sand accrued $50,000 in salary in the quarter.

Our future cash requirements will depend on many factors, including finishing the development of our OxyAlert®, the costs involved in filing, prosecuting and enforcing patents, competing technological and market developments and the cost of product commercialization for OxyAlert® in particular, as well as our ongoing Secure Balance and Oxyview® sales efforts. We intend to seek additional funding through public or private financing transactions. Successful future operations are subject to a number of technical and business risks, including our continued ability to obtain future funding, satisfactory product development and market acceptance for our products.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).

MATERIAL COMMITMENTS

Convertible Notes Payable – The Company has entered into convertible debenture agreements that total $2,360,000 from June 2006 through August 2008. As of August 31, 2008, these notes were convertible into approximately 106 million shares of the Company’s post-reverse split common stock. Additionally, the note holders (or their affiliates) were initially granted options to purchase up to 81,668 shares of the Company’s common stock (these warrants were initially issued to purchase 49,000,000 shares of common stock, but the number has been adjusted for the 600 to 1 reverse stock split which was effective on August 27, 2008). If all of the notes were converted and the warrants were exercised, the note holders could own more than ninety-five percent of the Company’s outstanding common stock, however under the terms of the agreements the note holders can not convert their notes into holdings that would exceed 4.99% of the Company’s outstanding common stock. The notes were entered into under the terms of three different agreements.

On July 25, 2006, the Company entered into a Securities Purchase Agreement (the "Agreement") and agreed to issue and sell (i) callable secured convertible notes up to $2 million, and (ii) warrants to acquire an aggregate of 20 million shares of the Company's common stock (due to the reverse stock split effective on August 27, 2008, the warrants can now acquire 33,334 shares of the Company’s common stock at a price of $60.00 per share). The notes bear interest at 6% per annum, and mature three years from the date of issuance. The notes are convertible into the Company's common stock at the applicable percentage of the average of the lowest three trading prices for the Company's shares of common stock during the twenty trading day period prior to conversion. The applicable percentage is 50%; however, the percentage shall be increased to: (i) 55% in the event that a Registration Statement is filed within thirty days from July 26, 2006, and (ii) 60% in the event that the Registration Statement becomes effective within one hundred and twenty days from July 26, 2006. The Company has not had a Registration Statement become effective as of the date of this Report. At August 31, 2008, only $1.5 million of the convertible notes were funded. On September 5, 2008, the conversion rate and interest rate of the July 2006 convertible debentures have been adjusted as set forth below. The “Applicable Percentage” (as defined in each of the notes to be the rate at which the note holders can convert their debt into common stock) has been adjusted to 40%. This means that the convertible note holders can now convert their debt into stock at the average of the lowest three trading prices for the common stock during the twenty day trading period prior to conversion multiplied by 40%. Also the interest rate on all convertible notes has been adjusted from 6% to 12%. This interest rate adjustment was retroactive to January 1, 2008.

The Company may prepay the notes in the event that no event of default exists, there are a sufficient number of shares available for conversion, and the market price is at or below $0.10 per share. In addition, in the event that the average daily price of the common stock, as reported by the reporting service, for each day of the month ending on any determination date is below $0.10, the Company may repay a portion of the outstanding principal amount of the notes equal to 101% of the principal amount thereof divided by thirty-six plus one month's interest. The full principal amount of the notes is due upon default under the terms of the notes. In addition, the Company has granted the investors a security interest in substantially all of its assets and intellectual property as well as registration rights.

The Company received the first tranche of $700,000 on July 27, 2006, less issuance costs of $295,200, the second tranche of $600,000, less issuance costs of $13,000 on August 30, 2006, and the third tranche of $200,000 was received on January 24, 2007.

The Company issued seven year warrants to purchase 20,000,000 shares of its common stock at an exercise price of $0.10. These warrants have been adjusted to purchase 33,334 shares of common stock at a price of $60.00.

The issuance costs incurred in connection with the convertible notes are deferred and being amortized to interest expense over the life of each debenture tranche.

On March 15, 2007, the Company entered into a Securities Purchase Agreement (the "Agreement") and agreed to issue and sell (i) callable secured convertible notes up to $450,000, and (ii) warrants to acquire an aggregate of 9 million shares of the Company's common stock (due to the reverse stock split effective on August 27, 2008, the warrants can now acquire 15,000 shares of the Company’s common stock at a price of $36.00 per share). The callable secured convertible notes (4 notes, $450,000 total loan principal; 3 year term; 6% annual interest, 15% annual "default interest") are convertible into shares of our common stock at a variable conversion price based upon the applicable percentage of the average of the lowest three (3) Trading Prices for the Common Stock during the twenty (20) Trading Day period prior to conversion. The "Applicable Percentage" means 50%; provided, however, that the Applicable Percentage shall be increased to (i) 55% in the event that a Registration Statement is filed within thirty days of the closing and (ii) 60% in the event that the Registration Statement becomes effective within one hundred and twenty days from the closing. Under the terms of the callable secured convertible note and the related warrants, the callable secured convertible note and the warrants are exercisable by any holder only to the extent that the number of shares of common stock issuable pursuant to such securities, together with the number of shares of common stock owned by such holder and its affiliates (but not including shares of common stock underlying unconverted shares of callable secured convertible notes or unexercised portions of the warrants) would not exceed 4.99% of the then outstanding common stock as determined in accordance with Section 13(d) of the Exchange Act. The shares underlying the convertible notes are subject to a registration rights agreement. The Company also agreed to increase its number of authorized shares of common stock from 100 million to 500 million. The total number of authorized shares of common stock was increased to 750 million in February 2008. On September 5, 2008, the conversion rate and interest rate of the March 2007 convertible debentures have been adjusted as set forth below. The “Applicable Percentage” (as defined in each of the notes to be the rate at which the note holders can convert their debt into common stock) has been adjusted to 40%. This means that the convertible note holders can now convert their debt into stock at the average of the lowest three trading prices for the common stock during the twenty day trading period prior to conversion multiplied by 40%. Also the interest rate on all convertible notes has been adjusted from 6% to 12%. This interest rate adjustment was retroactive to January 1, 2008.

The Company may prepay the notes in the event that no event of default exists, there are a sufficient number of shares available for conversion, and the market price is at or below $0.10 per share. The rate of prepayment ranges from 120% of face value of the notes or higher, depending on the timing of such prepayment. In addition, the Company has granted the investors a security interest in substantially all of its assets and intellectual property as well as registration rights.

The Company received the first tranche of $120,000 on March 15, 2007, less issuance costs of $20,000, the second tranche of $110,000, less issuance costs of $10,000 on April 16, 2007, and the third tranche of $110,000 was received on May 15, 2007, less issuance costs of $10,000. The final tranche of $110,000 was received in June 2007. An additional $110,000 was funded on July 15, 2007 under the same terms of the Securities Purchase Agreement dated March 15, 2007.

The Company issued seven year warrants to purchase 9,000,000 shares of its common stock at an exercise price of $0.06. These warrants have been adjusted to reflect the reverse split on August 27, 2008 to warrants to purchase 15,000 shares of common stock at a price of $36.00.

On June 16, 2008, the Company entered into a Securities Purchase Agreement (the "Agreement") and agreed to issue and sell (i) callable secured convertible notes up to $500,000, and (ii) warrants to acquire an aggregate of 20 million shares of the Company's common stock (due to the reverse stock split effective on August 27, 2008, the warrants can now acquire 33,334 shares of the Company’s common stock at a price of $0.60 per share). The callable secured convertible notes are convertible into shares of our common stock at a variable conversion price based upon the applicable percentage of the average of the lowest three (3) Trading Prices for the Common Stock during the twenty (20) Trading Day period prior to conversion. The "Applicable Percentage" (as defined in each of the notes to be the rate at which the note holders can convert their debt into common stock) has been adjusted to 40%. This means that the convertible note holders can now convert their debt into stock at the average of the lowest three trading prices for the common stock during the twenty day trading period prior to conversion multiplied by 40%. Also the interest rate on all convertible notes has been adjusted from 6% to 12%. This interest rate adjustment was retroactive to January 1, 2008.

The Company may prepay the notes in the event that no event of default exists, there are a sufficient number of shares available for conversion, and the market price is at or below $0.10 per share. The rate of prepayment ranges from 120% of face value of the notes or higher, depending on the timing of such prepayment. In addition, the Company has granted the investors a security interest in substantially all of its assets and intellectual property as well as registration rights.

The Company received the first tranche of $100,000 on June 16, 2008, less issuance costs of $10,000, the second tranche of $100,000 was agreed to on August 12, 2008 and a third tranche agreement was signed in December 2008 in the amount of $75,000. $75,000 of the note proceeds due under the August 2008 agreement was not received until September 2008.

The Company issued seven year warrants to purchase 33,334 shares of its common stock at an exercise price of $0.60. (These warrants were originally issued to purchase 20 million shares at $0.001 but they have been adjusted to reflect the reverse split on August 27, 2008).

Secure Balance Agreements-We have entered into various agreements with third parties to perform certain services in connection with Secure Balance sales. These contracts require us to pay certain parties for commissions, services and/or equipment associated with the Secure Balance sales. We account for these services and/or equipment costs as cost of sales as the sales are booked. Among these contracts is an Exclusive Distribution Agreement for our Secure Balance product dated June 1, 2007 with Physical Rehabilitation Management Services, Inc. (“PRMS”). Under the terms of the agreement, we issued PRMS 500,000 shares of our restricted common stock at a price of $0.04 per share ($20,000 total). The term of the agreement is 5 years and we pay a 14% commission to PRMS on each sale of Secure Balance equipment.

On March 31, 2008, the Company issued to a consultant an anti-dilutive warrant granting the holder the right to purchase up to 250,000 shares of common stock at $.50 per share until March 31, 2011. The Company also issued the consultant a convertible promissory note in the principal amount of $37,000 due September 1, 2008. On or before September 1, 2010, the holder may convert the note into shares of the Company's common stock. In all circumstances, the holder shall receive a minimum of 400,000 shares of the Company's common stock. Furthermore, in the event of a merger, consolidation, combination, subdivision, forward split or reverse split, any portion of the unpaid amount of this note may be converted into fully-paid, non-assessable shares of the Company's common stock, at a conversion price equal to $.25 per share.

Employment Agreement with Chief Executive Officer, Scott R. Sand – On September 21,

2006, the Company entered into an Employment Agreement with its President and Chief

Executive Officer, Scott R. Sand. The term of the agreement is five years and calls for an annual salary of $200,000. The Company is also required to issue Mr. Sand 300,000 shares of its common stock in each year of the agreement.

CONVERTIBLE NOTES ISSUED FOR SERVICES – Between June 1, 2004 and May 1, 2008, the Company issued a total of $940,000 in convertible notes to pay for services. These notes had terms varying from one to four years and carried interest rates of 6%. The Company entered into another convertible note for services in the quarter ended August 31, 2008 for $30,000, bringing the total amount of convertible debentures issued for services to $970,000 as of August 31, 2008. The note holders began converting their debts in November 2008.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

GOVERNMENT REGULATION

MEDICAL DEVICE APPROVAL PROCESS. Medical devices are regulated by the Food and Drug Administration ("FDA") according to their classification. The FDA classifies a medical device into one of three categories based on the device's risk and what is known about the device. The three categories are as follows:

Class I devices are generally lower risk products for which sufficient information exists establishing that general regulatory controls provide reasonable assurance of safety and effectiveness. Most class I devices are exempt from the requirement for pre-market notification under section 510(k) of the Federal Food, Drug, and Cosmetic Act. FDA clearance of a pre-market notification is necessary prior to marketing a non-exempt class I device in the United States.

Class II devices are devices for which general regulatory controls are insufficient to provide a reasonable assurance of safety and effectiveness and for which there is sufficient information to establish special controls, such as guidance documents or performance standards, to provide a reasonable assurance of safety and effectiveness. A 510(k) clearance is necessary prior to marketing a non-exempt class II device in the United States.

Class III devices are devices for which there is insufficient information demonstrating that general and special controls will provide a reasonable assurance of safety and effectiveness and which are life-sustaining, life-supporting or implantable devices, or devices posing substantial risk. Unless a device is a preamendments device that is not subject to a regulation requiring a Premarket Approval ("PMA"), the FDA generally must approve a PMA prior to the marketing of a class III device in the United States.

The company's Oxyview® product is registered as Class-I by the U.S. Food and Drug Administration, and as such, the company is registered and conducts its quality assurance procedures under the guidelines established by the U.S. Food and Drug Administration. Further, the company must comply with the State of California Department of Health Services quality assurance policies, and on June 29, 2007, the company was audited by the Department of Health Services. Following the audit, the company received a license to conduct manufacturing of Oxyview® in the State of California.

LABELING AND ADVERTISING. The company is in compliance with FDA labeling guidelines. The marketing claims that we may make in the labeling and advertising of our medical devices is limited by FDA guidelines. Should we make claims exceeding those guidelines, such claims will constitute a violation of the Federal Food, Drug, and Cosmetics Act. Violations of the Federal Food, Drug, and Cosmetics Act, Public Health Service Act, or regulatory requirements at any time during the product development process, approval process, or after approval may result in agency enforcement actions, including voluntary or mandatory recall, license suspension or revocation, 510(k) withdrawal, seizure of products, fines, injunctions and/or civil or criminal penalties. Any agency enforcement action could have a material adverse effect on us. The advertising of our products will also be subject to regulation by the Federal Trade Commission, under the FTC Act. The FTC Act prohibits unfair methods of competition and unfair or deceptive acts in or affecting commerce. Violations of the FTC Act, such as failure to have substantiation for product claims, would subject us to a variety of enforcement actions, including compulsory process, cease and desist orders, and injunctions. FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, and restitution. Violations of FTC enforcement orders can result in substantial fines or other penalties.

FOREIGN REGULATION. Outside the United States, our ability to market our products will also depend on receiving marketing authorizations from the appropriate regulatory authorities. The foreign regulatory approval process includes all of the risks associated with FDA procedures described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country. Recently the FDA has approved Export Certification to sell Oxyview® in Taiwan and People’s Republic of China. The company is currently seeking FDA Export Certification for Japan, Canada and Saudi Arabia.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that material information related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

As of the end of the period covered by this report, August 31, 2008, we carried out an evaluation under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our CEO and CFO concluded, as of the date of such evaluation, that our disclosure controls and procedures were not effective as of August 31, 2008.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations for the Treadway Commission. Based on our evaluation under the framework, including the completion and review of internal review assessment forms and the completion and review of financial reporting information systems and controls checklists in the framework, our management concluded that our internal controls over financial reporting were not effective as of August 31, 2008.

Remediation of Material Weakness in Internal Control

As discussed in Note 15 to unaudited consolidated financial statements for August 31, 2008, the Company has restated its consolidated financial statements for the quarter ended August 31, 2008 (as well as for the years ended May 31, 2008 and 2007). These restatements are the result of the Company's accounting adjustments due to unrecorded liabilities with origination dates from 1997-2007. These unrecorded liabilities were issued in the form of convertible notes for services rendered or notes due to officers for past due salary. The convertible notes also had derivative liabilities associated with the convertible feature which resulted in additional changes to the financial statements. Based on the restatement, we determined that at the end of 2008 that the Company's policies and procedures did not provide for adequate management oversight and review of the Company's accounting for (i) liabilities issued in the form of convertible notes for services rendered or notes due to officers for past due salary, and (ii) the accounting for derivative liabilities associated with the convertible feature of the notes. These deficiencies resulted in the restatement of the Company's consolidated financial statements for the year ended May 31, 2008 and 2007 and the quarterly reports for the quarters ended August 31, 2006, November 30, 2006, February 28, 2007, August 31, 2007, November 30, 2007, February 29, 2008 and August 31, 2008.

The foregoing led our management to conclude that our disclosure controls and procedures were not effective as of August 31, 2008 because of a material weakness in our internal controls over financial reporting.

We identified a material weakness in our internal control over financial reporting as of August 31, 2008 because fundamental elements of our company’s control environment were not present as of August 31, 2008, including an independent board oversight and review of financial reporting. The financial processes and procedures and internal control procedures are performed by the Board. There exists a significant overlap between management and the Board of Directors. Specifically, we do not currently have the ability to objectively monitor the processes and procedures of financial reporting as the individual responsible for financial reporting is also a member of the Board of Directors. Additionally, due to insufficient staffing and the lack of full time personnel, it was not possible to ensure appropriate segregation of duties between incompatible functions. In the course of our assessment, we also identified that there were control deficiencies which were the result of our not maintaining a sufficient complement of personnel to ensure that financial information (both routine and non-routine) is adequately analyzed and reviewed on a timely basis to detect misstatements. Other deficiencies, such as valuing financial implications of future equity issuances for contract terms, were identified by the auditors and material adjustments to the financial statements were required. These deficiencies represent a material weakness in our internal control over financial reporting given that it results in a reasonable possibility that a material misstatement to the annual or interim financial statements would not have been prevented or detected.

Based on the material weakness described above, management has concluded that as of August 31, 2008 the Company's internal control over financial reporting was not effective based on the criteria in Internal control - Integrated framework issued by the COSO.

We intend to take the following steps as soon as practicable and funding is available to remediate the material weakness we identified as follows:

·	We will increase the oversight and review procedures of the board of directors with regard to financial reporting, financial processes and procedures and internal control procedures.

·	To the extent we can attract outside directors, we will nominate an audit committee to review and assist management with its reporting goals.

Based on the criteria established by COSO, management identified the following material weaknesses in the Company’s internal control over financial reporting as of May 31, 2008:

Control Environment — The Company did not maintain an effective control environment, which is the foundation for the discipline and structure necessary for effective internal control over financial reporting, as evidenced by: (i) an insufficient number of personnel appropriately qualified to perform control monitoring activities, including the recognition of the risks and complexities of its business operations, (ii) insufficient resources and deficient processes for information and communication flows commensurate with the complexity of its organizational and entity structure and (iii) an insufficient number of personnel with an appropriate level of GAAP knowledge and experience or ongoing training in the application of GAAP commensurate with the Company’s financial reporting requirements, which resulted in erroneous or unsupported judgments regarding the proper application of GAAP. This control environment material weakness also contributed to the following additional material weaknesses:

Accrued Liabilities - The Company did not have effective controls to ensure that all accrued liabilities were valid, complete and accurate. Specifically, the Company had insufficient processes in place to ensure that written agreements leading to accounts payable were properly identified and recorded in the appropriate period.

o	Debt Covenants — The Company did not have effective controls to ensure a thorough review of its debt agreements and financial covenant compliance calculations, and thus ensure that such calculations were performed correctly.

o	Convertible Debt Valuation — The Company did not have effective controls to ensure that the fair value of its convertible debt was appropriately computed and accounted for upon the adoption of FASB ASC 470-20, Debt with Conversion and Other Options (formerly FSP APB 14-1).

o	State Sales Taxes — The Company did not have effective controls to ensure that the it properly accounted for its sales tax liability to the State of California.

In the first quarter of 2009, we implemented additional review procedures to ensure that a complete review is performed on all terms of our convertible notes for services rendered, and that supporting accounting documentation is available to ensure that our accounting for the previously noted material weaknesses is in accordance with accounting principles generally accepted in the United States of America. These review procedures were in place in connection with the preparation of our consolidated financial statements for the first and second quarters of 2009. As such, we believe that the remediation initiative outlined above was sufficient to eliminate the material weakness in internal controls over financial reporting as discussed above.

In the first quarter of 2010, we implemented additional procedures to ensure that all terms of our debt instruments were properly approved and documented. These procedures were in place in connection with the preparation of our consolidated financial statements for the first quarter of 2010. Further, in November, 2009, the Company retained the services of CDM Capital to review and assist the Company in its financial transactions and periodic filings. As such, we believe that remediation initiative outlined above was sufficient to eliminate the material weakness in internal controls over financial reporting as discussed above.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Other than as noted above, there were no changes made in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. Limitations. Our management, including our CEO and CFO, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

A result of the foregoing, management concluded that the Company’s restated consolidated financial statements included in this Report on Form 10-Q/A present fairly, in all material respects, the Company’s consolidated financial position, results of operations and cash flows as of the dates, and for the periods, presented in conformity with GAAP.

PART II. - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 15, 2008, the Company and its CEO Scott Sand were named in a civil case in the Superior Court of the County of San Bernardino. The filing was made by Citibank and sought damages of $13,589 stemming from past due credit card charges. Although this credit card was a personal credit card of Mr. Sand, the Company was named in the filing. On October 14, 2008, Mr. Sand entered into a settlement agreement to pay a sum of $11,121 in three installments from October 24, 2008 through November 28, 2008. Upon the timely payment of the three installments, the plaintiff will file a Dismissal With Prejudice of the entire action. Should payments not be made in a timely fashion, the settlement offer will be null and void and the plaintiff will continue with all applicable legal remedies.

ITEM 1A. RISK FACTORS

TRENDS THAT MAY IMPACT OUR LIQUIDITY

Positive Trends:

The United States has an increasingly elderly population. Our Secure Balance and respiratory product line (except GasAlert which targets the entire consumer population) are made to meet some of the challenges and circumstances experienced by our senior citizens. As a result, we expect our sales to increase in time in reflection of this positive trend.

Management also believes that our products provide increasing protection in relation to medical malpractice issues. Use of our Secure Balance system, OxyAlert® and Oxyview® products enhance the safety of patients, and therefore, we believe, lessen the chances of medical malpractice exposure to our physician clients.

We have been developing our respiratory product line since 1999. We have identified competition in the marketplace for our Oxyview® and OxyAlert® products. The competition with Oxyview® is very small. There are 3 major manufacturers of oxygen flow meters, all of whom manufacture the gravity dependent [ball in tube] flow meter that can only attach directly to the delivery system. Specifically, there are two other in-line oxygen flow meters, the Liter-Meter manufactured by Erie Medical, Inc., and the Rotameter manufactured by King Instruments. Both of these devices are gravity dependent flow meters that include glass housings and are heavier and more difficult to use as compared to the Oxyview®. Oxyview® only weighs approximately 4 grams, less than ¼ the weight of the Liter-Meter and Rotameter. It is made of medical grade polycarbonate which is lighter, more durable and less of a safety factor compared to the glass house used on the competitive models. More important, Oxyview® is not gravity dependent and works in any position, providing a more accurate reading and more user friendly environment for the patients and clinicians. The Liter-Meter and Rotameter are gravity dependent, and must be held vertical to provide a reading. Oxyview® is not affected by normal temperature changes and humidity, and can function at high altitudes for private and commercial aviation use; whereas the Liter-Meter and Rotameter are affected by temperature, humidity and gravity, and become even more unstable in providing a reading for oxygen flow rate. The size of competition is expected to enhance our planned marketing campaign.

Negative Trends:

Our product sales are impacted by government cuts and policy changes and are government dependent. Adverse economic conditions, federal budgetary concerns and politics can affect healthcare insurance regulations and could negatively impact our product sales.

SEASONAL ASPECTS THAT MAY IMPACT OUR MEDICAL MARKET

Traditionally, the medical market experiences an economic decrease in purchasing during the summer months. Peak months are usually October through May, followed by a decrease from June to September. This is the common "bell curve" that has been consistent for several decades and will affect our sales during the course of a year.

OUR SECURE BALANCE LEASING AND FINANCING PROGRAMS

Our customers can obtain capital equipment loans through commercial third party bank leasing and financing institutions to purchase our Secure Balance products. The company is a vendor with several major banks that offer capital equipment leasing to the consumer. The banks control the application and loan approval process for any Secure Balance transactions handled accordingly. Each banking institution offers a variety of leasing programs, terms, buyouts and tax incentives, and the customer has a choice depending upon their personal credit score and credit worthiness.

NEW ACCOUNTING PRONOUNCEMENTS

The possible effect on our financial statements of new accounting pronouncements that have been issued for future implementation is discussed in the footnotes to our audited financial statements (see Note 2).

BUSINESS RISKS

The following is a summary of the many risks and uncertainties we face in our business. You should carefully read these risks and uncertainties as well as the other information in this report in evaluating our business and its prospects.

WE HAVE A HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT, AND WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE.

We have experienced significant operating losses in each period since our inception. As of August 31, 2008, we have incurred total accumulated losses of $15,740,679. We expect these losses to continue and it is uncertain when, if ever, we will become profitable. These losses have resulted principally from costs incurred in the development of our products and from general and administrative costs associated with operations. We expect to incur increasing operating losses in the future as a result of expenses associated with research and product development as well as general and administrative costs. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE TO SUPPORT OUR GROWTH, AND RAISING SUCH CAPITAL WILL LIKELY CAUSE SUBSTANTIAL DILUTION TO EXISTING STOCKHOLDERS. IF ADDITIONAL CAPITAL IS NOT AVAILABLE, WE MAY HAVE TO CURTAIL OR CEASE OPERATIONS.

Our current plans indicate we will need significant additional capital for research and development and market penetration before we have substantial revenue generated from our BAFI(TM) product line. The actual amount of funds that we will need will be determined by many factors, some of which are beyond our control, and we may need funds sooner than currently anticipated. These factors include:

·	the extent to which we enter into licensing arrangements, collaborations or joint ventures;

·	our progress with research and development;

·	the costs and timing of obtaining new patent rights;

·	cost of continuing operations and sales;

·	the extent to which we acquire or license other technologies; and

·	regulatory changes and competition and technological developments in the market.

We will be relying on future securities sales or additional loans to enable us to grow and reach profitability. There is no guarantee we will be able to sell our securities or secure additional loans. Further, future sales of securities will likely subject our shares to dilution.

WE HAVE RELIED ON CAPITAL CONTRIBUTED BY RELATED PARTIES, AND SUCH CAPITAL MAY NOT BE AVAILABLE IN THE FUTURE.

The Company has relied on loans and compensation deferrals from our CEO and Chairman, Scott R. Sand, and investment in the form of convertible notes payable from various individuals and entities to sustain the Company from 1999 into the current fiscal year. Although Mr. Sand has converted the amounts owed to him into shares of our common stock and Series A Convertible Preferred Stock, we may have to look again to Mr. Sand for assistance in financing. There is no guarantee that Mr. Sand will have financial resources available to assist in our funding. As of August 31, 2008, the Company owes Mr. Sand $887,973 for expenses paid on behalf of the Company and direct loans made to the Company. Mr. Sand has deferred $39,000 in compensation as of August 31, 2008. If future capital is not available from Mr. Sand or other third parties in the future, the Company’s operations may be negatively affected.

OUR RESPIRATORY PRODUCTS MAY NOT BE SUCCESSFULLY DEVELOPED OR COMMERCIALIZED, WHICH WOULD HARM US AND FORCE US TO CURTAIL OR CEASE OPERATIONS.

We are an emerging medical device manufacturer registered with the US Food and Drug Administration where Oxyview® is classified as a Class-I medical device. Oxyview® is currently being sold. The OxyAlert® product is still in the late stages of development as we still need manufacturing prototypes. Of the respiratory products, only Oxyview® is currently being marketed and sold. Our Oxyview® sales for the quarter ended August 31, 2008 were $788. Our products may not be successfully developed or commercialized on a timely basis, or at all. If we are unable, for technological or other reasons, to complete the development, introduction or scale-up of manufacturing of our products or other potential products, or if our products do not achieve a significant level of market acceptance, we would be forced to curtail or cease operations. Even if we develop our products for commercial use, we may not be able to develop products that:

·	are accepted by, and marketed successfully to, the medical marketplace;

·	are safe and effective;

·	are protected from competition by others;

·	do not infringe the intellectual property rights of others;

·	are developed prior to the successful marketing of similar products by competitors; or

·	can be manufactured in sufficient quantities or at a reasonable cost.

WE MAY NOT BE ABLE TO FORM AND MAINTAIN THE COLLABORATIVE RELATIONSHIPS THAT OUR BUSINESS STRATEGY REQUIRES, AND IF WE CANNOT DO SO, OUR ABILITY TO DEVELOP PRODUCTS AND REVENUE WILL SUFFER.

We must form research collaborations and licensing arrangements with several partners at the same time to operate our business successfully. To succeed, we will have to maintain our existing relationships and establish additional collaborations. We may not be able to establish any additional research collaborations or licensing arrangements necessary to develop and commercialize products using our technology or do so on terms favorable to us. If our collaborations are not successful or we are not able to manage multiple collaborations successfully, our programs may suffer.

·	Collaborative agreements generally pose the following risks:

·	collaborators may not pursue further development and commercialization of products resulting from collaborations or may elect not to continue or renew research and development programs;

·	collaborators could independently develop, or develop with third parties, products that could compete with our future products;

·	the terms of our agreements with our current or future collaborators may not be favorable to us;

·	a collaborator with marketing and distribution rights to one or more products may not commit enough resources to the marketing and distribution of our products, limiting our potential revenues from the commercialization of a product;

·	disputes may arise delaying or terminating the research, development or commercialization of our products, or result in significant litigation or arbitration; and

·	collaborations may be terminated and, if terminated, we would experience increased capital requirements if we elected to pursue further development of the product.

OUR QUARTERLY OPERATING RESULTS WILL FLUCTUATE

Our quarterly operating results will fluctuate for many reasons, including:

·	our ability to retain existing customers, attract new customers and satisfy our customers' demands,

·	our ability to acquire merchandise, manage our inventory and fulfill orders,

·	changes in gross margins of our current and future products, services, and markets,

·	changes in usage of the Internet and online services and consumer acceptance of the Internet and online commerce,

·	the level of traffic on our Web site,

·	the effects of acquisitions and other business combinations, and related integration,

·	technical difficulties, system downtime or Internet brownouts

·	our ability to properly anticipate demand,

·	our ability to prevent fraud perpetrated by third parties through credit card transactions, and payments transactions,

·	our level of merchandise returns,

·	disruptions in service by common shipping carriers due to strikes or otherwise,

·	disruption of our ongoing business,

·	problems retaining key technical and managerial personnel,

·	expenses associated with amortization purchased, intangible assets,

·	additional operating losses and expenses of acquired businesses, if any, and/or

·	impairment of relationships with existing employees, customers and business partners.

SECURE BALANCE IS A PRIVATE LABEL PRODUCT THAT IS NOT EXCLUSIVE TO US.

We provide education, training and services related to the SportKat product lines that all constitute what we call "Secure Balance." However, the devices themselves are provided to us on a non-exclusive basis, meaning that other companies are marketing the same devices under other names, inclusive of SportKat and Interacoustics. The non-exclusive nature of the provision of the devices to us may negatively impact our ability to capture a meaningful market share. Due to the higher margins of our Oxyview® product, we are shifting our focus away from Secure Balance sales and marketing efforts until January 2009. Until this time, there will be a continued decrease of sales for any Secure Balance products and services, which could impact our revenues and income. The new sales program for Secure Balance will be comprised of a new Secure Balance website (SecureBalance.com) that will feature our current products and services, as well as includes additional new products for vestibular function testing and balance assessment/therapy. Our objective to become more competitive in the balance medicine market is to offer a variety of products and services for the customer to choose from at lower and more competitive prices. We have negotiated new distribution contracts with major manufacturers for VNG systems and balance systems and plan to implement these new products in January 2009.

ALTHOUGH WE HAVE MINOR COMPETITION IN RELATION TO OUR Oxyview® PRODUCT LINE, WE EXPECT AN INCREASE IN THE FUTURE.

Although we are aware of current competition for our Oxyview® product line, we expect competition to continue to develop after marketing our products. It is unknown at this time what impact any such competition could have on us.

We are a "going concern" enterprise and it is foreseeable that more than one competitor could emerge that is much stronger financially than we are and/or could already have significant marketing relationships for other medical devices.

WE DO NOT HAVE INTERNATIONAL PATENTS for OxyAlert®; WHICH MAY NEGATIVELY IMPACT OUR PLANS FOR FOREIGN OPERATIONS.

Although we intend to apply for international patents for our respiratory product line, we have not as yet done so for OxyAlert®, except for European, Chinese and Japanese patents for Oxyview®. We do not know when, and if, we will apply for such OxyAlert® patents. If we do not apply for these patents, or if there are delays in obtaining the patents, or if we are unable to obtain the patents, we may not be able to adequately protect our technologies in foreign markets for OxyAlert®.

IF WE ARE UNABLE TO PROTECT EFFECTIVELY OUR INTELLECTUAL PROPERTY, THIRD PARTIES MAY USE OUR TECHNOLOGY, WHICH COULD IMPAIR OUR ABILITY TO COMPETE IN OUR MARKETS.

Our success will depend on our ability to obtain and protect patents on our technology and to protect our trade secrets. The patents we currently own may not afford meaningful protection for our technology and products. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or unenforceable. In addition, our current and future patent applications may not result in the issuance of patents in the United States or foreign countries. Competitors might develop products similar to ours that do not infringe on our patents. In order to protect or enforce our patent rights, we may initiate interference proceedings, oppositions, or patent litigation against third parties, such as infringement suits. These lawsuits could be expensive, take significant time and divert management's attention from other business concerns. The patent position of medical firms generally is highly uncertain, involves complex legal and factual questions, and has recently been the subject of much litigation. No consistent policy has emerged from the U.S. Patent and Trademark Office or the courts regarding the breadth of claims allowed or the degree of protection afforded under biotechnology patents. In addition, there is a substantial backlog of applications at the U.S. Patent and Trademark Office, and the approval or rejection of patent applications may take several years.

We cannot guarantee that our management and others associated with us will not improperly use our patents, trademarks and trade secrets. Further, others may gain access to our trade secrets or independently develop substantially equivalent proprietary information and techniques.

OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.

We may be sued for infringing on the patent rights or misappropriating the proprietary rights of others. Intellectual property litigation is costly, and, even if we prevail, the cost of such litigation could adversely affect our business, financial condition and results of operations. In addition, litigation is time consuming and could divert management attention and resources away from our business. If we do not prevail in any litigation, we could be required to stop the infringing activity and/or pay substantial damages. Under some circumstances in the United States, these damages could be triple the actual damages the patent holder incurs. If we have supplied infringing products to third parties for marketing or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or damages paid to the patent holder.

If a third party holding rights under a patent successfully asserts an infringement claim with respect to any of our products, we may be prevented from manufacturing or marketing our infringing product in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. Any required license may not be available to us on acceptable terms, or at all. Some licenses may be non-exclusive, and therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to market some of our anticipated products, which could have a material adverse effect on our business, financial condition and results of operations.

IF WE LOSE OUR KEY MANAGEMENT PERSONNEL, OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS WOULD SUFFER.

Our performance is substantially dependent on the performance of our current senior management, Board of Directors and key scientific and technical personnel and advisers. The loss of the services of any member of our senior management, in particular Mr. Sand, our CEO and Chairman, Board of Directors, scientific or technical staff or advisory board may significantly delay or prevent the achievement of product development and other business objectives and could have a material adverse effect on our business, operating results and financial condition.

WE HAVE NO COMMERCIAL PRODUCTION CAPABILITY YET FOR MOST OF OUR PRODUCT LINES AND WE MAY ENCOUNTER PRODUCTION PROBLEMS OR DELAYS, WHICH COULD RESULT IN LOWER REVENUE.

We have not produced the OxyAlert® product for sale, although production is currently pending the review for exempt status with the US Food and Drug Administration. We have begun production and sales of our Oxyview® product, but not OxyAlert® or GasAlert. Customers for any potential products and regulatory agencies will require that we comply with current good manufacturing practices that we may not be able to meet. We may not be able to maintain acceptable quality standards if we ramp up production. To achieve anticipated customer demand levels, we will need to scale-up our production capability and maintain adequate levels of inventory. We may not be able to produce sufficient quantities to meet market demand. If we cannot achieve the required level and quality of production, we may need to outsource production or rely on licensing and other arrangements with third parties. This reliance could reduce our gross margins and expose us to the risks inherent in relying on others. We may not be able to successfully outsource our production or enter into licensing or other arrangements under acceptable terms with these third parties, which could adversely affect our business.

WE HAVE NO MARKETING OR SALES STAFF, AND IF WE ARE UNABLE TO ENTER INTO COLLABORATIONS WITH MARKETING PARTNERS OR IF WE ARE UNABLE TO DEVELOP OUR OWN SALES AND MARKETING CAPABILITY, WE MAY NOT BE SUCCESSFUL IN COMMERCIALIZING OUR PRODUCTS.

We currently have no in-house sales, marketing or distribution capability. As a result, we will depend on collaborations with third parties that have established distribution systems and direct sales forces. To the extent that we enter into co-promotion or other licensing arrangements, our revenues will depend upon the efforts of third parties, over which we may have little or no control.

If we are unable to reach and maintain an agreement with one or more distribution entities or collaborators under acceptable terms, we may be required to market our products directly. This requires that we establish our own specialized sales force and marketing organization to market our products. To do this, we would have to develop a marketing and sales force with technical expertise and with supporting distribution capability. Developing a marketing and sales force is expensive and time consuming and could delay a product launch. We may not be able to develop this capacity, which would make us unable to commercialize our products.

IF WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS AND HAVE NOT OBTAINED ADEQUATE INSURANCE TO PROTECT AGAINST THESE CLAIMS, OUR FINANCIAL CONDITION WOULD SUFFER.

As we continue to launch commercially our respiratory product line, we will face increased exposure to product liability claims. We have exposure selling Secure Balance. We have limited product liability insurance coverage, but there is no guarantee that it is adequate coverage. There is also a risk that third parties for which we have agreed to indemnify could incur liability.

We cannot predict all of the possible harms or side effects that may result and, therefore, the amount of insurance coverage we obtain may not be adequate to protect us from all liabilities. We may not have sufficient resources to pay for any liabilities resulting from a claim beyond the limit of, or excluded from, our insurance coverage.

Risks Relating to Our Common Stock

THE SEC HAS THREATENED TO SUSPEND TRADING OF OUR STOCK

On October 13, 2005, we received a letter from the Division of Corporate Finance of the Securities and Exchange Commission ("SEC") in connection with our failure to file periodic reports as required by the Securities Exchange Act of 1934. Specifically, as of the date of the SEC's letter, our predecessor management failed to file periodic reports dating to fiscal year ended 1998. After the merger, we recommenced filing of our periodic reports on November 7, 2005. We have worked diligently on getting these past due filings completed and filed with the SEC. We believe that all past due filing requirements have been met.

OUR STOCK IS THINLY TRADED, WHICH CAN LEAD TO PRICE VOLATILITY AND DIFFICULTY LIQUIDATING YOUR INVESTMENT.

The trading volume of our stock has been low, which can cause the trading price of our stock to change substantially in response to relatively small orders. In addition, during the last two fiscal years, our common stock has traded as low as $0.30 and as high as $78.00 (adjusted for our 600 to 1 reverse split which was effective on August 27, 2008). Both volume and price could also be subject to wide fluctuations in response to various factors, many of which are beyond our control, including:

·	actual or anticipated variations in quarterly and annual operating results;

·	announcements of technological innovations by us or our competitors;

·	developments or disputes concerning patent or proprietary rights; and

·	general market perception of medical device and provider companies.

WE HAVE NOT, AND CURRENTLY DO NOT ANTICIPATE, PAYING DIVIDENDS ON OUR COMMON STOCK.

We have never paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future. We currently intend to retain future earnings, if any, to finance operations, capital expenditures and the expansion of our business.

THERE IS A LIMITED MARKET FOR OUR COMMON STOCK WHICH MAKES IT DIFFICULT FOR INVESTORS TO ENGAGE IN TRANSACTIONS IN OUR SECURITIES.

Our common stock is quoted on the Pink Sheets under the symbol "IGTG." There is a limited trading market for our common stock. If public trading of our common stock does not increase, a liquid market will not develop for our common stock. The potential effects of this include difficulties for the holders of our common shares to sell our common stock at prices they find attractive. If liquidity in the market for our common stock does not increase, investors in our company may never realize a profit on their investment.

OUR STOCK PRICE IS VOLATILE WHICH MAY MAKE IT DIFFICULT FOR INVESTORS TO SELL OUR SECURITIES FOR A PROFIT.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:

·	technological innovations or new products and services by us or our competitors;

·	additions or departures of key personnel;

·	sales of our common stock;

·	our ability to integrate operations, technology, products and services;

·	our ability to execute our business plan;

·	operating results below expectations;

·	loss of any strategic relationship;

·	industry developments;

·	economic and other external factors; and

·	period-to-period fluctuations in our financial results.

Because we have a limited operating history with little revenues to date, you may consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

OUR COMMON STOCK IS DEEMED A "PENNY STOCK" UNDER THE RULES OF THE SEC, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME.

Our common stock is currently listed for trading on the Pink Sheets which is generally considered to be a less efficient market than markets such as NASDAQ or other national exchanges, and which may cause difficulty in conducting trades and difficulty in obtaining future financing. Further, our securities are subject to the "penny stock rules" adopted pursuant to Section 15(g) of the Securities Exchange Act of 1934, as amended, or Exchange Act. The penny stock rules apply to non-NASDAQ companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). Such rules require, among other things, that brokers who trade "penny stock" to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade "penny stocks" because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that we remain subject to the "penny stock rules" for any significant period, there may develop an adverse impact on the market, if any, for our securities. Because our securities are subject to the "penny stock rules," investors will find it more difficult to dispose of our securities. Further, for companies whose securities are traded on the Pink Sheets, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies, and (iii) to obtain needed capital.

A SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.

If our stockholders sell substantial amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options or warrants, or conversion of convertible notes, the market price of our common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. As of October 7, 2008, 336,611 shares of our issued common stock are unrestricted and 7,712,660 shares are restricted (but many may be eligible to have restrictions lifted). Further, at August 31, 2008, we had $2,321,576 in convertible notes outstanding, which may be converted into restricted common stock or if eligible, into unrestricted common stock under Rule 144.

RISKS RELATING TO OUR FINANCING AGREEMENTS:

EVENTS OF DEFAULT UNDER OUR CONVERTIBLE DEBENTURES

We have entered into a series of convertible note agreements; specifically, a $1.5 million convertible agreement entered into on July 25, 2006, the $450,000 convertible debt entered into on March 15, 2007, the $110,000 convertible note entered into on July 30, 2007 and $225,000 convertible debt entered into on June 16, 2008. Under the transaction documents, we have committed various acts and failed to timely perform other acts that constitute events of default under the transaction documents. We have received assurance from counsel for the investors that “You are not in default. We [the investors] have to put you into default and we have not.” There can be no assurance that the investors will not declare a default in the future. Our stockholders should be aware that if the investors provide written notice of default to us, then our liabilities would increase dramatically due to the penalties, reset provisions, and other damages specified in the transaction documents. The increase in liabilities attributed to a notice of default under the transaction documents could vastly exceed our current market capitalization and have dramatic negative affects on our financial condition. The debentures are collateralized by our assets and, in the event if we are unable to repay or restructure these debentures, there is no assurance that the holders of the debentures will not institute legal proceedings to recover the amounts owed including foreclosure on our assets. We estimate that our default penalties could exceed $6 million in a “parity value” default provision under these note agreements. The entered into a stipulation for judgment in the amount of $4.5 million in July 2009 to settle these notes. No adjustment to the financial statements herein has been made to reflect this judgment.

IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CONVERTIBLE DEBENTURES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF AVAILABLE, OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CONVERTIBLE DEBENTURES, IF REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH COULD REQUIRE THE SALE OF SUBSTANTIAL ASSETS.

We have issued convertible debentures that total $2,360,000. As of August 31, 2008, $38,424 of these notes were converted into common stock. Unless sooner converted into shares of our common stock, we are required to repay the convertible debentures. To do so, we would be required to use our working capital, if any at that time, and/or raise additional funds. If we were unable to repay the debentures when required, the debenture holders could commence legal action against us to recover the amounts due. Any such action may require us to curtail or cease operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended August 31, 2008, we sold the following securities without registration under the Securities Act of 1933 in reliance on the exemption contained in Section 4(2) and Regulation D promulgated thereunder:

Common Stock

a) On August 27, 2008, the Company engaged Media4Equity LLC, a Nevada limited liability company, to provide public relations services to the Company. Pursuant to the Media Production and Placement Services Agreement (the “Agreement”), Media4Equity is to act as production and placement agency for the Company’s print and broadcast media campaign and to provide the Company with a guaranteed dollar value of national media exposure equivalent to $2,000,000 (the “Media Credit”) as further set forth in the Agreement. The services provided under the Agreement shall commence at the sole discretion of the Company, but no later than twelve months from the effective date of the Agreement and the Agreement shall terminate upon the Media Credit being used in its entirety or within three years of commencement of services, whichever is earlier.

Under the Agreement, the Company issued Media4Equity 3,300,000 restricted shares of its common stock, no par value, valued at $.06 per share (after our 3,000 for 1 reverse stock split on March 18, 2009, this figure has been adjusted to 1,100 post-reverse split common shares). The shares have piggyback registration rights and Media4Equity may also make one “demand” registration request, under which Company agrees to file under the Securities Act of 1933, as amended, a registration statement covering the shares within 30 days after receipt of such request. Further, the Company is to pay Media4Equity a cash fee of $2,950 per month for the duration of the media campaign, for the purpose of offsetting Media4Equity’s costs in executing the campaign. However, the first payment shall not commence until twelve months after the start of the media campaign, which at the Company’s request, can be delayed for a maximum of twelve months from the effective date. The Company relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act of 1933 for the issuance of these securities. The shares were issued to an accredited investor. There was no general solicitation or advertising and the shares were issued with a restrictive legend. The total value of the issuance was booked at $198,000 and has been treated as a deposit under this contract.

b) During the quarter ended August 31, 2008, the Company issued 98,186 shares of common stock to convertible note holders who converted $9,971 of their debt into common stock (After adjusting for the March 18, 2009 reverse stock split, this figure has been adjusted to 32 shares).

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(All exhibits with original signatures are contained in the corporate office files of Ingen Technologies, Inc. ("Ingen"))

Exhibit No.	Description
2.1	Plan and Agreement of Merger Relating to the Merger of Ingen Technologies, Inc. into Creative Recycling, Inc., dated March 15, 2004. (incorporated by reference to registrant's Form 10-KSB/A filed March 24, 2006)
3.1	Amended and Restated Articles of Incorporation of Ingen Technologies, Inc., as filed with the Georgia Secretary of State on or about March 15, 2005. (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005)
3.2	Resolution 2005.6 of the Ingen Board of Directors (signed by the preferred stockholders as well) modifying the Amended and Restated Articles of Incorporation with respect to the classifications and rights of our preferred shares. (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005)
3.3	Bylaws of Ingen Technologies, Inc. (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005)
3.4	Minutes of Special Stockholder meeting of March 15, 2005 amending our Bylaws by changing the date of the annual stockholders meeting from May 15 to March 15. (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005)
3.5	Amended and Restated Articles of Incorporation of Ingen Technologies, Inc., as filed with the Georgia Secretary of State on or about December 28, 2005 (incorporated by reference to registrant's Form 8-K filed January 10, 2006)
3.6	Articles of Amendment to Articles of Incorporation of Ingen Technologies, Inc. as filed with the Georgia Secretary of State (incorporated by reference to registrant's Form 10-QSB filed April 21, 2008)
3.7	Articles of Amendment to Articles of Incorporation of Ingen Technologies, Inc., as filed with the Georgia Secretary of State on August 27, 2008
4.1	Specimen of Ingen Technologies, Inc. common stock certificate (exhibit 4.1 of our 10-KSB for the fiscal year ended May 31, 2005 incorporated herein by this reference).
10.1	Agreement between Ingen Technologies Inc. and Elizabeth Wald dated October 15, 2005 for the provision of telephone answering services (included as an exhibit to our 10-QSB filed with the SEC on January 17, 2006 and incorporated herein by this reference).
10.2	Agreement between Ingen Technologies, Inc. and Siegal Performance Systems, Inc. dated November 15, 2005 for distribution of Secure Balance® (included as an exhibit to our 10-QSB filed with the SEC on January 17, 2006 and incorporated herein by this reference).
10.3	Contract signed regarding Peter J. Wilke as our General Counsel, dated January 30, 2006 (included as an exhibit to our 10-QSB filed with the SEC on April 7, 2006 and incorporated herein by this reference).
10.4	Template for investment contract for our restricted common stock in offers and sales to Edward Meyer, Jr. and Salvatore Amato, dated February 13, 2006 (included as an exhibit to our 10-QSB filed with the SEC on April 7, 2006 and incorporated herein by this reference).
10.5	Investment contract dated February 28, 2006 in which Jeffrey Gleckman purchased 1,000,000 restricted common shares (included as an exhibit to our 10-QSB filed with the SEC on April 7, 2006 and incorporated herein by this reference).
10.6	Distribution Agreement (for Secure Balance®) dated February 16, 2006 between Ingen Technologies, Inc. and Secure Health, Inc. (included as an exhibit to our 10-QSB filed with the SEC on April 7, 2006 and incorporated herein by this reference).
10.7	Agreement for Consulting Services between Ingen Technologies, Inc. and Anita H. Beck, d/b/a Global Regulatory Services Associates, dated February 27, 2006 (included as an exhibit to our 10-QSB filed with the SEC on April 7, 2006 and incorporated herein by this reference).
10.8	Advertising Service Agreement between Ingen Technologies, Inc. and Media Mix Advertising, Inc. dated March 1, 2006 (included as an exhibit to our Form SB-2 filed with the SEC on April 5, 2006 and incorporated herein by this reference).

10.9	Distribution agreement (for Secure Balance®) between Ingen Technologies, Inc. and Michael Koch, DC, dated March 10, 2006 (included as an exhibit to our Form SB-2 filed with the SEC on April 5, 2006 and incorporated herein by this reference).
10.10	Securities Purchase Agreement dated July 25, 2006 by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.11	Form of Callable Convertible Secured Note by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC dated July 25, 2006 (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.12	Form of Stock Purchase Warrant entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on July 25, 2006 (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.13	Registration Rights Agreement entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on July 25, 2006 (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.14	Security Agreement entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on July 25, 2006 (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.15	Intellectual Property Security Agreement entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on July 25, 2006 (included as an exhibit to our Form 8-K dated July 26, 2006 and incorporated herein by this reference).
10.16	Employment Agreement between the Company and its Chief Executive Officer and Chairman, Scott R. Sand, dated September 21, 2006 (included as an exhibit to our Form 8-K dated October 3, 2006 and incorporated herein by this reference).
10.17	Technology And Patent Pending Purchase and Sale Agreement between Ingen Technologies, Inc. and Richard Campbell, grantor, dated November 7, 2006 (included as an exhibit to our Form 8-K dated November 16, 2006 and incorporated herein by this reference).
10.18	Technology And Patent Pending Purchase and Sale Agreement between Ingen Technologies, Inc. and Francis McDermott, grantor, dated November 7, 2006(included as an exhibit to our Form 8-K dated November 16, 2006 and incorporated herein by this reference).
10.19	Distribution Agreement between Ingen Technologies, Inc. and MedOx Corporation, dated December 1, 2006, for the distribution of Oxyview® (included as an exhibit to our Form 8-K dated December 1, 2006 and incorporated herein by this reference).
10.20	Exclusive Distribution Agreement between Ingen Technologies, Inc. and Secure Health, Inc., dated December 1, 2006, for the distribution of Secure Balance® (included as an exhibit to our Form 8-K dated December 1, 2006 and incorporated herein by this reference).
10.21	Non-qualified stock plan dated January 22, 2007, authorizing the Company to issue up to 20% of the company's authorized common stock (20 million shares) and preferred stock (8 million shares) under the plan. (included as an exhibit to our Form 8-K dated January 18, 2007 and incorporated herein by this reference).
10.22	Option agreements dated January 22, 2007 (included as an exhibit to our Form 8-K dated January 18, 2007 and incorporated herein by this reference).
10.23	Distribution Agreement between Ingen Technologies, Inc. and Physical Rehabilitation Management Services, Inc., effective as of June 1, 2007 (included as an exhibit to our Form 8-K dated May 14, 2007 and incorporated herein by this reference).
10.24	Securities Purchase Agreement dated March 15, 2007 by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)

10.25	Stock Purchase Warrant entered into by and among the Company and AJW Offshore, Ltd. on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.26	Stock Purchase Warrant entered into by and among the Company and AJW Partners, LLC on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.27	Stock Purchase Warrant entered into by and among the Company and AJW Qualified Partners, LLC on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.28	Stock Purchase Warrant entered into by and among the Company and New Millennium Capital Partners II, LLC on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.29	Registration Rights Agreement entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.30	Intellectual Property Security Agreement entered into by and among the Company and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC on March 15, 2007 (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.31	Investment contract dated December 1, 2006 in which Jeffrey Gleckman purchased 2,000,000 restricted common shares (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
10.32	Securities Purchase Agreement dated June 16, 2008 (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.33	Registration Rights Agreement dated June 16, 2008 (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.34	Security Agreement dated June 16, 2008 (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.35	Intellectual Property Security Agreement dated June 16, 2008 (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.36	Callable Secured Convertible Note to AJW Partners, LLC (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.37	Callable Secured Convertible Note to AJW Master Fund, Ltd. (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.38	Callable Secured Convertible Note to New Millennium Capital Partners II, LLC (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.39	Common Stock Purchase Warrant to AJW Partners, LLC (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.40	Common Stock Purchase Warrant to AJW Master Fund, Ltd. (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.41	Common Stock Purchase Warrant to New Millennium Capital Partners II, LLC (included as an exhibit to our Form 8-K dated June 20, 2008 and incorporated herein by this reference)
10.42	Media Production And Placement Services Agreement with Media4Equity LLC (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)

10.43	Agreement with Brad Klearman dated January 1, 2008 (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
10.44	Amendment No. 1 to the Securities Purchase Agreement Dated as of June 16, 2008 by and among Ingen Technologies, Inc., AJW Partners, LLC, New Millennium Capital Partners II, LLC and AJW Master Fund, Ltd. (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
10.45	Callable Secured Convertible Note to AJW Partners, LLC dated August 29, 2008 (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
10.46	Callable Secured Convertible Note to AJW Master Fund, Ltd. dated August 29, 2008 (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
10.47	Callable Secured Convertible Note to New Millennium Capital Partners II, LLC dated August 29, 2008 (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
10.48	Amendment of Notes Agreement with AJW Partners, LLC, New Millennium Capital Partners II, LLC, AJW Master Fund, Ltd., AJW Offshore, Ltd., and AJW Qualified Partners, LLC (incorporated by reference to registrant's Form 10-KSB filed September 29, 2008)
21.1	Subsidiaries of Ingen Technologies, Inc. (included as an exhibit to our Form 10-KSB dated August 29, 2007 and incorporated herein by this reference)
31.1	Certification of Scott R. Sand, Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Thomas J. Neavitt, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Scott R. Sand, Chief Executive Officer.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Thomas J. Neavitt, Chief Financial Officer.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INGEN TECHNOLOGIES, INC.

September 29, 2010	By:	/s/ Scott R. Sand
		Scott R. Sand
		Chief Executive Officer and Chairman

September 29, 2010	By:	/s/ Thomas J. Neavitt
		Thomas J. Neavitt
		Secretary and Chief Financial Officer

Ingen Technologies, Inc. - FORM 10-Q/A - September 29, 2010

Attached files

Also read