PART I

Item 1.  Business.

Business Development

     References to our “Company,” “our,” “we,” “us” and words of similar import refer to GeNOsys, Inc. (“GeNOsys”), a Utah corporation, formerly known as “The Autoline Group, Inc.”, and our wholly-owned subsidiary, GeNOsys, Inc., a Nevada corporation (“GeNOsys Nevada”), as applicable.  Our current operations are conducted through GeNOsys.

     GeNOsys, Inc. (“GeNOsys Nevada”) was incorporated under the laws of the State of Nevada on June 30, 2005. The Company was organized for the purpose of developing and commercializing a method to produce medical grade nitric oxide gas on demand at a significantly reduced price.  

     On August 18, 2005, GeNOsys Nevada entered into a Merger Agreement with The Autoline Group, Inc. (“Autoline”), a Utah corporation incorporated June 29, 2001, and publicly traded on the over-the-counter bulletin board market (“OTCBB”), whereby the shareholders exchanged 100 percent of their equity interest on a 1 for 1 basis for comparable equity securities of Autoline.  The legal capital structure of the business combination has GeNOsys Nevada being the wholly owned subsidiary of Autoline.  As the business combination is accounted for as a reverse merger, GeNOsys Nevada is deemed to be the acquirer of Autoline.  Upon the closing of the Merger Agreement, the name of the Company was changed to “GeNOsys, Inc.” (“GeNOsys”), and the Company’s trading symbol on the OTCBB changed to “GNYS.”

Description of the Business

     Nitric Oxide Gas for Inhalation

We are a medical research and development company specializing in pharmaceutical, bio-technical and medical gas generating systems.  The primary gas our systems will generate is medical grade nitric oxide, along with other various combinations of beneficial medical gases suitable for the treatment of human conditions and diseases.  The gases also have other potential uses, such as the treatment of animals by veterinarians and the sterilization of equipment and devices.

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     Non-medical grade nitric oxide gas is produced and sold commercially by major gas companies as a specialty gas mixture and calibration gas.  Nitrogen dioxide is present in all nitric oxide gas currently produced.  Its presence limits the size of the dose of nitric oxide gas that can be administered for prospective uses in both humans and animals.

     We have developed a proprietary compound formulation that will be utilized to produce medical grade nitric oxide gas in our desktop and portable generators.  Management believes that with the further refinement of our proprietary formulation, we can make or filter medical grade nitric oxide gas with minimal amounts of nitrogen dioxide, and that this process can produce medical grade nitric oxide gas in ample quantities for any current or prospective use and at a price substantially less than that of all currently available technologies.

     Our current generator models are capable of delivering sufficient quantities of nitric oxide gas for individual laboratory desktop use. We are continuing to further develop our generators and our proprietary compound formulation for high production quantities and consistency.  The product must have a known shelf life and be available in various configurations to produce known concentrations and volumes of gas.  Packaging is another critical developmental process that we are addressing. Management plans to rely on outside contractors to achieve these objectives.

     We estimate that non-clinical laboratory sales could take place earlier than United States Food and Drug Administration (“FDA”) approval. Management anticipates that selling our desktop generator earlier into the market as laboratory equipment will pave the way for sales of our medical generators and proprietary tablets and compounds, but expected financial contributions from non-medical generator and tablet sales will not be sufficient to fund the substantial costs of the FDA approval process for human medical uses.  We expect that contributions from laboratory sales will be able to cover all or part of our manufacturing and set-up costs and contribute to our overall profitability in due time, but believe that we will also require additional funding, which we are currently working to secure.  

     All human medical uses of nitric oxide gas require FDA approval prior to initiating sales in the United States, and the approval of similar international agencies in their respective countries.  Approval can be a long and expensive process, with no assurance that any such approval can or will ever be obtained.  Management hopes to reduce the time for regulatory approval by certain strategic approaches that are proprietary.

     Our objectives are to establish GeNOsys (generated nitric oxide systems) as the premier nitric oxide generating pharmaceutical company and to:

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manufacture and sell medical grade nitric oxide generators and tablets and compounds for use in the relief of human diseases;

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offer value added services such as custom generators adapted for the treatment of various diseases;

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hire staff both currently identified and unidentified to implement our business model; and  

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obtain FDA approval of our generating systems.

     Nitric Oxide Producing Topical Products

We have developed a group of nitric oxide producing products for topical use.  Patent applications have been filed for these products, which will be available as a cream, gel or wash, depending on the desired application and use.

There are significant markets for topical nitric oxide producing products, including use on non-healing wounds (diabetic ulcers, etc.) and skin care (acne, rashes, abrasions, etc.).  For use on non-healing wounds, nitric oxide producing topical products will, with their vasodilator properties, support blood flow to the wound area and support collagen growth, with their anti-inflammatory properties they will reduce inflammation in the wound area, and with their antibacterial properties, support the body in clearing the wound area of infection.  We are currently working

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with a wound care clinic to finalize the procedures for use on non-healing wounds.  It is anticipated that revenues will be generated from these topical nitric oxide producing products no later than the third quarter of 2011.

Principal Products or Services and Their Markets

     Our principal products are our patented nitric oxide gas generators which use our proprietary nitric oxide producing tablet medium and our nitric oxide producing topical products.  It is our objective to be the significant supplier of medical grade nitric oxide gas to end users in both the domestic and international markets.

     We will target the treatment of tuberculosis (“TB”) as our initial market for our inhaled nitric oxide product.  There are a number of factors which entered into this decision.

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TB has high visibility and priority with the World Health Organization (“WHO”) and other international organizations

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New drugs are needed to combat the growing worldwide health threat TB presents, particularly multi-drug resistant TB (“MDR-TB”) and extensively drug-resistant TB (“XDR-TB”).

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Data obtained from treatment of TB can be utilized in a submission to the FDA for approval

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TB patients often are concurrently infected with other diseases.  Treating TB patients will provide valuable data on the effectiveness of nitric oxide for additional applications

     The 2010 market for all anti-TB drugs was projected by The Global Alliance for TB Drug Development (“The TB Alliance”) to be between $612 million and $670 million with the potential market for a new anti-TB drug estimated to be between $316 million and $345 million. The TB market provides a number of significant advantages as the initial target market.  WHO and The TB Alliance have made the development of a new anti-TB drug one of their highest priorities in order to halt the world health threat posed by TB, particularly MDR-TB and XDR-TB

     The current treatment regimen adopted by The TB Alliance and WHO is the directly observed treatment, short-course (“DOTS”).  Utilizing this treatment method, patients are brought into hospitals and clinics for two weeks, during which time medical personnel directly observe the patient taking the prescribed medications.  To incentivize patients to enter the DOTS treatment program, they are paid while at the clinic or hospital and, upon leaving, are provided additional money and food.  However, DOTS is cumbersome and labor intensive, particularly because currently available anti-TB drugs require a minimum treatment of 6 months.  Many patients experience unpleasant side effects which are common with patients on antibiotic regiments, such as digestive problems and diarrhea, and adherence with the relatively long course of treatment is poor.  Such non-adherence commonly leads to treatment failure and the development of drug resistance.

     Recognizing the limitations and problems of the DOTS program, WHO and The TB Alliance will incentivize and make available funding to organizations which can develop new anti-TB drugs, particularly new drugs that offer at least one of these three improvements over DOTS:.  

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Shorten the total duration of effective treatment and/or significantly reduce the total number of doses needed to be taken under DOTS supervision.

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Improve the treatment of MDR-TB, which cannot be treated with current anti-TB drugs, and/or

3.

Provide a more effective treatment of latent TB infection, which is essential for eliminating TB.

     It is the belief of management that our nitric oxide treatment method meets all three of the above criteria.       

     While TB will be the initial market targeted for the aforementioned reasons, nitric oxide is not a single indication or single market drug.  Nitric oxide has antifungal, antiviral and antibacterial properties, and recently many research laboratories have begun research and development programs where nitric oxide gas is an integral part of the development of new drugs.  To date, research and subsequent treatment regimens have been held hostage by the high cost of cylinder medical grade nitric oxide gas.  We believe that the availability of on-site and on-demand production of our low cost medical grade nitric oxide gas will lead to greater use of the gas in treatment of both common and lethal diseases.

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      Our business plan includes a multi-track process of FDA and ISO 13485:2003 approvals. Clinical trials will be conducted under protocols which conform to FDA requirements and the data generated from those trials will then be used in our multi-track process of submitting and obtaining such FDA and ISO 13485:2003 approvals.

     Our patented GeNOsys Nitric Oxide System is unique in its ability to produce medical grade nitric oxide gas on site and on demand.  The compressed cylinder gas method currently used to administer nitric oxide gas is expensive, charged at the rate of $138 per hour, up to a maximum of $12,000 per month per patient.  The compressed gas cylinders are heavy, hard to transport and store, and dangerous.  In addition, once used, they must be stored prior to being shipped back to the vendor to be re-filled.  Freight and storage costs are burdensome.  The most significant problem, however, is the cost currently charged in the US for medical grade nitric oxide gas.  Research using this medical gas that has potential to treat a wide range of diseases has been limited.  

     In order to encourage research and to shorten the time line to positive cash flow, we plan to initiate sales of nitric oxide generators into research laboratories.  We believe that less stringent regulatory demands on researchers make this an attractive method of gaining access to the research community.  As sales increase in the laboratory market, new uses for the gas generator will be identified as well as new applications and dose ranges for other diseases that may be unknown at this time.  This new knowledge can be used to our advantage in customizing and updating generators for the new markets identified.

     Distribution Methods of the Products or Services

Nitric Oxide Gas for Inhalation

     In the United States, the FDA restricts sales of drugs to those which have received their approval.  Our strategy will be to use the data generated from TB clinical trials to obtain FDA approval.  Clinical trials have not yet begun and there can be no assurance that permission to conduct such trials will be granted.  Should we be successful in obtaining FDA approval, we will choose as our distribution channel appropriate distributors who have complimentary lines of products.  Because of the nature of the FDA approval process, there can be no assurance as to the actual timing or success of the product commercialization.

     As a market strategy we intend to involve key potential users of our products during clinical trials.  Early innovators will be sought to use our products in trials.  The early innovators are the best word of mouth advertisers in the medical community.  We intend to secure the services of several key individuals who may be specifically helpful in advancing our sales and marketing opportunities.

     Management anticipates that the non-medical laboratory use of the generator will stimulate customer contacts and create interest within the nitric oxide market in our products by demonstration and use. Management plans to engage a distributor to handle our marketing and distribution when appropriate.

Nitric Oxide Producing Topical Products

The pathway to FDA approval for a topical product is significantly shorter than that required for a product which is inhaled or ingested.  Our plan is to gather data from the clinical use currently being set up and, then use the resultant data in filing an application for an FDA Over-the-Counter (“OTC”) product approval.  The doctors conducting the clinical work will also prepare reports for publication in trade journals and make presentations at medical conventions to bring awareness of these products to the medical community.  We are working to establish distribution channels for these products, initially in foreign countries, to be followed by distribution in the United States upon receipt of an OTC registration number from the FDA.  

     Competitive Business Conditions

     We are entering the medical device and therapy business.  Many of our competitors are larger and have more funding than we do.  Further, taking a pharmaceutical product or medical device or application to market requires significant resources and time.  Patents held on our generators, coupled with lower production costs of medical grade nitric oxide gas, may inhibit competitors from entry into the market.  

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     Regardless, we expect that all of our products under development will face intense competition from existing and future products marketed by large companies, including our generators and our proprietary compound formulation of tablets and compounds utilized to produce medical grade nitric oxide gas.  Nitric oxide is currently sold commercially by most major gas companies as a specialty gas mixture and calibration gas.  Most of these gases are not medical use gases. The major competitors in this industry are Praxair (Union Carbide), Airgas, Air Liquide (Liquid Air), AGA (Europe), British Oxygen and Mattheson Gas.

     Research is currently being done by numerous pharmaceutical companies, colleges and universities on various treatments utilizing nitric oxide gas.  Over 80,000 articles have been published on various nitric oxide experiments and another 4,000 to 5,000 are being published yearly.  It is anticipated that the findings of these studies will increase the current competition for medical uses of nitric oxide.

     Sources and Availability of Raw Materials and Names of Principal Suppliers

     The chemical substances that make up our proprietary compound formulation of tablets and compounds that will be utilized to produce nitric oxide gas in our generators are common substances that are available from a number of sources.

     Dependence on One or a Few Major Customers

     Our products have not received FDA approval to be marketed and we have not started production.  We therefore do not have any sales.  However, we do not anticipate that we will be dependent upon one or a few major customers for our success or for the sale of our products.  We believe the markets for nitric oxide gas are wide and varied and will continue to grow.  If our technology is successful in producing low cost nitric oxide gas for non-medical uses and for the treatment of human diseases and maladies as outlined above, management believes that the use of nitric oxide gas will increase substantially.

     Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts

        We have succeeded in obtaining the following rights with respect to our products:

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Nitric Oxide Gas Generator, Canadian Patent Application, Serial Number 2,413,834, Filed December 10, 2002;

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Nitric Oxide Gas Generator, U. S. Patent Application, Serial No. 10/733,805, Filed December 10, 2003; Allowed, January 29, 2007;

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Medical Gas Generator, U. S. Design Application, Serial No. 29/204,287, Filed April 27, 2004; and

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Medical Gas Generator, Canadian Design Registration, Patent No. 104685, Issued November 23, 2004;

     Management intends to continue filing patent applications or other applications that may protect our proprietary formulation of tablets and compounds that will be utilized to produce nitric oxide gas in our generators and nitric oxide producing topical products as the need arises. Following further development of our generators and proprietary compound formulations, we anticipate filing additional patent applications in the United States, Canada and other foreign countries, as appropriate.  

     Need for Governmental Approval of Principal Products or Services

     One of our corporate strategies will be to produce nitric oxide gas for use in the treatment of human diseases and maladies. Those applications will require FDA approval, which approval process may be expected to take many years; approval is never assured, and the process is very time consuming and costly. We do not presently have the funds available for these purposes, and no assurance can be given that we will be able to secure the required funding for these planned applications of our products.  We have not yet started the FDA approval process.

     The following is a brief summary of applicable governmental regulations to which we may be subject in our

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planned business operations that relate to the use of our products in the treatment of humans.

     Regulation by governmental authorities in the United States and other countries is a significant factor affecting the timing required for the commercialization of our generators and our nitric oxide tablet product.  Human use of either will require regulatory approval by governmental agencies prior to commercialization.  Various laws and regulations govern or influence the research and development, manufacturing, safety, labeling, storage, record keeping and marketing of our products.  The lengthy process of seeking and obtaining these approvals, and the subsequent compliance with applicable laws and regulations require the expenditure of substantial resources.  Any failure to obtain or maintain, or any delay in obtaining or maintaining, regulatory approvals could materially adversely affect our business.  Our policy will be to conduct our research and development activities in compliance with current FDA guidelines and with comparable guidelines in other countries where we may be conducting clinical trials or other developmental activities.

     Clinical testing, manufacturing and marketing of human pharmaceutical products require prior approval from the FDA and comparable agencies in foreign countries.  This process can be both lengthy and costly and the results are uncertain.  The FDA has established mandatory procedures and safety and efficacy standards that apply to the testing, manufacture and marketing of such products in the United States.  In the United States, these procedures include pre-clinical studies, request for designation, FDA registration, the filing of an Investigational New Drug Application (“IND”) or equivalent, human clinical trials and approval of a New Drug Application (“NDA”).  The results of pre-clinical testing, which include laboratory evaluation of product chemistry and animal studies to assess the potential safety and efficacy of the product and its formulations, must be submitted to the FDA as part of an IND that must be reviewed before clinical testing can begin.  Clinical trials generally involve a three-phase process:

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Phase I trials are conducted in volunteers or patients to determine the early side effect profile and, perhaps, the pattern of drug absorption, distribution and metabolism;

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Phase II trials are conducted in groups of patients with a specific disease in order to determine appropriate doses and dose regimens, expand evidence of the safety profile and, perhaps, determine preliminary efficacy; and;

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Phase III trials are large scale, comparative trials that are conducted on patients with a target disease in order to generate enough data to provide the statistical proof of efficacy and safety required by national regulatory agencies.

     The results of the preclinical and clinical testing are then submitted to the FDA in the form of an NDA for approval to commence commercial sales.  The FDA may, in responding to an NDA, grant marketing approval, request additional information or deny the approval if it determines that the NDA does not provide an adequate basis for approval. Among the conditions for an NDA approval is the requirement that the prospective manufacturer’s quality control and manufacturing procedures conform on an ongoing basis with current Good Manufacturing Practices (“cGMP”). In complying with cGMP, we must continue to expend time, money and effort in the areas of production and quality control to ensure full compliance, or we must engage the services of outside contractors who are well versed in compliance with these requirements.  Following approval of the NDA, we are subject to periodic inspections by the FDA.  Any determination by the FDA of manufacturing deficiencies could materially adversely affect our business.

     It is not presently anticipated that we will be manufacturing our generators or our nitric oxide tablet; we intend to develop our products through testing and then to contract the manufacture, sale and/or license of those products.

     European countries generally follow the same regulatory approval procedures.  The European Union has established a unified filing system administered by the Committee for Proprietary Medicinal Products (“CPMP”) designed to reduce the administrative burden of processing applications for pharmaceutical products derived from new technologies.  Following CPMP review and approval, marketing applications are submitted to member countries for final approval and pricing approval, as appropriate.  In addition to obtaining regulatory approval of products, it is generally necessary to obtain regulatory approval of the facility in which the product will be manufactured.  The approval process for medical devices in Europe is similar but is administered by private certification organizations

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known as Notified Bodies, which are accredited by each member state of the European Union.  The receipt of regulatory approvals often takes a number of years, involves the expenditure of substantial resources and depends on a number of factors, including the severity of the disease in question, the availability of alternative treatments and the risks and benefits demonstrated in clinical trials.  On occasion, regulatory authorities may require larger or additional studies, leading to unanticipated delay or expense.  There can be no assurance that any approval will be granted to us, and, even if granted, such approval may be withdrawn if compliance with regulatory standards is not maintained.  In addition, the regulatory approval processes for products in the U.S.,

European countries and other countries around the world are undergoing or may undergo changes, and we cannot predict what effect any changes in the regulatory approval process may have on our business.

     In addition to the foregoing, our present and future business may be subject to various laws and regulations relating to safe working conditions, clinical, laboratory and manufacturing practices, the experimental use of animals

and the use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research, as well as national restrictions on technology transfer, and import, export and customs regulations and similar laws and regulations in foreign countries.

     Research and Development

     We have not commenced planned principal operations.  The development of our business plan and our Plan of Operation will require substantial expenditures for research and development of our products, including our generator and our proprietary tablet and compound formulation for production of nitric oxide gas.  See the Part II, Item 7, below, specifically, the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  It is estimated that our predecessors expensed approximately $900,000 in research and development of the patent and patent applications that we acquired under the merger with GeNOsys Nevada.

     Cost and Effects of Compliance with Environmental Laws

     We do not anticipate any material expense for compliance with environmental laws in connection with our planned or contemplated business operations, as our plan is to use contractors well versed in dealing with the applicable hazards associated with producing and packaging nitric oxide gas and other pharmaceuticals.  See the Part II, Item 7, below, specifically, the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

     Number of Employees

     We currently have four employees and will consider our employment needs as business developments require. We anticipate filling most of our needs for services, other than core employees, through contract organizations and outside agreements with suppliers of services in the industries of our planned business operations as may be required.

Item 1A.  Risk Factors

     As a smaller reporting company, we are not required to provide information under this item.

Item 2.  Properties.

     Our executive offices are located at 86 N. University Ave., Suite 400, Provo, Utah 84601.  We also lease a storage facility for some of our equipment and records.  Both leases are on a month-to-month basis, and total $395 per month. The current facilities are not adequate for our needs and we are looking for a combination office and lab where all of our operations can be consolidated, but will continue the present facilities until such time as we have assurance of adequate funding to enable us to enter into a lease for such space.  Further, our current office space will not be adequate to meet the needs of our expected growth.  We will need to acquire additional office and/or laboratory facilities in the future to facilitate additional personnel and enable us to execute our business plan.

Item 3.  Legal Proceedings.

     We are not a party to any pending legal proceeding and, to the knowledge of management no federal, state or

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local governmental agency is presently contemplating any proceeding against us.  No director, executive officer or affiliate of ours, or owner of record of beneficially more than five percent of our common stock, is a party adverse to us or has a material interest adverse to us in any proceeding.

     Litigation to enforce our patents, to protect our proprietary information, or to defend us against alleged infringement of the rights of others may occur.  Such litigation would be costly, could divert our resources from other planned activities, and could have a material adverse effect on our results of operations and financial condition.

Item 4.  (Removed and Reserved).

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PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     Market Information

     Our common stock is traded on the “OTC Bulletin Board” of the Financial Industry Regulatory Authority (“FINRA”) under the symbol “GNYS.”  The following table sets forth the high and low bid information of our common stock for the periods indicated.  The price information contained in the table was obtained from Google Finance.  Note that the over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions, and that the quotations may not necessarily represent actual transactions in the common stock.  Resales of “restricted securities” may have an adverse effect on the market for our common stock, and all principal stockholders of shares of our common stock have presently satisfied the holding period requirements of Rule 144 of the Securities and Exchange Commission.  See the heading “Rule 144” below and Part III, Item 12.

STOCK QUOTATIONS (BID) *

*    The future sale of our presently outstanding “restricted securities” (common stock) by present members of management and others may have an adverse effect on any market in the shares of our common stock.  See the heading “Rule 144” below and Part III, Item 12.

     Holders of Record

     At March 15, 2011, there were approximately 220 holders of record of our common stock.  The number of holders of record was calculated by reference to our stock transfer agent’s books.

     Dividend Policy

     To date, we have not paid dividends on our common stock.  The payment of dividends on our common stock, if any, is at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial condition, and other relevant factors.  See Item 7 - “Management’s Discussion and Analysis or Financial Condition and Results of Operations.”  We do not intend to declare any dividends in the foreseeable future, but instead intend to retain all earnings, if any, for use in our operations.

     Securities Authorized for Issuance under Equity Compensation Plans

     The following table lists the securities authorized for issuance under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders as of November 30, 2010.

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     2007 Stock Option Plan

     On March 23, 2007, the GeNOsys, Inc. 2007 Stock Option Plan (“Stock Option Plan”) was approved by our Board of Directors and became effective on that date, subject to the Stock Option Plan being approved by our stockholders at the annual meeting.  The Stock Plan was approved by a vote of stockholders at the Annual Meeting held June 27, 2007.   The Stock Plan provides that 3,000,000 shares of our authorized but unissued common stock be reserved pursuant to the terms and conditions of the plan.  The Stock Plan allows the Board of Directors, under the direction of the Compensation Committee, to make broad-based grants of stock options, any of which may or may not require the satisfaction of performance objectives, to employees, consultants and non-employee directors.

     The Plan became effective upon the date of shareholder approval and shall continue in effect for a term of ten (10) years, unless terminated.  The maximum aggregate number of shares of common stock that may be sold under the Plan is 3,000,000 shares.  The term of each option and its exercise price shall be stated in an option agreement; provided that the term does not exceed ten (10) years from the date of grant.  The plan provides that a grant of a stock option to an employee shall have an exercise price no less than the fair market value of a share of common stock on the date on which the option is granted.  As a condition of the grant, vesting or exercise of an option granted under the Plan, the participant shall be required to satisfy any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the grant, vesting or exercise of the option or the issuance of shares.

     The Plan is to be administered by our Compensation Committee, if any or by our Board of Directors if there is no Compensation Committee.  Until a Compensation Committee is formed, our Board of Directors will administer the Plan.  The Board may establish a Compensation Committee and from time to time increase the size of that Compensation Committee and appoint additional members, remove members (with or without cause) and appoint new members in substitution, fill vacancies and/or remove all members of the committee.  The Compensation Committee may be composed of employee/director(s), non-employee/director(s) and/or major stockholder(s) of the company who are not a director.

     Non-statutory stock options may be granted to employees, directors and consultants who have the capacity to contribute to the success of the company.  Incentive stock options may be granted only to employees, provided that employees of affiliates shall not be eligible to receive incentive stock options.

     Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

     From December 2007 through November 2010, the Company issued $875,000 of convertible notes payable to officers and directors for funds provided to the Company.  The notes bear interest at the rate of five percent per annum and, at the election of the holder, may be converted into shares of restricted common stock of the Company at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common

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stock on the date the note was issued.  During 2010, $420,052 of the notes and accrued interest were converted under the terms of the agreements, resulting in the issuance of 2,912,326 shares of restricted common stock.

In February 2010, our Board of Directors approved the issuance of 200,000 shares of our restricted common stock for services rendered.  The stock was valued at $0.05 per share, resulting in a non-cash charge of $10,000 that was recorded in the first quarter of 2010.

In February 2010, our Board of Directors approved the issuance of 360,000 shares of our restricted common stock for services rendered.  At the time their services were completed the market value of the stock was $0.05 per share, resulting in a non-cash recorded charge of $18,000.

In April 2010, 25,000 shares of restricted common stock were issued pursuant to the terms on an employment agreement.   The stock was valued at $0.08 per share, resulting in a $2,000 non-cash charge, which was recorded in the second quarter of 2010.

In July 2010, 25,000 shares of restricted common stock were issued under the terms on an employment agreement. The stock was valued at $0.08 per share, resulting in a $2,000 non-cash charge, which was recorded in the third quarter of 2010.

During the three months ended August 31, 2010, the Company sold 1,666,000 shares of restricted common stock to qualified investors through a private placement.  Net proceeds from the sales of stock were $249,900.

In October 2010, our Board our Directors approved the issuance of 8,027,142 shares of our restricted common stock to two officers in full settlement of unpaid salary and benefits.  Upon receipt of the certificates both officers provided to the Company a full release from all claims arising from and related to the unpaid salaries.  

During the three months ended November 30, 2010, the Company sold 2,000,000 shares of restricted common stock to qualified investors through a private placement.  Net proceeds from the sales of stock were $100,000.

 We issued these securities to persons who were either “accredited investors,” or “sophisticated investors,” who, by reason of education, business acumen, experience or other factors, were fully capable of evaluating the risks and merits of an investment in our Company; and each had prior access to all material information about us.  We believe that the offer and sale of these securities was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Sections 4(2) and 4(6) thereof, and Rule 506 of Regulation D of the Securities and Exchange Commission.  Section 18 of the Securities Act preempts state registration requirements for sales to “accredited investors.”

     Use of Proceeds of Registered Securities

     There have been no sales of registered securities by us.

     Purchases of Equity Securities by Us and Affiliated Purchasers

     From December 2007 through November 2010 the Company has issued convertible notes payable to officers and a director for funds provided to the Company.  The notes bear interest at the rate of five percent per annum and, at the election of the holder, may be converted into shares of restricted common stock of the Company at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common stock on the date the note was issued.  If converted as of March 1, 2011, the notes outstanding would be convertible at approximately $0.05 per share.  At November 30, 2010 and 2009, the total of these convertible notes was $457,362 and $455,570, respectively.  During 2010 the Company agreed to satisfy its obligations owing to one of the directors, John W.R. Miller, for $418,475 of funds he advanced to the Company by exchanging the $418,475, plus interest owed to Mr. Miller, for the issuance of shares of stock to third parties for the cancellation of an equal amount of obligations owed by Mr. Miller.  Mr. Miller will receive no compensation in connection with this transaction.

     Mr. Miller’s obligations to third parties resulted from him personally borrowing funds from such third parties

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with an agreement to convert such personal notes into shares of the stock held by him.  Each note is past due and payable in full.  The notes total $418,475 and bear interest at the rate of 5% per annum.  Each note is convertible into shares of Company stock held by Mr. Miller at the average rate of $0.15 per share.  

Item 6.  Selected Financial Data

     As a smaller reporting company, we are not required to provide information under this item.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation.

     The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition.  The discussion should be read in conjunction with the financial statements and notes included in this report as Part II, Item 8.

     Overview

     We are in the development stage and have incurred cumulative net losses since inception.  We incurred negative cash flows from operating activities of $726,509 and $358,433 for the years ended November 30, 2010, and 2009, respectively.  Our products are in the development stage and are subject to regulatory approval by the FDA.  We have not yet begun the FDA approval process. Although we are confident that the products under development will be successfully tested and commercialized, there can be no assurance that such approvals will be received.  

     Our ability to carry out our plan depends entirely upon our ability to obtain additional substantial equity, debt financing or licensing agreements and royalties.  We cannot assure you that we will receive this financing. If we do not receive such funding, we will not be able to proceed with our intended business plans.  In 2010 we made a private placement of 3,666,000 shares of our common stock, which sale generated net proceeds of $349,900.  In 2009, we made a private placement of 200,000 shares of our common stock at a price of $0.10 per share for net proceeds of $20,000.  

     During 2008 through 2010 we issued convertible promissory notes to officers of the Company for funds received. The notes bear interest at the rate of five percent per annum and, at the election of the holder, may be converted into shares of restricted common stock of the Company at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common stock on the date the note was issued.  The following table summarizes the funds received during the years ended November 30, 2008, 2009 and 2010, and the number of shares that would be issued had all the outstanding  notes been converted at November 30, 2010, which conversion would have been at a rate of $0.04 per share based on the closing price of November 30, 2010:

      Substantial additional funds will still be required if we are to reach our goals that are outlined above.  We currently have no arrangements or understandings that will assure that we can successfully raise any additional funds that may be required.

     Our accountants have expressed substantial doubt about our ability to continue as a going concern as a result of our history of losses.  Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully complete the development and commercialization of our products and, once in the marketplace, to generate sufficient revenues to achieve positive cash flow and profitability.

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Financial Position

     The table below presents a summary of our consolidated balance sheets at November 30, 2010, and 2009.

     We had $27,167 in cash as of November 30, 2010.  This is a decrease of $948 from November 30, 2009.  We had a working capital deficit of $1,246,202 at November 30, 2010, as compared to working capital deficit of $1,304,303 at November 30, 2009.  This decrease in the working capital deficit was primarily due to the conversion of debt into equity, reduced by the operating loss for the fiscal year.

     Contractual Obligations

     The Company issued convertible promissory notes to officers of the Company for funds received.  The notes bear interest at the rate of five percent per annum and, at the election of the holder, may be converted into shares of restricted common stock of the Company at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common stock on the date the note was issued.  The following table summarizes the outstanding convertible notes issued during the years ended November 30, 2010, 2009 and 2008:

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Results of Operations

Year Ended November 30, 2010, Compared to Year Ended November 30, 2009

     During the years ended November 30, 2010, and 2009, we had no revenue or related cost of sales.  The selected financial information below shows only the components comprising total operating expenses and the resultant net loss for each reporting period.

     Research and development expenses (“R&D”) for the year ended November 30, 2010, were $659,417, which excludes $125,132 of stock-based compensation expense.  R&D expenses for the year ended November 30, 2009, were $585,197, which excludes $105,922 of stock-based compensation expense.  The expense level in 2010 increased by $74,220 compared to 2009 expense level.  Of the increase in 2010, $94,878 is from higher consulting fees, $19,210 from increased stock based compensation charges and $28,521 from increased tools and supplies related to prototypes. These increases were offset in part by decreases of $58,830 in advisory board fees, a $7,730 reduction in building rent, and a $3,541 decrease in depreciation expense.  It is anticipated that R&D expenses will increase in 2011 as test projects are initiated and the development work required for commercialization escalates.

     General and administrative expenses for the year ended November 30, 2010, were $371,704, excluding $180,069 of stock-based compensation expense, compared to $549,326, excluding $152,424 in stock-based compensation charges, for the year ended November 30, 2009, for a decrease of $177,622.  The 2010 decrease results primarily from a $217,502 decrease in consultant expenses, offset in part by increases and decreases in a number of other expense categories. The raising of additional funds, hiring of additional personnel, travel expenses, office rental, and other administrative expenses are all expected to increase during 2011 as products are introduced into the marketplace.

     Interest expense of $27,458 was recognized in the year ended November 30, 2010, which represents interest accrued on funds loaned to the Company by its officers and directors.  Interest expense recorded in the year ended November 30, 2009 was $11,397.  

     The net loss for the year ended November 30, 2010, was $1,370,020.  This compares to a net loss realized for the year ended November 30, 2009, of $1,404,366.  We expect the net loss in 2011 to approximate the 2010 loss as additional consultants, personnel and resources are utilized to complete the testing, regulatory approval and commercialization of our products will offset the expected revenue from initial sales of our products.

     Liquidity and Capital Resources

     To date, we have financed our operations principally through private placements of equity securities.  We used net cash for operating activities of $726,509 in the year ended November 30, 2010.  This is a $368,076 increase from the $358,433 used in the year ended November 30, 2009.  As of November 30, 2010, our working capital was $(1,246,202), and our current liabilities were $1,275,640.

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     Our working capital requirements for the foreseeable future will vary based on a number of factors, including the costs to complete development work, the cost of bringing products to commercial viability, the timing of the market launches, and the level of sales.  As of November 30, 2010, we had accounts payable and accrued liabilities totaling $1,275,640.  We need to raise additional funds immediately in order to execute our business plan.  There can be no assurance that additional funding will be available to us or that if funding is available that it will be under favorable terms.  If we are unsuccessful in raising additional funds we may be required to substantially reduce or eliminate certain areas of our product development activities, limit our operations significantly or cease operations entirely.

     Critical Accounting Policies

     Revenue Recognition

     We will recognize revenue when the following criteria have been met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured.  

     Product revenues will be recognized when persuasive evidence of an arrangement exists, risk of loss and title has transferred to our customers, the fee is fixed or determinable and collection is probable.  Rights of return for manufactured product are dependent upon the agreement.

      Long-Lived Assets

     We regularly evaluate whether events or circumstances have occurred that indicate the carrying value of our long-lived assets may not be recoverable.  When factors indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of the asset to determine if impairment exists.  If the expected future net cash flows are less than the carrying value, an impairment charge is recognized based on the fair value of the asset.  An evaluation of our intangible assets was conducted utilizing the two step impairment analysis. No impairments were indicated or recorded during the years ended November 30, 2010 and 2009.

     Capitalization of Patent Costs

     We have elected to capitalize patent costs and will amortize them over the shorter of the life of the patent or the number of years for which it is estimated that economic benefit will be derived.

     Stock Based Compensation

     On March 23, 2007, the GeNOsys, Inc. 2007 Stock Option Plan (“Stock Option Plan”) was approved by our Board of Directors and became effective on that date, subject to the Stock Option Plan being approved by the stockholders at the annual meeting.  On June 27, 2007, our stockholders approved the Stock Option Plan.  The Stock Option Plan provides that 3,000,000 shares of our authorized but unissued common stock be reserved pursuant to the terms and conditions of the Stock Option Plan.  The Stock Option Plan allows us, under the direction of the Compensation Committee, to make broad-based grants of stock options, any of which may or may not require the satisfaction of performance objectives, to employees and non-employee directors.  The purpose of these stock option grants is to attract and retain talented employees and further align employee and stockholder interests.  The Stock Option Plan provides an essential component of the total compensation package offered to employees, reflecting the importance that we place on motivating and rewarding superior results with long-term, performance-based incentives.  In March, June and November 2007, our Board of Directors approved the grant of an aggregate of 1,100,000 stock option grants to certain employees and directors, resulting in non-cash charges of $574,321.  In December 2007, our Board of Directors granted one of our officers an option to purchase 700,000 shares of common stock, resulting in a non-cash charge of $329,335.  In December 2008, our directors approved the grant of 900,000 stock option grants to certain employees and director, resulting in a non-cash charge of $151,900.  During 2010 our directors approved the grant of options to purchase 588,542 shares of common stock, resulting in a non-cash charge of $32,054.  These non-cash charges are being expensed ratably over the vesting periods of the individual agreements.  The total non-cash charge expense for the years ended November 30, 2010 and 2009 relating to these stock option grants was $305,201 and $258,346, respectively.

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     Recent Accounting Pronouncements

     ASC Topic 350 – In December 2010, the FASB issued Accounting Standards Update No. 2010-28, Intangibles – Goodwill and Other (Topic 350):  When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (ASU 2010-28).  ASU 2010-28 modifies Step 1 of the goodwill impairment test so that for those reporting units with zero or negative carrying amounts, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not based on an assessment of qualitative indicators that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating than an impairment may exist.  ASU 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010.  We do not expect adoption of this standard to have a material impact on our consolidated results of operations and financial condition.

     ASC Topic 820 – In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820):  Improving Disclosures about Fair Value Measurements (ASU 2010-06). We adopted ASU 2010-06, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements which are deferred until fiscal years beginning after December 15, 2010.  We believe that the disclosures will not have a material impact on our consolidated results of operations and financial condition when updated.  

     We have reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated results of operation, financial position or cash flows.  Based on that review, we believe that none of these pronouncements will have a significant effect on our current or future earnings or operations.

     Off-Balance Sheet Arrangements

     None.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     Not required for smaller reporting companies.

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Item 8.  Financial Statements and Supplementary Data

GeNOsys, Inc.

(A Development Stage Company)

Report of Independent Registered Public Accounting Firm

and Consolidated Financial Statements

November 30, 2010

TABLE OF CONTENTS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

GeNOsys, Inc. (A Development Stage Company)

We have audited the accompanying consolidated balance sheets of GeNOsys, Inc. as of November 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years ended November 30, 2010 and 2009 and for the period of the development stage (June 30, 2005) through November 30, 2010.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GeNOsys, Inc., (a development stage company), as of November 30, 2010 and 2009, and the results of their operations and their cash flows for the periods ended November 30, 2010 and 2009, and for the period of development stage (June 30, 2005) through November 30, 2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has experienced recurring losses from operations since its inception.  The Company has not established operations with consistent revenue streams.  These factors raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Mantyla McReynolds, LLC

Mantyla McReynolds, LLC

Salt Lake City, Utah

March 15, 2011

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 GENOSYS, INC.

(A Development Stage Company)

Consolidated Balance Sheets

See Accompanying Notes to Financial Statements.

22

GENOSYS, INC.

(A Development Stage Company)

Consolidated Statements of Operations

The Company is incorporated in and conducts its operations in the State of Utah, which levies a $100 minimum Franchise tax per year.  As a result, the Company has a provision of $100 per year to account for this tax.

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The effective tax rate for continuing operations differs from the statutory rate [20%] as follows:

Uncertain Tax Positions

The Company has evaluated for uncertain tax positions and determined that any required adjustments would not have a material impact on the Company’s balance sheet, income statement, or statement of cash flows.

The Company has filed income tax returns in the US.  All years prior to 2007 are closed by expiration of the statute of limitations.  The tax year ended November 30, 2007 will close by expiration of the statute of limitations this year.  The years ended November 30, 2010, 2009, and 2008 are open for examination.

NOTE 4   COMMON STOCK

In February 2010, the Board of Directors approved the issuance of 200,000 shares of restricted common stock for services rendered.  The stock was valued at $0.05 per share, resulting in a non-cash charge of $10,000 that was recorded in the first quarter of 2010.

In February 2010, the Board of Directors approved the issuance of 360,000 shares of restricted common stock for services rendered.  The stock was valued at $0.05 per share, resulting in the recording of a non-cash charge of $18,000.

In April 2010, 25,000 shares of restricted common stock were issued pursuant to the terms on an employment agreement.   The stock was valued at $0.08 per share, resulting in a $2,000 non-cash charge, which was recorded in the second quarter of 2010.

In July 2010, 25,000 shares of restricted common stock were issued under the terms on an employment agreement. The stock was valued at $0. 08 per share, resulting in a $2,000 non-cash charge, which was recorded in the third quarter of 2010.

During the three months ended August 31, 2010, the Company sold 1,666,000 shares of restricted common stock to qualified investors through a private placement.  Net proceeds from the sales of stock were $249,900.

In October 2010, our Board our Directors approved the issuance of 8,027,142 shares of our restricted common stock to two officers in full settlement of unpaid salary and benefits.  Upon receipt of the certificates both officers provided to the Company a full release from all claims arising from and related to the unpaid salaries.  

During the three months ended November 30, 2010, the Company sold 2,000,000 shares of restricted common stock to qualified investors through a private placement.  Net proceeds from the sales of stock were $100,000.

During the year, the Company issued 2,912,326 shares of restricted common stock for the conversion of $420,052 of debt and accrued interest.

NOTE 5

   INVENTORY

Inventory at November 30, 2010 and 2009 consisted of the following:

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NOTE 6   PROPERTY, PLANT & EQUIPMENT

The major classes of property, plant and equipment as of the balance sheet dates are as follows:

Equipment is stated at cost.  Depreciation is provided by using the straight-line method over three or five years. Depreciation expense for the years ended November 30, 2010 and 2009 was $31,923 and $38,392, respectively. Amortization expense related to leasehold improvements for the years ended November 30, 2010 and 2009 was $2,167 and $4,334, respectively.  The amortization recorded for 2010 is for the period December 1, 2009 through May 31, 2010.  The office was vacated on May 31, 2010, and the unamortized leasehold improvement balance of $6,140 was expensed at that time.  Expenditures for maintenance and repairs are charged to expense as incurred.

NOTE 7   PATENTS

Patents are carried at cost and are amortized over the estimated life from which financial benefit is expected to accrue. Balances as of the balance sheet dates are as follows:

The Company also capitalized $20,707 in patent costs during the current year.  Amortization expense related to patents for the years ended November 30, 2010 and 2009 was $13,104 and $9,766, respectively.  Based upon the current capitalized patent costs, amortization expense is expected to be approximately $15,180 per year for the next six years.

NOTE 8   COMMITMENTS AND CONTINGENCIES

In June 2010, the Company was able to terminate the remainder of the five-year operating lease that commenced on November 1, 2006.  They currently rent office space on a month-to-month basis and therefore have no long term commitment.

Total rent expense for the year ended November 30, 2010 and 2009 was $67,475 and $82,934, respectively.

NOTE 9   RELATED PARTIES

As of November 30, 2010, directors and officers of the Company owned 52.9% of the Company’s issued and outstanding stock.  This allows for the officers and directors to effectively control the vote on substantially all

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significant matters with the approval of only a small group of other stockholders.

Accounts Payable – Related Party

As of November 30, 2010 and 2009, officers of the Company were owed $7,628 and $14,327, respectively, for various expenditures they made on behalf of the Company.

Accrued Liabilities – Related Party

At November 30, 2010 and 2009, officers and directors of the Company were owed $504,969 and $429,079, respectively, in unpaid director fees, advisory board fees, and salary.

Loans Payable – Related Party

At November 30, 2010, officers of the Company had advanced $457,363 in funding in the form of notes payable to the Company.  The notes bear interest at the rate of five percent per annum and, at the election of the holder, may be converted into shares of the Company’s restricted common stock at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common stock on the date the note was issued.  It is the intent of the Company, should the notes not have been previously converted, to repay these notes upon the closing of a major capital raise.

NOTE 10   STOCK-BASED COMPENSATION

On March 23, 2007, the GeNOsys, Inc. 2007 Stock Option Plan (“Stock Plan”) was approved by the Board of Directors and became effective on that date, subject to the Stock Plan being approved by the stockholders at the annual meeting.  The Stock Plan provides that 3,000,000 shares of the Company’s authorized but unissued common stock be reserved pursuant to the terms and conditions of the plan.  On June 27, 2007, the annual meeting of stockholders was held, at which time the stockholders approved the Stock Plan.  The Stock Plan allows the Company, under the direction of the Compensation Committee, to make broad-based grants of stock options, any of which may or may not require the satisfaction of performance objectives, to employees, consultants and non-employee directors.   In June and July 2007, the Board of Directors approved stock option grants to purchase 1,100,000 shares of common stock to certain employees, directors and consultants, resulting in a non-cash charge of $574,321.  In November and December 2007, the Board of Directors approved addition grants of 700,000 options to an employee and a director, resulting in a non-cash charge of $329,335. In December 2008, our directors approved the grant of 900,000 stock option grants to a certain employee and director, resulting in a non-cash charge of $151,900.  During 2010 our directors approved the grant of 588,542 stock option grants to a certain employee, resulting in a non-cash charge of $32,054.  In 2010, 200,000 of the previously granted stock options were forfeited.  The charges are being expensed ratably over the shorter of the vesting period or the requisite service period of the stock option grants.    

A summary of the status of the Company’s option plans as of December 1, 2009, and changes during the year ended November 30, 2010, is presented below:

The following table summarizes information about stock options outstanding at November 30, 2010:

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model.   The use of this valuation model requires the use of accounting judgment and financial estimates, including estimates of the expected term employees will retain their vested warrants before exercising them, the estimated volatility of our stock price, and the number of warrants that will be forfeited prior to the completion of their vesting requirements.  Application of alternative assumptions could produce significantly different estimates of the fair value of stock-based compensation and consequently, the related amounts recognized in our statements of operations. The Company utilized the simplified method of determining fair value, in that the Company has not experienced stock option exercising. The following weighted-average assumptions used for grants:  Grants made in June, July and November, 2007: average risk-free interest rate of 5.25%; expected lives of 10 years; expected dividend yield of zero percent; expected volatility of 61.47% to 68.88%.  The grant made in December, 2007: risk-free interest rate of 3.89%; expected life of 6.5 years; expected dividend yield of zero percent; expected volatility of 62.75%.  The grants made in December, 2008:  risk-free interest rate of 3.89; expected life of 6.5 years; expected dividend yield of zero percent; expected volatility of 112.14%.  The grants made in 2010:  risk-free interest rate of 3.04; expected life of 6.5 years; expected dividend yield of zero percent; expected volatility of 171.08%.  For the year ended November 30, 2010 and 2009, the Company recognized stock based compensation expense of $305,201 and $258,346, respectively.  As of November 30, 2010, total stock based compensation related to non-vested awards not yet recognized was $64,194 with a weighted average recognition period of 6.58 years.  As of November 30, 2009, total stock based compensation related to non-vested awards not yet recognized was $337,342 with a weighted average recognition period of 7.57 years.

The weighted-weighted average grant-date fair value of options granted during the years ended November 30, 2010 and 2009 was $0.05 and $0.20, respectively.

NOTE 11 SUBSEQUENT EVENTS

The Company notes the following transactions which occurred subsequent to the year end:

Related Party Transaction

Subsequent to November 30, 2010, the Company has issued convertible notes payable to an officer and a director for funds provided to the Company.  The notes were issued February 8, 2011, in the amount of $7,500, February 17, 2011, in the amount of $4,400, and on February 18, 2011, in the amount of $842.  The notes bear interest at the rate

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of five percent per annum and, at the election of the holder, may be converted into shares of restricted common stock of the Company at the lower of the market rate on the date notice of conversion is given or 125% of the closing price of the common stock on the date the note was issued.

On January 3, 2011, the Board of Directors approved the issuance of 1,500,000 shares of restricted common stock to directors and 1,282,817 to consultants in payment of services rendered.  

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

     We had no disagreements on accounting and financial disclosures with our accounting firm during the reporting periods covered by this Annual Report.

Item 9A. Controls and Procedures

     As of the end of the period covered by this Annual Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that information required to be disclosed is recorded, processed, summarized and reported within the specified periods and is accumulated and communicated to management, including our President and Chief Financial Officer, to allow for timely decisions regarding required disclosure of material information required to be included in our periodic Securities and Exchange Commission reports.  Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to a reasonable assurance level of achieving such objectives. However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

     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 Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

     Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of November 30, 2010.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework.  Based on this evaluation, our management, with the participation of the President and Secretary, concluded that, as of November 30, 2010, our internal control over financial reporting was effective.

     Inherent Limitations Over Internal Controls

     Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls.  Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

     Changes in internal control over financial reporting

     We have made no change in our internal control over financial reporting during the last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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     Attestation Report of the Registered Public Accounting Firm

     This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.

Item 9B.  Other Information.

    None; not applicable.

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PART III

Item 10.  Directors, Executive Officers, and Corporate Governance.

     Identification of Directors and Executive Officers

     The following table sets forth the names of all of our current directors and executive officers.  These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.

          * These persons presently serve in the capacities indicated.

     Business Experience

     John W. R. Miller.  Mr. Miller is our founder and serves as our Chief Executive Officer and Chairman of the Board. Mr. Miller is 59 years old.  In 2003, he co-founded Alberta 1017975 with Christie W. Jones, the predecessor to our Technology Rights.  From 2001 to 2003, Mr. Miller was self-employed.  Mr. Miller was the President and a Co-Founder of Pulmonox Medical Corp., a biotechnology corporation, where he worked from 1990 to 2001. He participated in the FDA approval process for inhaled nitric oxide therapy. Mr. Miller sold his interest in Pulmonox in 2001.  Mr. Miller received a B.S. Degree in Education/Business from Brigham Young University in 1972.

     Steven D. Minton, M.D.  Dr. Minton serves as our Chief Medical Officer and is a Director of our Company.  He is 65 years old.  Dr. Minton is the Chief of Neonatology at Utah Valley Regional Medical Center and the Intermountain Health Care Urban South Medical Director of Newborn Services.  As a practicing physician for 31 years with a specialty and intense interest in the care of the critically ill new born, Dr. Minton’s expert knowledge and the scope of his understanding of the efficacy of the Company’s research, products and devices in unparalleled.  Dr. Minton is a widely published and a recognized expert in neonatal care using nitric oxide gas inhalation therapy and has been nationally recognized for his ongoing research.  Dr. Minton received a Bachelor of Science degree from the University of Cincinnati and a Doctor of Medicine from the University of  Cincinnati School of Medicine.  

     Gordon D. Barker.  Mr. Barker joined our Board as a Director in January 2011.  Mr. Barker served as Chief Executive Officer of Thrifty Payless Drug Stores, Inc., a $5.1 billion company, and was instrumental in negotiating its merger with Rite Aid Drugs.  Mr. Barker currently serves on a number of Board of Directors for both public and private companies, including NuMedics, Inc., American Consulting Technology and Research, and as Vice Chairman and Lead Outside Independent Director of United Natural Foods, Inc.  Mr. Barker has also served as Chairman of the Juvenile Diabetes Research Foundation International.  Mr. Barker’s extensive business experience within the retail sector, including his having served as a chief executive officer of three retail drug store chains, coupled with his experience as a public company director and deep understanding of corporate governance matters contribute to his qualifications to serve on the Board.

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     Keith L. Merrell.  Mr. Merrell is our Chief Financial Officer, Treasurer and General Manager.  He is 65 years old. He joined our Company in February 2007.  Mr. Merrell draws on over 30 years of accounting experience to manage all of our accounting functions and to interface with our independent public accountants.  He spent two years in the field of public accounting, and served as Chief Financial Officer or Controller of five companies prior to joining us. His business career also includes extensive experience in management, sales and marketing, consulting, and merger and acquisition work.  He served as both Chief Financial Officer and Controller of Specialized Health Products International, Inc., a manufacturer of safety medical devices, from 2000 to 2007, and as Vice President-Western Operations for Michelex, an injection molding company with corporate headquarters in New York, from 1998 to 2000. From 1991 to 1998 he served as Director of Finance for The Duplication Group, planning, implementing, and bringing online the first compact disc manufacturing facility in the intermountain area.  He graduated from Arizona State University with a B.S. degree in Accounting.

     John P. Livingstone.  Dr. Livingstone, a Ph.D. is a director of our Company and is 59 years old.  In addition to his practice as a psychologist, Dr. Livingstone has served as an educator, both in Canada and the United States, and is currently a professor at Brigham Young University.  Dr. Livingstone has published and been a contributor to a number of books, as well as writing and/or presenting numerous articles and papers.  His work has earned him recognition among his peers for his distinguished service.  Dr. Livingstone received a B.S. degree in Biology/Chemistry from the University of Alberta in 1974, a Master of Education degree in Guidance and Counseling from the University of Regina, and a Doctor of Education degree in Counseling and Personnel Services from Brigham Young University.

     Significant Employees

     There are no employees who are not executive officers who are expected to make a significant contribution to our Company’s business.

     Family Relationships

     There are no family relationships between any director or executive officer.

     Involvement in Certain Legal Proceedings

     During the past five years, no present or former director, executive officer or person nominated to become a director or an executive officer of our Company:

          (1) was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;

          (2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

          (3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

          (4) was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

     Promoters and control person.

     See the heading “Transactions with Related Persons” below.

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     Compliance with Section 16(a) of the Exchange Act

     Our executive officers, directors, and 10% stockholders are required under the Securities Exchange Act of 1934 to file reports of ownership and changes in ownership with the Securities and Exchange Commission.  Copies of these reports must also be furnished to us.

     Based solely on a review of the copies of reports furnished to us, or written representations that no reports were required, we believe that during the fiscal year ended November 30, 2010, our executive officers, directors and 10% stockholders complied with all filing requirements.

     Code of Ethics

     We adopted a Code of Ethics for our Chief Executive Officer or our Chief Financial Officer and attached a copy of our Code of Ethics as an exhibit to our Form 10-KSB for the year ended November 30, 2005.  See Part III, Item 15.

     A copy of our Code of Ethics will be provided, free of charge, upon request to us at the address and telephone number listed on the cover page of this Annual Report.

     Corporate Governance

     Director Independence

     Two of our directors, Gordon D. Barker and John P. Livingstone, presently qualify as independent directors.  None of our other directors presently qualify as independent directors due to the percentage of ownership and/or affiliation with us as an employee or consultant.

     Board Meetings and Committees; Annual Meeting Attendance

     During the year ended November 30, 2010, five Board meetings were held.  No annual meeting was held during the fiscal year ended November 30, 2010.

     Nominating Committee and Corporate Governance Committee

     We have not established a nominating and corporate governance committee because, due to our lack of substantial operations and the fact that we only have three directors and executive officers, we believe that our Board of Directors is able to effectively manage the issues normally considered by a nominating and corporate governance committee.  Following an increase in our current operations, a further review of this issue will no doubt be necessitated and undertaken by our management.

     Audit Committee

     Our full Board of Directors currently serves as our Audit Committee.  We have not yet established an independent audit committee; we do not believe the lack of an independent audit committee will have any adverse effect on our financial statements, based upon our current business operations.  We will continue to assess the point at which an independent audit committee will be necessary in the future.

     Compensation Committee

     We have not established a compensation committee because, due to our lack of substantial operations and the fact that we only have three directors and executive officers; we believe that we are able to effectively manage the issues normally considered by a compensation committee.  Following an increase in our current operations, a further review of this issue will no doubt be necessitated and undertaken by our management.

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     Shareholder Communications

     Although we do not have a formal policy regarding communications with the Board of Directors, stockholders may communicate with our Board of Directors by writing to us at:  GeNOsys, Inc., Attention: Investor

Relations, 86 N. University Avenue, Suite 400, Provo, UT 84601.  Stockholders who would like their submission directed to a particular member of the Board may so specify, and the communications will be forwarded to that director, as appropriate.

Item 11. Executive Compensation.

     COMPENSATION DISCUSSION AND ANALYSIS

     Compensation Objectives

     Our compensation philosophy is to align executive compensation with the interests of stockholders, attract, retain and motivate a highly competent team of executives, and link pay to performance.

     Base Salary

     Base salaries for our executives depend on the scope of their responsibilities and their performance.  Base salary is designed to compensate the executives for services rendered during the year.  These salaries are compared to amounts paid to the executive’s peers outside our Company.  As we have not yet established a Compensation Committee, salary levels are typically reviewed annually by the Board of Directors performance review process, with increases based on the assessment of the performance of the executive.

Long-term Compensation

     The Board of Directors determined that long-term incentive compensation would be in the form of stock options granted.  We have a stock option plan implemented which has been approved by the shareholders to provide long-term compensation to directors and employees of the company.

     Perquisites

     The only material perquisite provided to our executive officers is a mileage reimbursement for use of their personal automobile while engaged on company business.

     Retirement Benefits

     As a development stage company, we have no retirement benefits currently in place.  It is the intent of the company to add such benefits at a future date.

     Employee agreements

     We have not entered into employment contracts with our executive officers and their compensation is determined at the discretion of our board of directors.

     Compensation

     The following table shows the compensation paid to our principal executive officer, principal financial officer, and our most highly compensated executive officer for the last three fiscal years:

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SUMMARY COMPENSATION TABLE

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

     Security Ownership of Certain Beneficial Owners

     The following table lists the beneficial ownership of our outstanding common stock by our management and each person or group known to us to own beneficially more than 5% of our outstanding common stock.  Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Based on these rules, two or more persons may be deemed to be the beneficial owners of the same securities.  Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to the shares of common stock shown as beneficially owned by them.  The percentage of beneficial ownership is based on 66,165,059 shares of common stock issued as of March 1, 2011, plus any shares which each of the following persons may acquire within 60 days by the exercise of rights, warrants and/or options.

     2007 Stock Option Plan

     On March 23, 2007, the GeNOsys, Inc. 2007 Stock Option Plan (“Stock Option Plan”) was approved by our Board of Directors and became effective on that date, subject to the Stock Option Plan being approved by our stockholders at the annual meeting.  The Stock Plan provides that 3,000,000 shares of our authorized but unissued common stock be reserved pursuant to the terms and conditions of the plan.  The Stock Plan was approved by a vote of stockholders at the Annual Meeting held June 27, 2007.  The Stock Plan allows the Board of Directors, under the direction of the Compensation Committee, to make broad-based grants of stock options, any of which may or may not require the satisfaction of performance objectives, to employees, consultants and non-employee directors.

     The Plan became effective upon the date of shareholder approval and shall continue in effect for a term of ten (10) years, unless terminated.  The maximum aggregate number of shares of common stock that may be sold under the Plan is 3,000,000 shares.  The term of each option and its exercise price shall be stated in an option agreement; provided that the term does not exceed ten (10) years from the date of grant.  The plan provides that a grant of a stock option to an employee shall have an exercise price no less than the fair market value of a share of common stock on the date on which the option is granted.  As a condition of the grant, vesting or exercise of an option granted under the Plan, the participant shall be required to satisfy any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the grant, vesting or exercise of the option or the issuance of shares.

     The Plan is to be administered by our Compensation Committee.  Until a Compensation Committee is formed the Board of Directors will administer the Plan.  The Board may from time to time increase the size of any Compensation Committee and appoint additional members, remove members (with or without cause) and appoint new members in substitution, fill vacancies and/or remove all members of the committee.  The Compensation Committee may be composed of employee/director(s), non-employee/director(s) and/or major stockholder(s) of the company who are not a director.

     Non-statutory stock options may be granted to employees, directors and consultants who have the capacity to contribute to the success of the company.  Incentive stock options may be granted only to employees, provided that employees of affiliates shall not be eligible to receive incentive stock options.

Item 13. Certain Relationships and Related Transactions, and Directors Independence.

     Transactions with Related Persons

     There have been no material transactions involving $60,000 or more between us or our subsidiaries and/or our directors, executive officers or five percent stockholders other than compensatory arrangements that are detailed in the Executive Compensation Discussion and Analysis and the Notes Payable detailed in Note 10 to the financial

statements.

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     Promoters and Certain Control Persons

     See the heading “Transactions with Related Persons” above.

     Parents of the Smaller Reporting Company

     We have no parents.

     Director Independence

     We believe Gordon D. Barker and John P. Livingstone are independent directors as defined under NASD Rule 4200(a)(15).

Item 14. Principal Accountant Fees and Services.

     Accountant Fees

     The following table presents the aggregate fees billed for each of the last two fiscal years by our principal accountant, Mantyla McReynolds LLP, Certified Public Accountants, in connection with the audit of our financial statements and other professional services rendered by that firm.  

     Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accountant in connection with statutory and regulatory filings or engagements.  Audit-related fees represent professional services rendered for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.  

     Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”

     Tax fees represent professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.  All other fees represent fees billed for products and services provided by the principal accountant, other than the services reported for the other categories.

     All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.

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     Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

     Our audit committee makes recommendations to our board of directors regarding the engagement of an auditor. Before the auditor renders audit and non-audit services our board of directors approves the engagement.  Our audit committee does not rely on pre-approval policies and procedures.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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PART IV

Item 15.  Exhibits and Financial Statement Schedules

Exhibit No.              Description of Exhibit                           

3.1

Articles of Incorporation filed as an Exhibit to our Registration Statement on Form 10-SB filed May 14, 2002.

3.2

By-laws filed as and Exhibit to our Registration Statement on Form 10-SB filed May 14, 2002.

3.3

Amendment to the Articles of Incorporation dated September 12, 2005, filed as Exhibit 3.3 of our Form 10-KSB Annual Report for the fiscal year ended November 30, 2005.

3.4

Amendment to the By-Laws dated June 18, 2004, filed as Exhibit 3.4 of our Form 10-KSB Annual Report for the fiscal year ended November 30, 2005.

14

Code of Ethics filed as Exhibit 14 to our Form 10-KSB Annual Report for the fiscal year ended November 30, 2005.

21

Subsidiaries, filed as Exhibit 21 of our Form 10-KSB Annual Report for the fiscal year ended November 30, 2005.

Registration statement on Form 10-SB filed May 14, 2002, as amended on September 10, 2002, November 19, 2002 and December 9, 2002*

Annual Report on Form 10KSB for the fiscal year ended November 30, 2005, and filed on March 7, 2006*

Annual Report on Form 10KSB for the fiscal year ended November 30, 2006, and filed on March 15, 2007*

Current Report on Form 8-K dated January 22, 2008, and filed February 12, 2008*

Annual Report on Form 10-KSB for the fiscal year ended November 30, 2007, and filed on February 28, 2008*

Annual Report on Form 10-K for the fiscal year ended November 30, 2008, and filed on March 16, 2009*

Annual Report on Form 10-K for the fiscal year ended November 30, 2009, and filed on March 1, 2010*

*   Referenced for additional information.

31.1

Certification of John W. R. Miller under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Keith L. Merrell under Section 302 of the Sarbanes-Oxley Act of 2002.

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Certification of John W.R. Miller and Keith L. Merrell pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                             GeNOsys, Inc.

Date: 3/15/2011                  By/s/John W. R. Miller

                                            John W. R. Miller, Jr., Director,

                                            Chief Executive Officer and

 Chairman of the Board

Date: 3/15/2011                  By/s/Keith L. Merrell

                                            Keith L. Merrell, Director,

                                            Chief Financial Officer and

                                            Treasurer

Date: 3/15/2011                  By/s/Gordon D. Barker

                                            Gordon D. Barker

                                            Director

Date: 3/15/2011                  By/s/John P. Livingstone

                                            John P. Livingstone

                                            Director

Date: 3/15/2011                  By/s/Stephen D. Minton, M.D.

                                            Stephen D. Minton, M.D., Director

                                            and Chief Medical Officer

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