S-1/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM S-1/A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

(AMENDMENT NO. 2)

OxySure® Systems, Inc.

Delaware	3841	71-0960725
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S.  Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

OxySure Systems, Inc.

10880 John W. Elliot Drive, Suite 600

Frisco, Texas  75034

(972) 297-6450

(Address and telephone number of principal executive offices

and principal place of business)

Julian T. Ross

OxySure Systems, Inc.

10880 John W. Elliott Drive, Suite 600

Frisco, Texas  75034

(972) 294-6555

(Name, address and telephone number for agent for service)

__________________

Copies to

Oswald & Yap LLP

16148 Sand Canyon Avenue

Irvine, CA  92618

Telephone: (949) 788-8900

Facsimile (949) 788-8980

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  £

If this Form is a post effective amendment filed under Rule 462(c) of the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  £

If this Form is a post effective amendment filed under Rule 462(d) of the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  £

If delivery of the Prospectus is expected to be made pursuant to Rule 434, check the following box.  £

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

CALCULATION OF REGISTRATION FEE

			Proposed		Proposed
			Maximum		Maximum		Amount of
Title of Each Class of	Amount To Be		Offering Price		Aggregate		Registration
Securities To Be Registered	Registered1		Per Share2		Offering Price		Fee
Selling Security Holders Issued Common Stock, $0.0004 par value per share		1,676,816 3	$	1.00	$	1,676,816	$	120.00
Common Stock, $0.0004 par value per share		5,000,0004	$	1.00	$	5,000,000	$	357.00
Underlying Shares for Convertible Preferred Stock, $0.0005 par value per share		2,563,749 5	$	1.00	$	2,563,749	$	183.00
Total Registration Fee		9,240,565	$	1.00	$	9,240,565	$	660.00

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

PRELIMINARY PROSPECTUS

________________________

1 In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of additional shares of common stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions.

 

2 Estimated pursuant to Rule 457(a) of the Securities Act, solely for the purpose of computing the amount of the registration fee.  The selling price of our Common Stock was established arbitrarily.

 

3 Represents shares of the Registrant’s common stock being registered for resale that have been issued to the selling security holders named in the Prospectus or a Prospectus supplement.

 

4 Represents shares of the Registrant’s common stock being registered for sale in a direct public offering by the Registrant.

 

5 Represents shares of the Registrant’s common stock being registered for resale that have been or may be acquired upon the conversion of convertible preferred stock that has been issued to the selling stockholders named in the Prospectus or a Prospectus supplement.

Subject to Completion, Dated_____________________     

PRELIMINARY PROSPECTUS

9,240,565

Shares of Common Stock

OxySure® Systems, Inc.

This is our initial public Offering .  There is no public market for our common stock.  It is our intention to seek quotation of our common stock by a market maker on the an over-the-counter electronic quotation system such as the OTC Bulletin Board subsequent to the date of this Prospectus .  The lack of a public market for our common stock may place purchasers of our shares at risk of having an illiquid security.  There can be no assurance that any market maker will file the necessary documents with an OTC electronic quotation system , nor can there be any assurance that such an application for quotation will be approved.

Our existing shareholders are offering for sale, 1,676,816 shares of common stock.  In addition, we are offering a total of 5,000,000 shares of our common stock in a direct public offering, without any involvement of underwriters or broker-dealers.  The offering price is $1.00 per share (the “Offering Price”) for both newly issued shares and those being sold by current shareholders.  In addition, 2,563,749 shares of common stock are being registered for issuance upon conversion of 2,101,434 shares of preferred stock (net of prior conversions), at a 1.22 :1 ratio.  The unaffiliated Selling Security Holders will sell at the specified fixed Offering Price of $1.00 per share until the shares are quoted on an OTC quotation system , after which the shares will sell at prevailing market prices or privately negotiated prices.  We will not receive any proceeds from the sales by the Selling Security Holders .  The Selling Security Holders named herein are deemed underwriters of the shares of common stock which they are offering.  The promoters named herein will sell at the specified fixed Offering Price of $1.00 throughout the Offering period.

The direct public Offering will terminate 180 days from the effective date of this Prospectus , although we may close the Offering on any date prior if the Offering is fully subscribed or at the discretion of our Board of Directors.  At our sole discretion, we may extend the Offering for an additional 90 days.  The funds will be maintained in a separate bank account at Silicon Valley Bank.  All funds are immediately available for our use.  Upon funds clearance, we will remove those funds and use them as set forth in the Use of Proceeds section of this Prospectus .  This account is not an escrow, trust or similar account.  Your subscription will only be deposited in a separate bank account under our name.

There is no minimum amount of shares that we must sell in our direct public Offering , and therefore no minimum amount of proceeds will be raised.  We are offering the shares without any underwriting discounts or commissions.  Our minimum purchase requirement is $25,000.  If all of the shares offered by us are purchased, the gross proceeds to us will be $5,000,000.  Julian T. Ross, officer and director, will market our shares and offer and sell them on our behalf.  This is a best efforts direct participation Offering that will not utilize broker-dealers.  Mr. Ross ’ efforts relate only to shares offered in the direct public Offering and not to any shares offered by Selling Security Holders .

The purchase of the securities involves a high degree of risk.  See section entitled “Risk Factors” beginning on page   8.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone’s investment in these securities or determined if this Prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

The Date of this Prospectus is: July 15, 2010

SUBJECT TO COMPLETION

The information in this preliminary Prospectus may be changed.  Existing shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This preliminary Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

TABLE OF CONTENTS

PROSPECTUS SUMMARY	1
RISK FACTORS	8
USE OF PROCEEDS	24
DILUTION	26
DIVIDEND POLICY	27
DETERMINATION OF OFFERING PRICE AND ADDITIONAL INFORMATION	27
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	27
SELLING SECURITY HOLDERS	27
SHARES ELIGIBLE FOR FUTURE SALE	36
PLAN OF DISTRUBUTION	38
DESCRIPTION OF BUSINESS	49
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	73
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	80
DESCRIPTION OF SECURITIES	83
INTERESTS OF NAMED EXPERTS AND COUNSEL	87
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION	88
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	91
AVAILABLE INFORMATION	92
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING	93

Please read this Prospectus carefully.  It describes our business, financial condition and results of operations.  We have prepared this Prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on information contained in this Prospectus .  We have not authorized any other person to provide you with different information.  This Prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted.  The information in this Prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

The terms “we,” “us,” and “our,” as used in this Prospectus refer to OxySure Systems, Inc.

PROSPECTUS SUMMARY

Because this is only a summary, it does not contain all of the information that may be important to you.  You should carefully read the more detailed information contained in this Prospectus , including our financial statements and related notes.  Our business involves significant risks.  You should carefully consider the information under the heading “Risk Factors” beginning on page 8.

1

OxySure Systems, Inc. was formed on January 15, 2004 as a Delaware “C” Corporation for the purpose of developing products with the capability of generating medical grade oxygen “on demand,” without the necessity of storing oxygen in compressed tanks.  We developed a unique technology that generates medically pure (USP) oxygen from two dry, inert powders.  Other available chemical oxygen generating technologies contain hazards that we believe make them commercially unviable for broad-based emergency use by lay rescuers or the general public .  Our launch product is the OxySure Model 615 portable emergency oxygen system .  We believe that the OxySure Model 615 is currently the only product on the market that can be safely pre-positioned in public and private venues for emergency administration of medical oxygen by lay persons, without the need for training.

We were founded by our current Chairman, Chief Executive Officer, President, and Chief Financial Officer, Julian T. Ross, who conducted or managed all of the related research and development, a function Mr. Ross continues to oversee.  In early 2004, Mr. Ross moved his research and development efforts into the North Texas Enterprise Center for Medical Technology (“NTEC”).  NTEC is a Frisco , Texas based medical technology incubator, and we were accepted as an NTEC program company in early 2004, and graduated from the incubator program in November 2005.  In December 2005, we received F ood and D rug A dministration (“FDA”) clearance for our Model 615 (510(K), Class II).  The approval number for our FDA clearance is K052396, and Model 615 is cleared for over the counter sale, without the need for a prescription.

Upon graduation from NTEC, we proceeded with the development of our purpose-built production facility in Frisco, Texas, which also serves as our headquarters.  The facility comprises 16,200 square feet of light industrial space, of which approximately 10,000 square feet is dedicated to production and warehousing.  We received an economic incentive from the Frisco Economic Development Corporation (“FEDC”) in the amount of $243,000 in support of the development and build-out of the facility.  This incentive is structured as a promissory note in the amount of $243,000 issued by us to FEDC.  The promissory note is forgiven over a period of five years subject to us achieving targets such as headcount and square footage occupied in the city of Frisco.  On August 5, 2008, the amount of $30,000 was forgiven for meeting the first year targets in the Performance Agreement with the FEDC.  In addition, we received a further amount of $324,000 in the form of a Tenant Improvement Allowance from our landlord.  Upon completion of the build-out, we moved into the facility in October 2007.  We commenced commercial shipment of Model 615 during 2008.  We are still a n early stage business with a history of losses, and only recently began generating revenues.

Common Stock

We are authorized to issue 100,000,000 shares of common stock, $0.0004 par value per share, of which 15,724,816 shares are issued and outstanding as of the date of this Prospectus .  Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders.

2

Preferred Stock

We are authorized to issue up to 25,000,000 shares of our preferred stock, par value $0.0005 per share, from time to time in one or more series.  On March 31, 2006, we completed the issuance of 3,112,500 shares of our Series A Convertible Preferred Stock, par value $0.0005.  We subsequently issued an additional 30,737 preferred shares pursuant to a lease agreement, increasing the total number of Series A preferred shares issued to 3,143,237 shares.  As of the date of this Prospectus , there were 3,126,434 Series A preferred shares outstanding, net of conversions to common stock .   The number of shares of common stock into which each share of Series A Convertible Preferred will convert will be determined by dividing the original issue price by $0.82 , resulting in each share of the Series A Convertible Preferred becoming 1.22 shares of common stock.

Our Board of Directors, without further approval of our stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series of preferred stock.  Issuances of shares of preferred stock , while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock and prior series of preferred stock then outstanding.

Warrants

As of the date of this Prospectus, our warrant holders held an aggregate of 1,897,317 warrants to purchase shares of our common stock.  Some of the warrants are exercisable immediately.  The following table sets out the warrants by groups, amounts and aggregate exercise prices:

Group	Number of Warrants		Aggregate Exercise Price
Licensing Agreements		551,200	$	1.22
Consultants		240,719	$	0.42
Rent		220,915	$	0.49
Financing		859,483	$	0.30
Community Grants		25,000	$	1.00
Totals		1,897,317	$	0.62

Options

As of the date of this Prospectus, we have granted options to acquire an aggregate total of 2,321,994 shares (net of forfeitures and conversions) of our common stock with an aggregate exercise price of $0. 635 .  The holders of common and preferred stock hold an aggregate of 798,219 options (net of forfeitures and conversions) with an aggregate exercise price of $0. 838 per share to purchase common stock .  All other options are held by present and former employees, present and former Directors, Advisory Board members, and present and former consultants and other eligible persons who are not Selling Security Holders .  Present and former employees, including some who are also stockholders, have been issued 2,227,612 options (net of conversions) with an average weighted exercise price of $0. 62 per share.  Present and former Directors have been issued 32,000 options with an average weighted exercise price of $ 1 . 20 per share.  This does not include any options issued to Mr. Ross, our CEO who also serves on the Board of Directors.  Advisory Board members, including some who are also stockholders, have been issued 132,000 options with an average weighted exercise price of $ 1 . 39 per share.  Consultants and other eligible persons have been issued 94,382 options with an average weighted exercise price of $0. 95 per share.

3

Our shares of common stock are not traded on any exchange or other trading platform.

Our fiscal year end is December 31.

Our principal executive office is located at 10880 John W.  Elliott Drive, Suite 600, Frisco, Texas 75034 and our telephone number is (972) 294-6450.

The Offering

Common stock offered by existing holders of common stock	1,676,816
Direct Public Offer ing	5,000,000
Common stock offered upon conversion of Series A Convertible Preferred Stock	2,563,749
Total common stock offered by Selling Security Holders and Direct Public Offer ing	9,240,565
Use of proceeds	We will not receive any proceeds from the sale of the common stock by the Selling Security Holders .
Risk factors	Investing in these securities involves a high degree of risk.  As an investor you should be able to bear a complete loss of your investment.  You should carefully consider the information set forth in the “Risk Factors” section beginning on page 8 .

4

SUMMARY FINANCIAL DATA

The following summary financial information is derived from the unaudited financial statements for the three months ended March 31, 2010 and 2009 and the audited financial statements for the fiscal years ended December 31, 2009 , and 200 8 .  Such financial data should be read in conjunction with the reviewed and audited financial statements and the notes to the financial statements starting on page F-1 and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Statements of Operations

	Three Months Ended March 31, 2010			Three Months Ended March 31, 2009			Fiscal Year Ended December 31, 2009			Fiscal Year Ended December 31, 2008
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
REVENUE	$	267,177		$	106,431		$	387,361		$	97,060
COST OF SALES	$	22,832		$	32,312		$	194,518		$	50,433
GROSS PROFIT	$	244,345		$	74,119		$	192,843		$	46,626
OPERATING EXPENSES		-			-			-			-
Selling, General & Administrative expenses	$	377,411			915,913		$	2,388,235		$	2,888,456
LOSS FROM OPERATING EXPENSES	$	(133,066	)	$	(841,794	)	$	(2,195,392	)	$	(2,841,830	)
OTHER INCOME / (EXPENSES)	$	1,853		$	671		$	(48,244	)	$	(58,563	)
Net loss	$	(131,214	)	$	(841,123	)	$	(2,243,636	)	$	(2,900,393	)
Accumulated deficit - beginning of the period	$	(9,594,814	)	$	(7,410,000	)	$	(7,410,000	)	$	(4,508,980	)
Prior period adjustment		-			-		$	58,822		$	(627	)
Accumulated deficit - end of the year	$	(9,726,028	)	$	(8,251,124	)	$	(9,594,814	)	$	(7,410,000	)

5

Balance Sheet Summaries

	Three Months Ended March 31, 2010	Three Months Ended March 31, 2009	Fiscal Year Ended December 31, 2009	Fiscal Year Ended December 31, 2008
ASSETS	(Unaudited)	(Unaudited)	(Audited)	(Audited)
Current assets

Cash and cash equivalents	$	(1,808	)	$	(2,512	)	$	73,077	$	393
Accounts receivable	$	228,709		$	3,194		$	36,365	$	3,401
Inventory	$	175,091		$	272,441		$	138,737	$	284,736
Prepaid Expenses	$	86,951		$	69,063		$	86,851	$	52,673
Total current assets	$	488,943		$	342,185		$	335,030	$	341,203
Property & Equipment	$	451,254		$	817,011		$	518,976	$	921,860
Intangible assets	$	502,624		$	611,256		$	502,624	$	597,724
Other Assets	$	421,696		$	13,132		$	151,696	$	32,415
TOTAL ASSETS	$	1,864,517		$	1,783,583		$	1,508,326	$	1,893,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities		-			-			-		-
Accounts payable and Accrued Liabilities	$	410,247		$	443,915		$	332,701	$	342,594
Capital lease - current	$	311,294		$	277,569		$	326,057	$	275,343
Notes payable - current	$	625,200		$	1,344,282		$	310,600	$	484,350
Deferred Revenue		-		$	91,207			-	$	91,207
Total current liabilities	$	1,346,741		$	2,156,974		$	969,358	$	1,193,494
Long-term liabilities
Capital lease	$	46,673		$	310,132		$	47,036	$	106,891
Notes payable	$	1,761,059			-		$	1,761,059	$	1,004,732
Total long-term liabilities	$	1,807,732		$	310,132		$	1,808,095	$	1,111,624
TOTAL LIABILITIES	$	3,154,473		$	2,467,106		$	2,777,453	$	2,305,117

6

Balance Sheet Summaries (Continued)

	Three Months Ended March 31, 2010	Three Months Ended March 31, 2009	Fiscal Year Ended December 31, 2009	Fiscal Year Ended December 31, 2008
	(Unaudited)	(Unaudited)	(Audited)	(Audited)
STOCKHOLDERS’ EQUITY

Preferred stock, par value $0.0005, 25,000,000 shares authorized; 3,126,434 shares issued and outstanding in 2009 and 2008	$	1,563		$	1,563		$	1,563		$	1,563
Common stock, par value $0.0004,  100,000,000 shares authorized; 15,724,816 and 15,482,316 shares issued and outstanding in 2009 and 2008 respectively	$	6,290		$	6,220		$	6,290		$	6,193
Warrants issuance	$	167,750		$	75,000		$	167,750			-
Additional Paid-in Capital	$	8,260,469		$	7,484,818		$	8,150,084		$	6,990,329
Accumulated deficit	$	(9,726,028	)	$	(8,251,124	)	$	(9,594,814	)	$	(7,410,000	)
TOTAL EQUITY	$	(1,289,956	)	$	(683,523	)	$	(1,269,127	)	$	(411,915	)
TOTAL LIABILITIES,  AND STOCKHOLDERS’ EQUITY	$	1,864,517		$	1,783,583		$	1,508,326		$	1,893,202

7

RISK FACTORS

An investment in our common stock is highly speculative, involves a high degree of risk, and should be made only by investors who can afford a complete loss.  You should carefully consider the following risk factors, together with the other information in this Prospectus , including our financial statements and the related notes, before you decide to buy our common stock.  Our most significant risks and uncertainties are described below; however, they are not the only risks we face.  If any of the following risks actually occur, our business, financial condition, or results of operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein.

Risks Relating to the Early Stage of our Company

Because our auditors have issued a going concern opinion, there is substantial doubt that we can continue as an ongoing business for the next 12 months.

Our auditors have issued a going concern opinion.  This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months.  The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business.  As such, we may have to cease operations and you could lose your investment.

We lack a long operating history and have losses that we expect to continue into the foreseeable future.  There is no assurance our future operations will result in profitable revenues.  If we cannot generate sufficient revenues to operate profitably, we may cease operations and you will lose your investment.

We were incorporated on January 15, 2004 and we do not have a long operating history or realized any substantial revenues.  We do not have any sufficient operating history upon which an evaluation of our future success or failure can be made.  Our net loss from inception through March 31, 2010 is $9,726,028 .

Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to :

·    complete raising funds in our direct public Offering ;

·    raise awareness and achieve market acceptance of our technology and our products;

·    identify and pursue channels and mediums through which we will be able to market and sell our products, including distributors and retailers;

·    attract and retain performing sales people;

·    lower our production costs significantly;

·    obtain any regulatory approvals where needed to market our products, including approvals in international markets;

·    procure and maintain on commercially reasonable terms relationships with third parties for the supply of services, parts and other manufacturing inputs; and

·    manage growth by managing administrative overhead.

8

Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues.  We cannot guarantee that we will be successful in generating sufficient revenues in the future.  Failure to generate sufficient revenues will cause you to lose your investment.

We are at a very early operational stage and our success is subject to the substantial risks inherent in the establishment of a new business venture.

The implementation of our business strategy is in a very early stage.  We only produce one product, a portable emergency oxygen device, and the commercialization of this product is in its infancy.  Our intended markets may not adopt this product, and it may not be commercially successful.  We intend to develop additional product candidates but none have proven to be commercially viable or successful.  Our business and operations should be considered to be in a very early stage and subject to all of the risks inherent in the establishment of a new business venture.  Accordingly, our intended business and operations may not prove to be successful in the near future, if at all.  Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

We have a very limited operating history and our business plan is unproven and may not be successful.

Our company was formed in January 2004, but we only began commercial product shipment of our first product in earnest in early 2008 after we moved into our new, purpose built production facility.  Since January 2004, our primary activities have been research and development, the obtainment of our FDA approval, the identification of collaborative partners, intellectual property protection such as patent applications and capital raising activities.  We have not licensed or sold any substantial amount of products commercially and do not have any definitive agreements to do so.  We have not proven that our business model will allow us to identify and develop commercially feasible products.

We have suffered operating losses since inception and we may not be able to achieve profitability.

We had an accumulated deficit of $ 9,726,028 and have an overall deficit of $1,289,956 in stockholders’ equity as of March 31, 2010.  We expect to continue to incur research and development expenses as well as significant expenses related to investment in sales and marketing and organizational growth in the foreseeable future related to the ongoing product development, completion of new development and commercialization of our products.  As a result, we are sustaining substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability.

9

We have limited organizational and management resources.

Our management and organizational resources are limited, and this may adversely impact our ability to execute our business plan, successfully commercialize our portable emergency oxygen device, maintain regulatory compliance, or capitalize on market opportunities, if any.  We have significant intellectual capital invested in our current employees and management, and any loss in organizational resources may have an adverse impact on our business.  In particular, we have been, and we expect to continue to be reliant on, the experience and talents of our founder and President, Mr. Ross .

We may have difficulty raising additional capital in addition to the direct public Offering, which could deprive us of necessary resources.

We expect to continue to devote significant capital resources to provide working capital, and to fund sales and marketing as well as research and development.  In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through the sale of assets, public or private debt or equity financing, collaborative relationships or other arrangements.  Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others.  Because our common stock is not and may never be listed on a stock exchange or any other trading system , many investors may not be willing to purchase it or may demand steep discounts.  Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.

We expect to raise additional capital during 2010 but we do not have any firm commitments for additional funding.  If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may suffer liquidity issues that may have a material adverse impact on our ability to continue operations or we may have to modify our business plan and/or significantly curtail our planned activities and other operations.

Failure to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating results.

Our growth has placed, and is expected to continue to place, a strain on our managerial, operational and financial resources.  Further, we will be required to manage those multiple relationships.  Any further growth by us or an increase in the number of our distributors, strategic relationships or alliances will increase this strain on our managerial, operational and financial resources.  This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

10

Our success is dependent on key personnel.

Our ability to succeed is substantially dependent on the performance of our officers and Directors.  Our success also depends on our ability to attract, hire, retain and motivate future officers and key employees.  The loss of the services of any of these executive officers or other key employees could have a material adverse effect on our business, prospects, financial condition and results of operations.  We have entered into employment agreements with our executive officers and key employees.  We currently have no “Key Person” life insurance policies.  Our future success may also depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, sales, marketing and customer service personnel.  We have been, and we expect to continue to be reliant on, the experience and talents of our founder and President, Mr. Ross.

Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel.  The failure to attract and retain the necessary technical, managerial, sales, marketing and customer service personnel could have a material adverse effect on our business, prospects, and financial condition.

Risks Relating to our Research and Development Business

There are substantial inherent risks in attempting to commercialize new technological applications, and, as a result, we may not be able to successfully develop products or technology for commercial use.

We conduct ongoing development on our portable emergency oxygen device, and we conduct research and development of products in various vertical markets and industries.  Our product development team is working on developing technology and products in various stages.  However, commercial feasibility and acceptance of such product candidates are unknown.  Scientific research and development requires significant amounts of capital and takes an extremely long time to reach commercial viability, if at all.  Other than our portable emergency oxygen device, to date, our research and development projects have not produced commercially viable applications, and may never do so.  Even our portable emergency oxygen device may not prove to be commercially viable in the long term.  During the research and development process, we may experience technological barriers that we may be unable to overcome.  Because of these uncertainties, it is possible that none of our product candidates will be successfully developed.  If our portable emergency oxygen device fails to achieve commercial success, or we are unable to successfully develop new products or technology for commercial use, we will be unable to generate revenue or build a sustainable or profitable business.

11

We will need to achieve commercial acceptance of our applications to generate revenues and achieve profitability.

While we began shipping our portable emergency oxygen device in earnest during 2008, there can be no assurance that there will be market acceptance for our portable emergency oxygen device, its need, or its use, and there can be no assurance of its commercial acceptance or profitability.  While we intend to develop additional products, even if our research and development yields technologically feasible applications, we may not successfully develop commercial products, and even if we do, we may not do so on a timely basis.  If our research efforts are successful on the technology side, it could take at least several years before this technology will be commercially viable.  During this period, superior competitive technologies may be introduced or customer needs may change, which will diminish or extinguish the commercial uses for our applications.  We cannot predict when significant commercial market acceptance for our portable emergency oxygen device or any of our potential new products will develop, if at all, and we cannot reliably estimate the projected size of any such potential market.  If markets fail to accept our portable emergency oxygen device or any new products we may develop, we may not be able to generate revenues from the commercial application of our products and technologies.  Our revenue growth and achievement of profitability will depend substantially on our ability to have our portable emergency oxygen device and any new products we may introduce be accepted by customers.  If we are unable to cost-effectively achieve acceptance of our products and technology by customers, or if the associated products do not achieve wide market acceptance, our business will be materially and adversely affected.

We will need to establish relationships with collaborative and development partners to fully develop and market our existing and new products.

We do not possess all of the resources necessary to develop and commercialize existing and new products on a mass scale resulting from or that may result from our technologies.  Unless we expand our product development capacity and enhance our internal marketing capability , we will need to make appropriate arrangements with collaborative partners to develop and commercialize current and future products.

If we do not find appropriate partners, our ability to develop and commercialize products could be adversely affected.  Even if we are able to find collaborative partners, the overall success of the development and commercialization of product candidates in those programs will depend largely on the efforts of other parties and is beyond our control.  In addition, in the event we pursue our commercialization strategy through collaboration, there are a variety of attendant technical, business and legal risks, including:

● a development partner would likely gain access to our proprietary information; potentially enabling the partner to develop products without us or design around our intellectual property;

● we may not be able to control the amount and timing of resources that our collaborators may be willing or able to devote to the development or commercialization of our product candidates or to their marketing and distribution; and

● disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our products and product candidates or that result in costly litigation or arbitration that diverts our resources.

The occurrence of any of the above risks could impair our ability to generate revenues and harm our business and financial condition.

12

We rely on third parties to manufacture our product parts and subassemblies and new product candidates and our business will suffer if they do not perform.

Our production activity is primarily focused on the final assembly of our portable emergency oxygen device, and we outsource the manufacturing of most of the parts, components or subassemblies.  We expect to continue to utilize this manufacturing model for this product as well as for new product candidates.  As a result, we do not expect to manufacture many of our products and product inputs and will engage third party contractors, molders and packagers to provide manufacturing or production services.  If our contractors do not operate in accordance with regulatory requirements and quality standards, our business will suffer.  We expect to use or rely on components and services that are provided by sole source suppliers.  The qualification of additional or replacement vendors is time consuming and costly.  If a sole source supplier has significant problems supplying our products, our sales and revenues will be hurt until we find a new source of supply.

Our production process is very labor intensive.

Due to resource constraints and current limitations in our production process, our production process is very labor intensive.  We hope in the future to increase the level of automation in our process, and if we do, there is no assurance that we will be able to realize any production efficiencies through such automation.  If we are not able to automate our processes or do not realize any production efficiencies though automation, we may need a larger production force, and if we do, our production costs may rise.  Furthermore, if our production process stays labor intensive then our production process time may be slower which will not allow us to quickly and effectively respond to large orders if any.  We may elect to outsource some or all of our production process in an effort reduce costs and increase production capacity.  If we do, we may experience quality issues and long production lead times, which will adversely impact customer satisfaction and sales.  In addition, quality issues may lead to enforcement action by the FDA.

Moving to higher production volumes could be accompanied by quality problems.

To date, we have produced and shipped limited quantities of our first product, the portable emergency oxygen device.  In the event that demand for this product increases, we will have to accommodate such increases in demand by increasing our production throughput.  There can be no assurance that we would be successful in increasing our production throughput in response to any increases in demand, or that we would not suffer losses in product quality.  Any upward pressure on production capacity requirements may have an adverse impact on quality, production cost and delivery times.  Furthermore, we may seek to outsource some, part or all of our production process to meet demand.  Any such outsourcing of production may have an adverse impact on quality, production cost and delivery times.

13

We rely on third parties for the worldwide marketing and distribution of our product candidates, who may not be successful in selling our products.

We currently do not have adequate resources to market and distribute any products outside of the U.S . and engage third party marketing and distribution companies to perform these tasks.   We also do not have adequate resources to market and distribute products in the U.S.   While we believe that distribution partners will be available, we cannot assure you that the distribution partners, if any, will succeed in marketing our products on a global basis.  We may not be able to maintain satisfactory arrangements with our marketing and distribution partners, who may not devote adequate resources to selling our products.  If this happens, we may not be able to successfully market our products, which would decrease or eliminate our ability to generate revenues.

We may not be successful at marketing and selling our technology or products.

We began commercializing our first product, our portable emergency oxygen device, in earnest in early 2008.  We also intend to develop additional products and technologies for various vertical market applications.  We may not be able to market and sell our technology or products and any financial or research efforts we exert to develop, commercialize or promote such products may not result in revenue or earnings.

We may not be able to compete with better-established competitors.

While our portable emergency oxygen device is a medical device, it is targeted at commercial, education and government markets, as well as consumer markets.  In addition, our intended future products are targeted at various commercial, education, government and consumer markets.  The industries in which we operate, which include, but are not limited to, the medical device and biotechnology industries, are intensely competitive.  Most of our competitors have significantly greater financial, technical, manufacturing, marketing and distribution resources as well as greater industry experience than we have.  The particular medical conditions, illnesses or diseases our portable emergency oxygen device and future product lines are intended to address can also be addressed by other medical devices, products, procedures or drugs.  Many of these alternatives are widely accepted by physicians and our target customers and have a long history of use.  Physicians and target customers may use our competitors’ products and/or our products may not be competitive with other technologies.  If these things happen, our sales and revenues will be adversely impacted.  In addition, our current and potential competitors may establish cooperative relationships with large medical equipment companies or companies with competitive technologies to gain access to greater research and development or marketing resources.  Competition may result in price reductions, reduced gross margins and loss of market share.

14

Our products may be displaced by newer technology.

The medical device and biotechnology industries are undergoing rapid and significant technological change.  Third parties may succeed in developing or marketing technologies and products that are more effective than those developed or marketed by us, or that would make our technology and products obsolete or non-competitive.  Additionally, researchers and engineers could develop new technologies and products that replace or reduce the importance of our technologies and products.  Accordingly, our success will depend, in part, on our ability to respond quickly to medical and technological changes through the development and introduction of new products.  We may not have the resources to do this.  If our product candidates become obsolete and our efforts to develop new products do not result in any commercially successful products, our sales and revenues will suffer.

We may not have sufficient legal protection against infringement or loss of our intellectual property and we may lose rights to our licensed intellectual property if diligence requirements are not met.

Our success depends, in part, on our ability to secure and maintain patent protection, to preserve our trade secrets, and to operate without infringing on the patents of third parties.  While we intend to protect our proprietary positions by filing United States and foreign patent applications for our important inventions and improvements, domestic and foreign patent offices may not issue these patents.

To date we have filed various patents with respect to our technology and product candidates.  Some of these applications include applications for provisional patents which are not reviewed by the United States Patent and Trademark Office (“ PTO ”) and will not result in the issuance of a patent, unless a regular patent application is filed within one year after the filing of the provisional patent application.  Generally, our provisional patent applications do not contain all of the detailed design and other information required by a regular patent application.  As a result, it may be uncertain whether the description of the invention in a provisional patent meets the “best mode and enablement” requirements for issuance of a patent.  Failure to adequately describe the invention may result in the loss of certain claims.  Although we intend to file regular patent applications with respect to any of our provisional patent applications, such filings require substantial expenditures of management time and legal fees.  If we do not have the funds or resources to prepare, file and maintain patent applications, we could lose proprietary rights to our technology.

Even if we file patent applications and patents are issued, third parties may challenge, invalidate, or circumvent our patents or patent applications in the future.  Competitors, many of which have significantly more resources than we have and have made substantial investments in competing technologies, may apply for and obtain patents that will prevent, limit, or interfere with our ability to make, use, or sell our products either in the United States or abroad.

15

In the United States, patent applications are secret until patents are issued, and in foreign countries, patent applications are secret for a time after filing.  Publications of discoveries tend to significantly lag the actual discoveries and the filing of related patent applications.  Third parties may have already filed applications for patents for products or processes that will make our products obsolete or will limit our patents or invalidate our patent applications.

We require our employees, consultants, advisers and suppliers to execute confidentiality and assignment of invention agreements in connection with their employment, consulting, advisory, or supply relationships with us.  They may breach these agreements and we may not obtain an adequate remedy for breach.  Further, third parties may gain access to our trade secrets or independently develop or acquire the same or equivalent information.

We could be damaged by product liability claims.

Our portable emergency oxygen device is intended for use by laypersons, without any training requirements.  If one of our products malfunctions or a person misuses it and injury results to a user or operator, the injured party could assert a product liability claim against us .  While we intend to obtain product liability insurance in the foreseeable future, we do not currently carry a ny product liability insurance.   If we do pursue product liability insurance we may not be able to obtain it on reasonable terms or at all.  Even if we do obtain it, it may not sufficiently shield us from any potential product liability claims, and we might not have sufficient funds available to pay any claims over the limits of our insurance.  Furthermore, any potential product liability claim may lead to our product liability insurance being cancelled, or we may not be able to obtain such insurance at a rate that is acceptable to us or at all.  Because personal injury claims based on product liability may be very large, an underinsured or an uninsured claim could financially damage our company.

We may encounter unforeseen costs in supplying products.

Our estimates of the costs and time to be consumed in receiving components or input products supplied by outside vendors or third party companies may not be accurate.  There can be no assurance that we will not experience supply chain issues such as supply interruptions, fluctuations in supply or demand, or fluctuations in shipping costs caused by fluctuations in fuel costs.  If we were to experience such supply issues, they may have a material adverse effect on our business and operations.  We may not be able to transfer any adverse cost variations to our customers.

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Risks Relating to the Regulatory Environment

We may have compliance issues with the FDA which could prevent or delay our ability to generate revenues.

Our primary product, the portable emergency oxygen device is considered a Class II medical device by the FDA .

The FDA regulations govern the following activities that we perform, or that are performed on our behalf, to ensure that medical devices distributed domestically or exported internationally are safe and effective for their intended uses:

 ·    product design, development and manufacture;

 ·    product safety, testing, labeling and storage;

 ·    pre-marketing clearance or approval;

 ·    record keeping procedures;

 ·    product marketing, sales and distribution; and

 ·    post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths or serious injuries and repair or recall of products.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

 ·    warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

 ·    repair, replacement, refunds, recall or seizure of our products;

 ·    operating restrictions, partial suspension or total shutdown of production;

 ·    refusing our requests for 510(k) clearance or Pre-market Approval (“ PMA ”) of new products, new intended uses or modifications to existing products;

 ·   withdrawing 510(k) clearance or PMA approvals that have already been granted; and

 ·    criminal prosecution.

We may face problems from the Department of Transportation regarding the shipment of our product which could potentially increase our shipping costs and limit our revenue potential.

The U.S. Department of Transportation (“DOT”) issued an interpretation letter on October 3, 2008 determining that our primary product, the portable emergency oxygen device, should be classified as “Oxygen Generator, Chemical, UN3356” for the purposes of shipment.  As a result of this interpretation, we are required to maintain at least one certified shipping personnel on staff to conduct shipping from our warehouse.  This DOT interpretation also requires us to put certain hazardous materials labeling on our packages upon shipment.  While the FDA has deemed the Model 615 sufficiently safe for over the counter purchase by lay persons, and while we have obtained independent, third party validation of the non-hazardous nature of Model 615, we are required, for shipment purposes, to comply with requirements of this interpretation letter until we can obtain a Special Permit or other similar relief, removing these shipping requirements.  There can be no assurance that we will be able to obtain such a Special Permit or that we will be able to obtain some other, similar relief from DOT.  If we are able to obtain such a Special Permit or other similar relief, there can be no assurance that it won’t take a very long time to achieve.  Any delay or inability to obtain such a Special Permit or other, similar relief could have a material adverse impact on the marketability of our product, which in turn could limit our revenue potential.  During the period that we are shipping under the UN3356 shipping designation, we could suffer a temporary or permanent suspension of our ability to ship our products if we were to fail to comply with the applicable shipping requirements, which could result in a total loss or large decrease in the sales of our product.

17

We are subject to regulations and limitations set forth by the Federal Aviation Administration which could limit our ability to generate revenues.

The Federal Aviation Administration (“FAA”) maintains control over any oxygen devices that are carried by commercial aircraft, either as commercial cargo, passenger luggage or as passenger on-board items.  The DOT interpretation letter dated October 3, 2008 determined that our primary product, the portable emergency oxygen device should be classified as “Oxygen Generator, Chemical, UN3356” for the purposes of shipment.  This means, in part, that the product can only be shipped on cargo aircraft and cannot be carried on board commercial aircraft unless the FAA grants us specific approval for our product to be allowed on commercial aircraft.  Currently, we have not sought approval from the FAA for passengers to carry our portable emergency oxygen device on board commercial aircraft.  We plan to seek approval by the FAA for passengers to be allowed to carry our portable emergency oxygen device on board commercial aircraft.  There can be no assurance that we will be able to obtain such approval.  If we are able to obtain such approval, there can be no assurance that it won’t take a long time to obtain.  Any delay or inability to obtain such FAA approval could have a material adverse impact on the marketability of our product, as well as we may have increased costs associated with the delay or inability to obtain FAA approval, which in turn could limit our revenue potential.

We may face problems obtaining regulatory approval in international markets which could prevent or delay our ability to generate revenues.

As a medical device, our product is highly regulated.  We anticipate that most of the international markets we expect to operate in will require some sort of regulatory approval.  There can be no assurance that we will be able to obtain the regulatory approvals we will need to operate in our intended markets.

Risks Relating to our Stock

Our common stock is not listed or quoted on any exchange or electronic quotation system and shareholders may not be able to resell their shares.

Currently our common stock is not listed or quoted on any exchange or automated quotation system.   There can be no assurance that our common stock will ever be listed or quoted on any exchange or quotation system.  If our common stock is ever publicly traded, an active public market for our shares may never develop.  There can be no assurance that purchaser of our shares will be able to resell their shares at their original purchase price, if at all.

18

Our common stock is expected to be traded over the counter, which may deprive stockholders of the full value of their shares.

We anticipate that our common stock will be quoted via an over-the-counter electronic quotation system, such as the OTC Bulletin Board (“OTCBB”) .  If quoted on the OTCBB, our common stock is expected to have fewer market makers, lower trading volumes and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market.  These factors may result in higher price volatility and less market liquidity for the common stock.

If our stock price drops significantly, we may become subject to securities litigation that could result in a harmful diversion of our resources.

In the past, following periods of volatility in the market price of a particular company’s stock, securities class action litigation has been brought against such companies.  Any litigation arising from the volatility in the price of our common stock could have an adverse effect upon our business, financial condition, and results of operations.

The determination of the existing shareholder selling price does not bear any relationship to our book value.

The Offering Price of our common stock does not bear any direct relationship to the value of our physical assets, our book value, or any other general accepted criteria of valuation.  The Offering Price is not necessarily an indication of the actual value of such securities at the time of this Offering .  Additionally, the market price for our securities following this Offering may be highly volatile as has been the case with the securities of other companies in emerging businesses.  Factors such as our financial results, the introduction of new products or services, the strength of our competitors, and various factors affecting our industry generally, may have a significant impact on the market price of our securities.  In recent years, the stock market has experienced a high level of price and volume volatility.  Market prices for the securities of many companies, particularly of small and emerging growth companies like ours whose common stock is traded in the over-the-counter market, have experienced wide price fluctuations which have not necessarily been related to the operating performance of these companies.

19

A low market price would severely limit the potential market for our common stock.

Our common stock is expected to trade at a price substantially below $5.00 per share, subjecting trading in the stock to certain Securities and Exchange Commission (“ SEC ”) rules requiring additional disclosures by broker-dealers.  These rules generally apply to any non-NASDAQ equity security that has a market price per share of less than $5.00 per share, subject to certain exceptions (a “penny stock”).  Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors.  For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale.  The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market.  Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer.  Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.  The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, Financial Industry Regulatory Authority (“ FINRA ”) rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.  Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

An investor’s ability to trade our common stock may be limited by trading volume.

A consistently active trading market for our common stock may not occur on an OTC electronic quotation system .  A limited trading volume may prevent our shareholders from selling shares at such times or in such amounts as they may otherwise desire.

20

Our company has a concentration of stock ownership and control, which may have the effect of delaying, preventing, or deterring a change of control.

Our common stock ownership is highly concentrated.  Through their ownership of shares of our common stock, two shareholders, JTR Investments, Limited, which is controlled by our President, Julian T. Ross, and Agave Resources, LLC, whose President is Donald Reed, a member of our Board of Directors, beneficially own 87.54 % of our total outstanding shares of common stock and preferred stock before this Offering .  This amount includes warrants and options held by JTR Investments, Limited and Agave Resources, LLC.  As a result of the concentrated ownership of the stock, these two stockholders, acting together, will be able to control all matters requiring stockholder approval, including the election of directors and approval of mergers and other significant corporate transactions.  This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company.  It could also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock.

We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets.  Some of these measures have been adopted in response to legal requirements.  Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed.  Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics.  While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange, we are not required to do so.  It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct.  For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided.  Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

21

Our board of directors has the authority to issue shares of “blank check” preferred stock, which may make an acquisition of our company by another company more difficult.

We may in the future adopt certain measures that may have the effect of delaying, deferring or preventing a takeover or other change in control of our company that a holder of our common stock might consider in its best interest.  Specifically, our board of directors, without further action by our stockholders, currently has the authority to issue shares of preferred stock and to fix the rights (including voting rights), preferences and privileges of these shares (“blank check” preferred).  Such preferred stock may have rights, including economic rights, senior to our common stock.  As a result, the issuance of the preferred stock could have a material adverse effect on the price of our common stock and could make it more difficult for a third party to acquire a majority of our outstanding common stock.

Because we will not pay dividends in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates.

We have never paid dividends on our common stock and we do not intend to do so in the foreseeable future.  We intend to retain any future earnings to finance our growth.  Accordingly, any potential investor who anticipates the need for current dividends from his investment should not purchase our common stock.

Selling Security Holders will be able to sell their shares at less than the fixed price that applies to our sales.

Selling Security Holders will be able to sell their shares at less than the fixed price that applies to our sales, which may limit our ability to raise capital through this Registration Statement.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements .”   These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management.  The use of words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “should,” “likely” or similar expressions, indicates a forward-looking statement.  Forward-looking statements are not guarantees of performance.  They involve risks, uncertainties and assumptions.  Future results may differ materially from those expressed in the forward-looking statements.  Many of the factors that will determine these results are beyond our ability to control or predict .   Stockholders are cautioned not to put undue reliance on any forward-looking statements, which speak only to the date made.  For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under “Risk Factors.”

The identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive.  All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.  You may rely only on the information contained in this Prospectus .  We have not authorized anyone to provide information different from that contained in this Prospectus .  Neither the delivery of this Prospectus nor the sale of common stock means that information contained in this Prospectus is correct after the date of this Prospectus.  This Prospectus is not an offer to sell or solicitation of an offer to buy these securities in any circumstances under which the offer or solicitation is unlawful.

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USE OF PROCEEDS

We will not receive any proceeds from the sales by the Selling Security Holders .  All proceeds from the sale of the 4,240,565 shares from the existing shareholders will be paid directly to those shareholders.

We will receive $5,000,000 in gross proceeds if we sell all of the shares being registered herein in our direct public Offering .  The following table prioritizes the intended uses of the proceeds from the Offering of $5,000,000.  Given that there is no minimum number of shares that must be sold and the possibility that we receive substantially less than $5,000,000, we have included our use of proceeds based on the number of shares sold because Selling Security Holders will be able to sell their shares at less than the fixed price that applies to our sales.  This may limit our ability to raise capital through our direct public Offering .

	If 10% of Shares Sold		Percent of Offering Proceeds			If 25% of Shares Sold		Percent of Offering Proceeds			If 50% of Shares Sold		Percent of Offering Proceeds			If 75% of Shares Sold		Percent of Offering Proceeds			If 100% of Shares Sold		Percent of Offering Proceeds
GROSS PROCEEDS FROM THIS OFFERING	$	500,000				$	1,250,000				$	2,500,000				$	3,750,000				$	5,000,000
Less: OFFERING EXPENSES
Legal, Accounting and Professional	$	100,000		20.0	%	$	100,000		8.0	%	$	100,000		4.0	%	$	100,000		2.7	%	$	100,000		2.0	%
Blue Sky Fees	$	4,500		*		$	4,500		*		$	4,500		*		$	4,500		*		$	4,500		*
Edgar Agent Fees	$	20,000		4.0	%	$	20,000		1.6	%	$	20,000		*		$	20,000		*		$	20,000		*
Transfer Agent Fees	$	4,500		*		$	4,500		*		$	4,500		*		$	4,500		*		$	4,500		*
SUB-TOTAL	$	129,000		25.8	%	$	129,000		10.3	%	$	129,000		5.2	%	$	129,000		3.4	%	$	129,000		2.6	%
NET PROCEEDS FROM OFFERING	$	371,000		74.2	%	$	1,121,000		89.7	%	$	2,371,000		94.8	%	$	3,621,000		96.6	%	$	4,871,000		97.4	%
Less: Payment on Debt and Accounts Payable
Payment of Senior Notes	$	0		*		$	0		*		$	300,000		12.0	%	$	325,000		8.7	%	$	500,000		10.0	%
Payment on First and Second Landlord Notes	$	0		*		$	50,281		4.0	%	$	150,844		6.0	%	$	201,126		5.4	%	$	251,407		5.0	%
Payment on other Junior Notes	$	0		*		$	0		*		$	0		0	%	$	300,000		8.0	%	$	500,000		10.0	%
Payment to Accounts Payable	$	50,000		10	%	$	75,000		6.0	%	$	75,000		3.0	%	$	75,000		2.0	%	$	100,000		2.0	%
SUB TOTAL	$	50,000		10	%	$	125,281		10.0	%	$	525,844		21.0	%	$	901,126		24.0	%	$	1,351,407		27.0	%
Less: COSTS ASSOCIATED WITH SALES AND MARKETING
Increase in Sales Staff	$	50,000		10	%	$	150,000		12.0	%	$	300,000		12.0	%	$	700,000		18.7	%	$	1,000,000		20.0	%
Increase in Marketing Budget	$	116,880		23.4	%	$	334,380		26.8	%	$	626,880		25.1	%	$	866,880		23.1	%	$	1,068,080		21.4	%
SUB-TOTAL	$	166,880		33.4	%	$	484,380		38.8	%	$	926,880		37.1	%	$	1,566,880		41.8	%	$	2,068,080		41.4	%

24

Less: COSTS ASSOCIATED WITH PRODUCTION
Investments in Production	$	25,000	5	%	$	100,000	8.0	%	$	150,000	6.0	%	$	175,000	4.7	%	$	175,000	3.5	%
Increase in Production Staff	$	0	*		$	59,000	4.7	%	$	88,500	3.5	%	$	118,000	3.1	%	$	177,000	3.5	%
SUB-TOTAL	$	25,000	5	%	$	159,000	12.7	%	$	238,500	9.5	%	$	293,000	7.8	%	$	352,000	7.0	%
Less: COSTS ASSOCIATED WITH RESEARCH AND DEVELOPMENT (“R&D”) ACTIVITIES
Increase in R&D	$	0	0	%	$	25,000	2.0	%	$	50,000	2.0	%	$	60,000	1.6	%	$	70,000	1.4	%
Increase in R&D Staff	$	0	0	%	$	0	0	%	$	0	0	%	$	90,000	2.4	%	$	90,000	1.8	%
SUB-TOTAL	$	0	0	%	$	25,000	2.0	%	$	50,000	2.0	%	$	150,000	4.0	%	$	160,000	3.2	%
Less: ADMINISTRATION COSTS
Staffing and Payroll	$	97,400	19.5	%	$	278,650	22.3	%	$	522,400	20.9	%	$	577,920	15.4	%	$	768,720	15.4	%
Working Capital	$	31,720	6.3	%	$	48,689	3.9	%	$	107,376	4.3	%	$	132,074	3.5	%	$	170,793	3.4	%
SUB-TOTAL	$	129,120	25.8	%	$	327,339	26.2	%	$	629,776	25.2	%	$	709,994	18.9	%	$	939,513	18.8	%
TOTALS	$	500,000	100	%	$	1,250,000	100	%	$	2,500,000	100	%	$	3,750,000	100	%	$	5,000,000	100	%

*Less than 1%.

25

DILUTION

“Dilution” represents the difference between the Offering Price and the net tangible book value per Share of Common Stock immediately after completion of the Offering.  “Net tangible book value ” is the amount that results from subtracting total liabilities from total assets.  In this Offering, the level of dilution is relatively substantial as a result of the low book value of our issued and outstanding stock.  Our net tangible book value on March 31, 2010 was ($ 0.114 ) per share.  Assuming all shares offered herein are sold, our net tangible book value will be $0. 138 per share.  Therefore, the purchasers of the Common Stock in this Offering will suffer an immediate dilution of approximately $0.8 62 per share while our present stockholders will receive an immediate increase of $0.2 52 per share in the net tangible book value of the shares they hold.  This will result in an 86.2 % dilution for purchasers of stock in this Offering.  All numbers are exclusive of the dilutive effect of warrants and options outstanding, if any.

The following table illustrates the dilution to the purchasers of the Shares in this Offering:

Full Offering

Offering Price per Share	$	1.00
Net Tangible Book Value per Share (Before Offering )	$	(0.114	)
Net Tangible Book Value per Share (After O ffering)	$	0. 138
Per Share Dilution to New Investors	$	0.8 62
Percentage Dilution per Share to New Investors		86.2	%

Stock Comparison

Affiliate Equity Holders

Number of Shares		% Ownership			Total Consideration		% of Total Consideration			% Ownership After Conversion of Convertible Securities
	14,065,000		89.45	%	$	145,200		6.43	%		90.31	%

Non-Affiliate Equity Holders

Number of Shares		% Ownership			Total Consideration		% of Total Consideration			% Ownership After Conversion of Convertible Securities
	1,659,816		10.56	%	$	2,111,436		93.57	%		22.45	%

26

DIVIDEND POLICY

We do not expect to declare or pay any cash dividends on our common stock in the foreseeable future, and we currently intend to retain future earnings, if any, to finance the expansion of our business.  The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant.  We have never paid dividends on our common stock .

DETERMINATION OF OFFERING PRICE AND ADDITIONAL INFORMATION

At present there is no public market for the common stock being registered.   We arbitrarily selected an Offering Price of $1.00 per share.  However, if publicly traded , the selling price will be determined by market factors not necessarily related to asset value net worth, or criteria of value, which could be considerably less.  Announcements of products or services by our competitors or us may have a significant impact on the market price.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There has never been a public trading market for our common stock.  Immediately upon the SEC deeming this Registration Statement, of which this Prospectus is a part, effective, we intend to seek out the assistance of a FINRA market maker to sponsor us and file an application for initial quotation of our common stock on an OTC electronic quotation system .  As of the date of this Prospectus , we had 53 stockholders of record.  In addition, the number of holders of convertible preferred stock totaled 50 stockholders.   Some of the holders of common stock are also holders of the convertible preferred stock .

SELLING SECURITY HOLDERS

The persons listed in the following table plan to offer the shares shown opposite their respective names by means of this Prospectus .  The owners of the shares to be sold by means of this Prospectus are referred to as the “ Selling Security Holders .”   All of the purchasers had business or personal prior relationships with our officers and directors.

27

In completing sales, brokers or dealers engaged by the Selling Security Holders may arrange for other brokers or dealers to participate.  Brokers or dealers may receive commissions or discounts from Selling Security Holders in amounts to be negotiated.

The Selling Security Holders and any broker/dealers who act in connection with the sale of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commissions received by them and any profit on any resale of the shares as a principal might be deemed to be underwriting discounts and commissions under the Securities Act.

If any Selling Security Holder enters into an agreement to sell his or her shares to a broker/dealer as principal and the broker/dealer is acting as an underwriter, we will file a post-effective amendment to the registration statement, of which this Prospectus is a part, identifying the broker/dealer, providing required information concerning the plan of distribution, and otherwise revising the disclosures in this Prospectus as needed.  We will also file the agreement between the Selling Security Holder and the broker/dealer as an exhibit to the post-effective amendment to the registration statement.

We have advised the Selling Security Holders that they and any securities broker/dealers or others who may be deemed to be statutory underwriters will be subject to the Prospectus delivery requirements under the Securities Act.  We have also advised each Selling Security Holder that in the event of a “distribution” of the shares owned by the Selling Security Holder , such Selling Security Holder , any “affiliated purchasers,” and any broker/dealer or other person who participates in the distribution may be subject to Rule 102 of Regulation M under the Securities Exchange Act of 1934 (the “Exchange Act”) until their participation in that distribution is complete.  Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class, as is the subject of the distribution.  A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transaction by the magnitude of the offering and the presence of special selling efforts and selling methods.”  We have also advised the Selling Security Holders that Rule 101 of Regulation M under the Exchange Act prohibits any “stabilizing bid” or “stabilizing purchase” for purpose of pegging, fixing or stabilizing the price of the common stock in connection with this Offering .

28

To our knowledge, no Selling Security Holder is a broker/dealer or affiliated with a broker/dealer.  The following Selling Security Holders have, or have had, relationships with us or our officers or directors.

 ·    Agave Resources, LLC is controlled by one of our Directors, Donald Reed.  Agave Resources, LLC is an affiliate of us and is considered an “underwriter” within the meaning of the Securities Act.

 ·    JTR Investments, Ltd. is a limited partnership controlled by our President and CEO, Julian Ross.  JTR Investments, Ltd. is an affiliate of us and is considered an “underwriter” within the meaning of the Securities Act.

 ·    The Ross Family Trust is controlled by trustees, one of whom is our President and CEO, Julian Ross.

 ·    Casey Jensen is the General Partner in the WJVEST Holding General Partnership.

 ·    Mr. Henry McDonald is a member of Jatch, LLC, one of our distributors .

 ·    R. Dean White is a member of our Board of Advisors.

 ·    Jonathan Burke is a member of our Board of Advisors.

 ·    George Brody is a member of our Board of Advisors.

 ·    Scott Freem a n is one of our former employees.

 ·    Pearl Ross is one of our employees and is the wife of Julian T. Ross, our Chairman, Chief Executive Officer, President and Chief Financial Officer.

 ·    Nancy Reed is the wife of Don Reed, our Director.

Manner of Sale

The shares of common stock owned by the Selling Security Holders may be offered and sold by means of this Prospectus from time to time as market conditions permit.   Since as of the date of this Prospectus no market exists for our common stock, sales by the Selling Security Holders are not possible until our common stock becomes quoted on the OTCBB.  The selling price is $1.00 per share.  If and when our common stock becomes publicly traded , the shares owned by the Selling Security Holders may be sold in the public market or in private transactions for cash at prices to be determined at that time.  We will not receive any proceeds from the sale of the shares by the Selling Security Holders .  The Selling Security Holders will pay all sales commissions and other costs of the sale of the shares offered by them.

Because the selling security holders may offer all, some or none of their shares, no definitive estimate as to the number of shares thereof that will be held by the selling security holders after such offering can be provided, and the following table has been prepared on the assumption that all shares of common stock offered under this Prospectus will ultimately be sold.

The following table sets forth (i) the number of outstanding common and preferred shares, beneficially owned by the Selling Security Holders prior to the Offering ; (ii) the aggregate number of shares offered by each such stockholder pursuant to this Prospectus ; and (iii) the amount and the percentage of the class to be owned by such security holder after the Offering is complete:

29

	Owned Before the Offering			After the Offering6
Name of Selling Security Holder	Number of Shares Owned7	Percentage Owned8	Number of Shares Offered	Number of Shares Owned	Percentage Owned
AHMAD, Baher A.9	30,500	*	30,500	0	0%
ANTWI, Dr. Ernest10	61,000	*	61,000	0	0%
ANTWI, Kwadwo	70,000	*	70,000	0	0%
AULDS Family L.P.  #111	80,000	*	80,000	0	0%
BERT, Raymond E. & Rachael Jane Bert12	30,500	*	30,500	0	0%
Bluestar Corporation Co. Ltd.13	61,000	*	61,000	0	0%
BRADY, Jeff L.14	30,500	*	30,500	0	0%
BRODY, George15	75,000	*	61,000	14,000	*

___________________________________

6 Unless otherwise indicated in the footnotes to this table, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.  Includes shares of common stock ; shares of common stock issuable upon conversion of Series A Convertible Preferred Stock at a conversion ratio of 1.22 :1 ; and shares of common stock that the selling stockholder has the right to acquire beneficial ownership of within 60 days of the date of this Prospectus upon exercise of warrants and options.

7 As of the date of this Prospectus , there were 15, 724 ,816 issued and outstanding common shares and 3,126,434 preferred shares (net of prior conversions) which are convertible into 3,814,249 common shares at a conversion rate of 1.22 :1 , totaling 19, 539 ,065 common shares outstanding.  In determining the percentage of common stock beneficially owned by a selling shareholder as of the date of this Prospectus , (a) the numerator is the number of shares of common stock beneficially owned by such selling shareholder (including shares that the shareholder has the right to acquire within 60 days of the date of this Prospectus ), and (b) the denominator is the sum of (i) the 19,539,065 total common shares outstanding on an as-converted basis as at the date of this Prospectus and (ii) the number of shares of common stock which such selling shareholder has the right to acquire within 60 days of the date of this Prospectus .

8 This table assumes that each selling stockholder will sell all shares offered for sale by the shareholder under this Prospectus .  Stockholders are not required to sell their shares.

9 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

10 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

11 AULDS Family L.P. #1 is controlled by Chris Aulds.

12 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

13 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

14 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .  Dr. B. Soo Lee has sole voting and investment rights.

15 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 , and 14,000 shares of Common Stock issuable upon the exercise of options .

30

BURKE, Dr. Jonathan16	143 ,000	*	122,000	21,000	*
CARR, Gregory W.17	50,500	*	50,500	0	0%
COCKEREL, Dr. Clay & Brenda18	30,500	*	30,500	0	0%
COTHERN, Robert Q.19	61,000	*	61,000	0	0%
CURLETT, Jesse D.	1,000	*	1,000	0	0%
CURLETT, Samuel R.	2,000	*	2,000	0	0%
DeGIRONIMO, Paul Bruno20	122,000	*	122,000	0	0%
DICKERSON, Carl21	10 ,000	*	5 ,000	5,000	*
DORREL, Ronald Kenton	40,000	*	40,000	0	0%
DUFFY, Joshua	2,000	*	2,000	0	0%
EVERSON Jr., Robert H.	10,000	*	10,000	0	0%
FELDMAN, David B.22	40,500	*	40,500	0	0%
FOSTER, T. Scott	1,066	*	1,066	0	0%
FREEMAN, John E.23	61,000	*	61,000	0	0%
FROST, Dr. David E.	20,000	*	20,000	0	0%
GEORGE, Holly24	30,500	*	30,500	0	0%
GUNTER, James Kyle25	30,500	*	30,500	0	0%
HAACK, Dr. Gregory J.26	61,000	*	61,000	0	0%
HACKLER, Joe27	30,500	*	30,500	0	0%

______________________________

16 Consists of 100,000 shares of Series A Convertible Preferred Stock which convert to 122,000 shares of Common Stock at a conversion ratio of 1.22 :1 , and 21,000 shares of Common Stock issuable upon the exercise of options.

 

17 Consists of   25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

18 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

19 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

20 Consists of 100,000 shares of Series A Convertible Preferred Stock which convert to 122,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

21 Consists of 5,000 shares of Common stock and 5,000 shares of Common Stock issuable upon the exercise of options.

 

22 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

23 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

24 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

25 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

26 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

27 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

31

HARRIS, Dennis O. 28	15, 000	*	12,500	2,500	0%
HILL, Steven 29	61,000	*	61,000	0	0%
HOYT, Matthew & Susan	5,000	*	5,000	0	0%
HUPP, Dr. James R.	15,000	*	15,000	0	0%
HUTTON, Tim30	200,000	1 . 02 %	200,000	0	0%
IR Services, Inc.	125,000	*	125,000	0	0%
JEFFREY, Lisa	10,000	*	10,000	0	0%
JENNINGS, Robert	25,000	*	25,000	0	0%
JENNINGS, Robert IFO Zack Jennings31	5,000	*	5,000	0	0%
JERNIGAN, Steve	70,000	*	70,000	0	0%
JJ Johnson Investments, Ltd.32	100,500	*	100,500	0	0%
JOHNSON, Joseph Q.33	30,500	*	30,500	0	0%
JONES, G.  Christopher	42,500	*	42,500	0	0%
JONES, Guy Breese	12,500	*	12,500	0	0%
KARPER, Dr. Robert E.	20,000	*	20,000	0	0%
KELLY, David and Randi34	61,000	*	61,000	0	0%
KING, Janet35	122,000	*	122,000	0	0%
KRAMER, Dr. Robert I.36	30,500	*	30,500	0	0%
LANZI, Dr. Guy L.37	136,500	*	136,500	0	0%
LARSON, Mr. & Mrs.	10,000	*	10,000	0	0%
LAVERDURE, Kristianne	20,000	*	20,000	0	0%
LAVERDURE, Maurice	10,000	*	10,000	0	0%
LAVERDURE, Maurice Jr.	10,000	*	10,000	0	0%

_________________________

28 Consists of 12,500 shares of Common stock and 2,500 shares of Common Stock issuable upon the exercise of options.

 

29 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

30 Consists of 17,000 shares of Common Stock and 150,000 shares of Series A Convertible Preferred Stock which convert to 183,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

31 Zack Johnson has sole voting and investment rights.

 

32 Includes 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .  Joe Johnson is the controlling shareholder of JJ Johnson Investments, Ltd and has sole voting and investment rights.

 

33 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

34 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

35 Consists of 100,000 shares of Series A Convertible Preferred Stock which convert to 122,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

36 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

37 Consists of 75,000 shares of Series A Convertible Preferred Stock which convert to 91,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

32

LE, Giang38	30,500	*	30,500	0	0%
LE, Phong39	316,750	1 . 62 %	300,000	16,750	*
LINDSAY, David	6,000	*	6,000	0	0%
LINDSAY, Jamie B.	4,000	*	4,000	0	0%
LINDSAY, Jerry	50,000	*	50,000	0	0%
LUCAS, Jonathan E.	1,000	*	1,000	0	0%
MANNING, Michael40	30,500	*	30,500	0	0%
MCDONALD, Henry41	15 ,000	*	10,000	5,000	*
MIRE, Patrick42	91,500	*	91,500	0	0%
MOORE, Craig Henderson43	61,000	*	61,000	0	0%
MORRISON, Kenneth Morrison Trust No. 144	61,000	*	61,000	0	0%
MOSS, Jerry W.45	30,500	*	30,500	0	0%
NELMS, James W., Jr.	62,600	*	62,600	0	0%
NELMS, Jim & Shelley	25 ,000	*	25 ,000	0	0%
NEW DAWN Acquisitions, LLC46	35,000	*	35,000	0	0%
NTEC, Inc.47	296,450	1.50%	15,250	281,200	1.42%
Oxygen Technology Investors Group, LLC.48	30,500	*	30,500	0	0%

___________________________

38 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

39   Consists of 300,000 shares of Common stock and 16,750 shares of Common Stock issuable upon the exercise of options.

 

40 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

41 Consists of 10,000 shares of Common stock and 5,000 shares of Common Stock issuable upon the exercise of options.

 

42 Consists of 75,000 shares of Series A Convertible Preferred Stock which convert to 91,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

43 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

44 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

45 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

46  NEW DAWN Acquisitions, LLC is controlled by Julie Nichols, who has sole voting and investment rights.

 

47 Consists of 12,500 shares of Series A Convertible Preferred Stock which convert to 15,250 shares of Common Stock at a conversion ratio of 1.22:1 and 281,200 shares of Common Stock issuable upon the exercise of warrants with an exercise price of $0.01 per share.  Larry Calton has sole voting and investment rights.

 

48 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22:1.  Gregory Scott Keller, Kenra Dee Keller, James Jeffreys, Roger Bussey, Vallerie Bussey, Brian Coolbaugh, Gerardo Fuentes-Lopez, and Kelty E. Fuentes have shared voting and investment rights.

33

PACIFIC Cattle Corporation49	306,500	1.56%	206,500	100,000	*
PARK, Jin	20,000	*	20,000	0	0%
PHILLIPS, Gregory50	30,500	*	30,500	0	0%
PHOENIX Capital Ventures, Inc.51	18,650	*	18,650	0	0%
POUYAT, Scott	5,000	*	5,000	0	0%
RBC Dain Rauscher FBO:  James W.  Nelms, Jr., SEP52	57,500	*	57,500	0	0%
REEVES, William M., DDS, MS Defined Benefit Pension Plan53	61,000	*	61,000	0	0%
REEVES, William McDonald54	30,500	*	30,500	0	0%
REVELL, Oliver B.55	61,000	*	61,000	0	0%
ROSATO, Vincent56	30,500	*	30,500	0	0%
ROSATO, Vincent, Jr.57	30,500	*	30,500	0	0%
SCHWARTZ, Dr. Daniel C.58	131,000	*	131 ,000	0	0%
SHEEHAN, Jana Lynn59	10,000	*	10,000	0	0%
SHEFTEL, Scott	5,000	*	5,000	0	0%
SPRADLEY Holdings60	20,000	*	20,000	0	0%
STAPLES, Jon61	270,650	1.368%	30,500	240,150	1.21%
STAPLES, Richard C., Jr.62	61,000	*	61,000	0	0%

___________________________

49 Consists of 115,000 Shares of Common Stock , 75,000 shares of Series A Convertible Preferred Stock which convert to 91,500 shares of Common Stock at a conversion ratio of 1.22 :1 , and 100,000 shares of Common Stock issuable upon the exercise of options: .  Stan Bert is the President of Pacific Cattle Corporation.  Stan Bert has sole voting and investment rights.

 

50 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

51 Phoenix Capital Ventures, Inc. is controlled by Josh B. Curlett, who has sole voting and investment rights.

 

52 James W.  Nelms has sole voting and investing rights.

 

53 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

54 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

55 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

56 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

57 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

58 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

59   Consists of 8,197 shares of Series A Convertible Preferred Stock which convert to 10,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

60 Spradley Holdings is controlled by Dr. Larry Spradley, who has sole voting and investment rights.

 

61 Consists of 25,000 shares of Series A Convertible Preferred Stock, which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 , and 240,150 shares of Common stock issuable upon the exercise of options.

 

62 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .

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STEINHARDT, James	10,000	*	10,000	0	0%
TABER, Steven M.	20,000	*	20,000	0	0%
The Sullivan Trust u/t/a Dated Oct 21, 1998 (Att: Dr. S.  Sullivan)63	61,000	*	61,000	0	0%
The Willhite Group & SGW Profit Sharing Plan UAD 2/1/198964	30,500	*	30,500	0	0%
TIMBREZA, Charles K.	1,500	*	1,500	0	0%
VenCore Solutions, LLC65	37,499	*	37,499	0	0%
WHITE, Dean R.66	116,250	*	81,000	35,250	*
WILLIAMSON, J.  Keith67	30,500	*	30,500	0	0%
WJVEST Holding General Partnership68	25,000	*	25,000	0	0%
WOOD, David	10,000	*	10,000	0	0%

Notes:

*Less than 1%.

___________________________

63 Consists of 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22 :1 .  Dr. Steven Sullivan has sole voting and investment rights.

 

64 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .  Stephen G Willhite has sole voting and investment rights.

 

65 Consists of 30,737 shares of Series A Convertible Preferred Stock which convert to 37,499 shares of Common Stock at a conversion ratio of 1.22 :1 .  The shareholders of VenCore Solutions, LLC include Laminar Direct, Len Ludwig, and the employees of VenCore Solutions, LLC.  James Paul Johnson has sole voting and investment rights.

 

66 Consists of 21,000 shares of Common stock, 50,000 shares of Series A Convertible Preferred Stock which convert to 61,000 shares of Common Stock at a conversion ratio of 1.22:1, and 35,250 shares of Common stock issuable upon the exercise of options.

 

67 Consists of 25,000 shares of Series A Convertible Preferred Stock which convert to 30,500 shares of Common Stock at a conversion ratio of 1.22 :1 .

 

68 Casey Jensen is the General Partner in the WJVEST Holding General Partnership.  Voting and investment rights are shared by Casey Jensen and Chet Wilke.

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SHARES ELIGIBLE FOR FUTURE SALE

Currently, there is no public market for our common stock.  Future sales of substantial amounts of our common stock in the public market could adversely affect market prices.  We have outstanding an aggregate of 15,724,816 shares of common stock as of the date of this Prospectus .   Assuming the maximum amount of the direct public Offering is sold , we will have 24,539,065 shares of our common stock issued and outstanding, which includes the as-converted preferred shares .  If and when this registration is deemed effective by the SEC, all of these shares will be eligible for sale on the public market (if one exists) without restriction or further registration under the Securities Act, except as may be restricted by lock up agreements and except that any shares purchased by our “affiliates,” as that term is defined in Rule 144 of the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 described below.  Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, which rules are summarized below.  Subject to the lock-up agreements described below and the provisions of Rules 144, additional shares will be available for sale in the public market as follows:

Approximate Number of Shares Eligible for Future Sale	Date
1,676,816	These shares will be eligible for sale on the public market (if one exists) after the SEC declares effective the registration statement of which this Prospectus is a part.
5,000,000	Direct Public Offer.  These shares will be eligible for sale on the public market (if one exists) after the SEC declares effective the registration statement of which this Prospectus is a part.
2,563,749	These shares will be eligible for sale on the public market (if one exists) after the SEC declares effective the registration statement of which this Prospectus is a part .  Series A Convertible Preferred Stock will be subject to certain lock-up provisions described in this registration statement.  It includes 2,563,749 shares into which our Series A Convertible Preferred Stock may convert.
9,240,565	These shares will be eligible for sale on the public market (if one exists) after the SEC declares effective the registration statement of which this Prospectus is a part.

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Rule 144

In general, under Rule 144, a person, or persons whose shares are aggregated, who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale and who has beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner, except if the prior owner was one of our affiliates, would be entitled to sell all of their shares, provided there is current public information available about our company.

Sales by affiliates under Rule 144 may also be subject to manner of sale provisions and notice requirements.  Any substantial sale of common stock pursuant to any registration statement or Rule 144 may have an adverse effect on the market price of our common stock by creating an excessive supply.

Lock-Up Agreements and Registration

Common Stock, Preferred Stock and Warrants: Shareh olders of our common stock, preferred stock and warrants have entered into lock-up agreements pursuant to which they agreed not to sell their shares (the “Shares”) during a lock-up period (the “Lock-up Period”).   The shares issued to IRSVS pursuant to the cancellation agreement with us are subject to the same restrictions as other shareholders.  The Lock-Up Period allows only the first 25% of the Shares owned by each shareholder to be sold during the period beginning the 91st day subsequent to our shares becoming publicly traded in a nationally recognized market and ending on the 180th day thereafter, and then 25% every 90 day period thereafter.

Notwithstanding the foregoing restrictions on transfer, the holder may, at any time and from time to time during the Lock-Up Period, transfer the Shares (i) as bona fide gifts or transfers by will or intestacy, (ii) to any trust for the direct or indirect benefit of the Holder or the immediate family of the holder , provided that any such transfer shall not involve a disposition for value, (iii) to a partnership which is the general partner of a partnership of which the holder is a general partner, provided, that, in the case of any gift or transfer described in clauses (i), (ii) or (iii), each donee or transferee agrees in writing to be bound by the terms and conditions contained herein in the same manner as such terms and conditions apply to the undersigned.  For purposes hereof, “immediate family” means any relationship by blood, marriage or adoption, not more remote than first cousin.

Stock Options:  Our employees are required to enter into a Voting Stock Agreement which sets out the terms of participation in our stock option plan.  The Voting Stock Agreement provides that in the event that we complete an initial public Offering of our securities resulting in the public trading of our securities, the shares underlying the stock options shall not be sold for a period of 12 months thereafter.

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PLAN OF DISTR I BUTION

The securities being offered may be sold by the Selling Security Holders or by those to whom such shares are transferred.  We are not aware of any underwriting arrangements that have been entered into by Selling Security Holders .  The distribution of the securities by the Selling Security Holders may be effected in one or more transactions that may take place in the over-the-counter market, including broker’s transactions, privately negotiated transactions or through sales to one or more dealers acting as principals in the resale of these securities.

Any of the Selling Security Holders , acting alone or in concert with one another, may be considered statutory underwriters under the Securities Act, as amended, if they are directly or indirectly conducting an illegal distribution of the securities on behalf of our corporation.  For instance, an illegal distribution may occur if any of the Selling Security Holders provide us with cash proceeds from their sales of the securities.  If any of the Selling Security Holders are determined to be underwriters, they may be liable for securities violations in connection with any material misrepresentations or omissions made in this Prospectus .

Our company or our management will not receive proceeds from the sales of the securities of Selling Security Holders , because this would constitute an illegal distribution of our securities and our company or our management may be deemed underwriters in such an instance, and they would have liability for any material misrepresentations or omissions in this document and otherwise in the offer and sales of securities.

In addition, the Selling Security Holders and any brokers and dealers through whom sales of the securities are made may be deemed to be underwriters within the meaning of the Securities Act and the commissions or discounts and other compensations paid to such persons may be regarded as underwriters’ compensation.

E ach of the Selling Security Holders and any other person participating in a distribution will be affected by the applicable provisions of the Exchange Act, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the Selling Security Holders or any such other person.

Under the Exchange Act, and the regulations thereunder, any person engaged in a distribution of the shares of our common stock offered by this Prospectus may not simultaneously engage in market making activities with respect to our common stock during the applicable “cooling off” periods prior to the commencement of such distribution.

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Also the Selling Security Holders are subject to applicable provisions which limit the timing of purchases and sales of our common stock by the Selling Security Holders .

Selling Security Holders are required to comply with Regulation M.  In general, Regulation M precludes any Selling Security Holder , any affiliated purchasers and any broker-dealer or any other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.  Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading efforts and selling methods.  Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.

Regulation M prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of the security, except as specifically permitted by Rule 104 of Regulation M.  These stabilizing transactions may cause the price of our common stock to be more than it would otherwise be in the absence of these transactions.  We have informed the Selling Security Holders that stabilizing transactions permitted by Regulation M allow bids to purchase our common stock if the stabilizing bids do not exceed a specific maximum.  Regulation M specifically prohibits stabilizing that is the result of fraudulent, manipulative, or deceptive practices.   Selling Security Holder and distribution participants are required to consult with their own legal counsel to ensure compliance with Regulation M.

There can be no assurance that the Selling Security Holders will sell any or all of the securities.  In order to comply with state securities laws, if applicable, the securities will be sold in jurisdiction only through registered or licensed brokers or dealers.  In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.  Under applicable rules and regulations of the Exchange Act, any person engaged in distribution of the securities may not simultaneously engage in market-making activities in these securities for a period of one or five business days prior to the commencement of such distribution.

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Timing of Sales

The Selling Security Holders may offer and sell the shares covered by this Prospectus at various times.  The Selling Security Holders will act independently of each other in making decisions with respect to the timing, manner and size of each sale.

Offering Price

The Selling Security Holders intend to sell their shares at an Offering Price of $1.00 per share until quoted on the OTCBB, or listed for trading or quoted on any other public market.  Thereafter, the sales price offered by the Selling Security Holders to the public may be:

(1)The market price prevailing at the time of sale;

(2)A price related to such prevailing market price; or

(3)Such other price as the Selling Security Holders determine from time to time.

Our common stock is not currently listed on any national securities exchange or electronic quotation system.  If our common stock becomes publicly traded, then the sale price to the public will vary according to the selling decisions of each Selling Security Holder and the market for our stock at the time of resale.

Manner of Sale

The shares may be sold by means of one or more of the following methods:

 (1)    a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

 (2)    purchase by a broker-dealer as principal and resale by that broker-dealer for its account pursuant to this Prospectus ;

 (3)    ordinary brokerage transactions in which the broker solicits purchasers;

 (4)    through options, swaps or derivative;

 (5)    privately negotiated transactions; or

 (6)    in a combination of any of the above methods.

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The Selling Security Holders may sell their shares directly to purchasers or may use brokers, dealers, underwriters or agents to sell their shares.  Brokers or dealers engaged by the Selling Security Holders may arrange for other brokers or dealers to participate.  Brokers or dealers may receive commissions, discounts or concessions from the Selling Security Holders , or, if any such broker-dealer acts as agent for the purchaser of shares, from the purchaser in amounts to be negotiated immediately prior to the sale.  The compensation received by the brokers or dealers may, but is not expected to, exceed that which is customary for the types of transaction involved.  Broker-dealers may agree with a Selling Security Holder to sell a specific number of shares at a stipulated price per share, and to the extent the broker-dealer is unable to do so acting as agent for a Selling Security Holder , to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to the Selling Security Holder .  Broker-dealers who acquire shares as principal may thereafter resell the shares from time to time in transactions, which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above, in the over-the-counter market or otherwise at prices and on terms then prevailing at the time of sale, at prices then related to the then current market price or in negotiated transactions.  In connection with resale of the shares, broker-dealers may pay to or receive from the purchasers of shares commissions as described above.

If our Selling Security Holders enter into arrangements with brokers or dealers, as described above, we are obligated to file a post-effective amendment to this registration statement disclosing such arrangements, including the names of any broker dealers acting as underwriters.

The Selling Security Holders and any broker-dealers or agents that participate with the Selling Security Holders in the sale of the shares may be deemed to be “underwriters” within the meaning of the Securities Act.  In that event, any commissions received by broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies, Estimates and Assumptions

The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities.  On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies.  We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations.  We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Revenue Recognition- Our revenue recognition policies are in accordance with the SEC Staff Accounting Bulletin (SAB) No. 104.  Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations on our part exist and collectability is reasonably assured.  Revenues are recognized from product sales, net of discounts and rebates.  Fees from licensees desiring to manufacture and distribute our products or derivative products using our intellectual property include initial license fees and royalties.  Initial license fees are generally recognized upon granting of the license to the licensee.  Royalties are recognized in the period earned.

Allowance for doubtful accounts.  In estimating the collectability of accounts receivable we analyze historical write-offs, changes in our internal credit policies and customer concentrations when evaluating the adequacy of our allowance for doubtful accounts.  Differences may result in the amount and timing of expenses for any period if we make different judgments or use different estimates.  Our accounts receivable represent a significant portion of our current assets and total assets.  Our realization on accounts receivable, expressed in terms of United States dollars may be affected by fluctuations in currency rates since the customer’s currency is frequently a currency other than United States dollars.

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Inventories.  Our inventory consists of raw material components for our portable oxygen systems as well as completed products and accessories.  Inventory is stated at the lower of cost or market.

Cash and Cash Equivalents.  We consider all highly liquid investments purchased with maturity of three months or less to be cash equivalents.  Cash and cash equivalents may at times exceed Federally insured limits.  To minimize this risk, we place our cash and cash equivalents with high credit quality institutions.

Property and Equipment.  Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement.  Renewals and betterments that materially extend the life of an asset are capitalized.  Expenditures for maintenance and repairs are charged to expense when incurred.

Impairment of Long-Lived Assets.  We review long-lived assets, including amortizable intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying value of the asset.  During 2009 and 2008, we recognized impairment charges of $100,978 and $0, respectively.  During the three months ended March 31, 2010, we did not recognize any impairment charge.

Research and Development Costs.  Costs associated with the development of our products are charged to expense as incurred.

Income Taxes.  We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes.”  Therefore, we record deferred taxes for the tax effect of differences between the financial reporting basis and the income tax basis of our assets and liabilities.  A valuation reserve is provided for a portion or all of the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Stock-Based Compensation.  In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123R (FAS-123R), Share-Based Payment, which is a revision of Statement of Financial Accounting Standards No. 123 (FAS-123), Accounting for Stock-Based Compensation.

FAS-123R eliminates accounting for share-based compensation transactions using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB-25), Accounting for Stock Issued to Employees, and requires instead that such transactions be accounted for using a fair-value-based-method.  We adopted the provisions of FAS-123R effective January 1, 2006 using the prospective method.  Under the prospective method compensation cost is recognized beginning with the effective date for all share-based payments granted, modified, repurchased or cancelled after the effective date.

As permitted under FAS-123R for nonpublic entities, we have elected to use the calculated value method to account for options granted in 2006.  A nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of an appropriate index for the volatility of the entity’s own share price.  Currently, there is no active market for our common shares and management has not been able to identify a similar publicly held entity that can be used as a benchmark.  Therefore, as a substitute for volatility, we used the historical volatility of the Dow Jones Small Cap Medical Equipment Manufacturers Index, which is representative of our size and industry.  We have used the historical closing values of that index to estimate volatility, which was calculated to be 35% to 55% .

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We accounted for all share based payments granted prior to January 1, 2006 in accordance with APB-25 and Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, an Interpretation for APB Opinion No. 25.  Under APB-25, we do not recognize any compensation expense related to employee or director stock options when options are granted with exercise prices at or above the estimated fair value of the stock on the date of grant, as determined by the Board of Directors.

With regard to the weighted-average option life assumption, we evaluate the exercise behavior of past grants as a basis to predict future activity.  The amount of stock based compensation expenses is net of an estimated forfeiture rate, which is also based on historical data.  We have not and do not anticipate distributing dividends to stockholders and accordingly use a 0% dividend yield assumption for all Black-Scholes option pricing calculations.  The fair value of options issued to employees for the period January 1, 2010 through March 31, 2010 is $19,304.  The fair value of options issued to employees during the year ended December 31, 2009 was approximately $133,604 and the year ended December 31, 2008 was approximately $89,957.

We follow the provisions of FAS-123R and Emerging issues Task Force No. 96-18, Accounting for Equity Instruments That are Issued to Other than Employees for Acquiring or in Connection with Selling Goods or Services, for equity instruments granted to non-employees.

The fair value of all options and warrants issued to employees and non-employees for the period January 1, 2010 through March 31, 2010 is $110,386.  The fair value of all options and warrants issued to employees and non-employees during the year ended December 31, 2009 was approximately $1,041,102 and the year ended December 31, 2008 was approximately $922,284.

Accounting Estimates.  The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period.  Actual results could differ from those estimated.

Advertising Costs - Advertising costs are charged to operations when incurred.  We incurred $47,164 and $50,082 in advertising costs in the years ending December 31, 2009 and 2008.  We incurred $3,381.40 in advertising costs for the three months ended March 31, 2010 as compared to $22,850.15 for the three months ended March 31, 2009.

Financial Instruments - Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2009 and 2008.  The respective carrying value of certain on balance- sheet financial instruments approximate their fair values.  These financial instruments include cash, accounts payable, accrued expenses and notes payable.  Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values.

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Reclassifications - Certain financial statement items have been reclassified to conform to the current year’s presentation.  These reclassifications had no impact on previously reported net loss.

Recently Enacted Accounting Standards -In April 2009, the FASB issued an update to ASC 820, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides guidance on determining fair value when there is no active market or where the price inputs being used represent distressed sales.  This update to ASC 820 was effective for interim and annual periods ending after June 15, 2009 and was adopted by us in the second quarter of 2009.  The adoption did not have a material impact on our consolidated financial statements.

In May 2009, the FASB issued ASC 855, “Subsequent Events.”  ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC 855, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, was effective for interim or annual periods ending after June 15, 2009.  We adopted this standard as of June 30, 2009; however, the adoption of ASC 855 had no impact to our consolidated financial statements.

In June 2009, the FASB issued ASU 2009-17, Consolidation (ASC 810) “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires ongoing qualitative reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  This new standard also requires additional disclosures about an enterprise’s involvement in variable interest entities.  We adopted this pronouncement on January 1, 2010 but there was no significant impact on its financial statements.

In June 2009, the FASB issued ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.”  ASC 105 establishes the FASB Accounting Standards Codification (“Codification”), as the single source of authoritative accounting and reporting standards in the United States for all non-government entities, with the exception of the Securities and Exchange Commission and its staff.  It does not include any new guidance or interpretations of US GAAP, but merely eliminates the existing hierarchy and codifies the previously issued standards and pronouncements into specific topic areas.  The Codification was adopted on July 1, 2009 for our financial statements for the year ended December 31, 2009.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements.”  This update will require (1) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (2) information about purchases, sales, issuances and settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs).  This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and require disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs.  The new disclosures and clarifications of existing disclosure are effective for fiscal years beginning after December 15, 2009, except for the disclosure requirements for related to the purchases, sales, issuances and settlements in the roll forward activity of Level 3 fair value measurements.  Those disclosure requirements are effective for fiscal years ending after December 31, 2010.  We still assessing the impact on this guidance and does not believe the adoption of this guidance will have a material impact to its financial statements.  Management does not believe that other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants or the SEC have a material impact on our present or future financial statements.

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Liquidity and Capital Resources

We had a cash balance of approximately ($1,808) as of March 31, 2010, as compared to ($2,512) as of March 31, 2009 and $73,077 as of December 31, 2009 as compared to $393 as of December 31, 2008.  Our funds are kept in financial institutions located in the United States of America.

We had negative working capital of approximately $1,511,571 and 683,523 as of March 31, 2010 and 2009, respectively and negative working capital of $1,269,127 and $411,915 as of December 31, 2009 and 2008, respectively.  The increase of negative working capital was largely caused by the substantial increase in general and administrative expenses.

Since inception, we have been engaged primarily in product research and development, investigating markets for our products, developing manufacturing and supply chain partners, and developing distribution, licensing and other channel relationships.  In the course of funding research and development activities, we have sustained operating losses since inception and have an accumulated deficit of $9,726,028 at March 31, 2010.

We completed product development and launched products in late 2007.  We have and will continue to use significant capital to manufacture and commercialize our products.  These factors raise substantial doubt about our ability to continue as a going concern.  In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of their common stock.

During 2010, we will need additional capital to market and sell our products, and to further develop and enhance our current product offerings, introduce new products and address unanticipated competitive threats, technical problems economic conditions or other requirements.  We raised approximately $117,500 during the year ended December 31, 2009 and $326,750 during the year ended 2008 through the sale of common stock and the exercise of stock options.  We estimate that we will require approximately $1.75 million over the next 12 months to remain viable.  There is no assurance that we will be successful in raising this additional capital or in achieving profitable operations.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.  However, there can be no assurance that any additional financing will be available to us.  Additional equity financing may involve substantial dilution to our then existing stockholders.  In the event we are unable to raise additional capital, we may be required to substantially reduce or curtail our activities.

In estimating the needed amount, the following assumptions were made:

 ·    All shareholder loans are deferred;

 ·    There are no deferments of rent expense or exchange of rent expense for equity;

 ·    There are no deferments of accounts payable or exchange of rent expense for equity; and

 ·    There is no refinancing of our debt obligations.

The following table sets out the major components of our estimates of cash needs over the next 12 months to remain viable, subject to the above assumptions:

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Accounts Payable	$	225,000
Notes Payable	$	160,450
Current portion of Capital Leases	$	311,294
Shareholder Loans	$	34,750
Subtotal	$	731,494
Rent expense	$	194,000
Insurance & Taxes	$	32,000
Regulatory compliance costs	$	100,000
Salaries & Wages	$	504,000
Inventory	$	75,000
General corporate expenses	$	115,000
Subtotal	$	1,020,000
Total estimate	$	1,751,494

Results of Operation

Total revenues for the year ended December 31, 2009 increased to $387,361 from $97,060 for the year ended December 31, 2008.  Total revenues for the three months to March 31, 2010 increased to $261,177 from $106,431 for the three months ended March 31, 2009.  This continued increase is a result of increased sales volume from our products during the periods and from license fees.

Research and development (“R&D”) expenses decreased from $278,633 for the year ended December 31, 2008 to $43,472 for the year ended December 31, 2009.  R&D expense for the three months ended March 31, 2010 was $0 as compared to $15,525 for the three months ended March 31, 2009.  This decrease is due to us focusing more on production and distribution and less on R&D.

Net loss decreased to $2,243,636 for the year ended December 31, 2009, from $2,900,393 for the year ended December 31, 2008, and basic and diluted net loss per share decreased to $0.143 from $0.187 in the prior period.  Net loss as of March 31, 2010 was $131,214 and diluted net loss per share was $0.008 as compared to a net loss as of March 31, 2009 of $841,123 and diluted net loss per share was $0.05.

Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of our services.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence.

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We have limited financial resources available which has had an adverse impact on our liquidity, activities and operations.  These limitations have adversely affected our ability to obtain certain projects and pursue additional business.  There is no assurance that we will be able to raise sufficient funding to enhance our financial resources sufficiently to generate volume or to engage in any significant research and development, or purchase plant or significant equipment.

Seasonality

Our business is not seasonal in nature.  The seasonal effect does not have a material impact on our sales.

Off-Balance Sheet Arrangements

We have no material off-balance sheet transactions.

Quantitative and Qualitative Disclosure Regarding Market Risk

Interest Rate Risk.  We may face some risk from potential fluctuations in interest rates, although our debt obligations are primarily short-term in nature.

Foreign Currency Risk.  Substantially all of our operations are conducted in the United States and our primary operational currency in US Dollar (“USD”).  As a result, currently the effect of the fluctuations of USD exchange rates has no appreciable impact on our business operations, but will be increasingly material as we introduce our products widely into new international markets.  Substantially all of our revenues and expenses are denominated in USD, and we use the United States dollar for financial reporting purposes.  As we introduce our products widely into new international markets, there can be no assurance that any applicable exchange rates will not be volatile or that any particular currencies will not devalue significantly against the U.S. dollar.  Exchange rate fluctuations may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations, if any, outside of the United States.

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DESCRIPTION OF BUSINESS

Background

We were formed on January 15, 2004 as a Delaware “C” Corporation for the purpose of developing products with the capability of generating medical grade oxygen “on demand,” without the necessity of storing oxygen in compressed tanks.  We developed a unique technology that generates medically pure (USP) oxygen from two dry, inert powders.  Other available chemical oxygen generating technologies contain hazards that we believe make them commercially unviable for broad-based emergency use by lay persons.  Our launch product is the OxySure Model 615 portable emergency oxygen device.  We believe that the OxySure Model 615 is currently the only product on the market that can be safely pre-positioned in public and private venues for emergency administration of medical oxygen by lay persons, without the need for training.

We were founded by our current Chairman, Chief Executive Officer, President, and Chief Financial Officer, Julian T. Ross, who conducted or managed all the related research and development, a function Mr. Ross continues to oversee.  In early 2004, Mr. Ross moved his research and development efforts into the North Texas Enterprise Center for Medical Technology (“NTEC”).  NTEC is a Frisco-based medical technology incubator, and we were accepted as an NTEC program company in early 2004.  To be accepted into the NTEC program, we first had to meet several admission criteria as well as a review and approval process.  The admission criteria NTEC has for an applicant company is that:

 ·    They have innovative and identifiable intellectual property.

 ·    Their time to market for the ventures products/services should be no more than three years.

 ·    Their preliminary business plan including pro forma financial statements showing significant revenues within five years.

 ·    They have a Healthcare Industry focus with emphasis in medical devices and healthcare related information technology and software.  Wireless technologies with broad application to include healthcare and/or medical devices.

 ·    Their founding entrepreneur is full-time in the venture being launched and possesses niche specific expertise.  Additional product development team members are desired.

 ·    They have sufficient seed capital or personal financial resources to carry the venture for at least four months at the current burn rate.

 ·    They have a willingness to utilize the full breadth of services offered by NTEC.

If a company meets the admission criteria, the applying company proceeds to the review process with the NTEC management team.  During this review process, the applying company has an interview with the NTEC management team, a presentation to the NTEC selection committee, and NTEC performs due diligence to assess the viability of the applying company’s venture.  If the applying company passes all criteria and is approved by the selection committee, then the applying company becomes a NTEC program company.

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We graduated from the NTEC program in November 2005.  For an NTEC program company to graduate from the NTEC program, they have to attain key milestones for funding, research, product development, operations management, capture of intellectual property, personnel, and regulatory planning.

Upon graduation from NTEC, we proceeded with the development of our purpose-built production facility in Frisco, Texas, which also serves as our headquarters.  The facility comprises 16,200 square feet of light industrial space, of which approximately 10,000 square feet is dedicated to production and warehousing.  We received an economic incentive from the Frisco Economic Development Corporation (“FEDC”) in the amount of $243,000 in support of the development of the facility.  In addition, we received a further amount of $324,000 in the form of a Tenant Improvement Allowance from our landlord.  Upon completion of the build-out, we moved into the facility in October 2007.  We commenced commercial shipment of Model 615 during the 2008 financial year.

Government Regulation

Our primary product, the OxySure portable oxygen device, Model 615, is a medical device, subject to extensive and rigorous regulation by the FDA, as well as other Federal and state regulatory bodies in the United States and comparable authorities in other countries.  We expect that many of our future products will also be similarly subject to regulation by the FDA.  We currently market our primary product, the Model 615 in the United States under a pre-market notification, or 510(k), clearance for emergency use.  Model 615 was cleared by the FDA for over the counter sale, without the need for a prescription, and the FDA approval number is K052396.  If we seek to market new products or to market new indications for our existing product, we will be required to file for and obtain either 510(k) clearance or PMAs.

The FDA regulations govern the following activities that we perform, or that are performed on our behalf, to ensure that medical devices distributed domestically or exported internationally are safe and effective for their intended uses:

• product design, development and manufacture;

• product safety, testing, labeling and storage;

• pre-marketing clearance or approval;

• record keeping procedures;

• product marketing, sales and distribution; and

• post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths or serious injuries and repair or recall of products.

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Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

• warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

• repair, replacement, refunds, recall or seizure of our products;

• operating restrictions, partial suspension or total shutdown of production;

• refusing our requests for 510(k) clearance or PMA approval of new products, new intended uses or modifications to existing products;

• withdrawing 510(k) clearance or PMA approvals that have already been granted; and

• criminal prosecution.

The FDA’s Pre-market Clearance and Approval Requirements

Unless an exemption applies, each medical device we wish to distribute commercially in the United States will require either prior 510(k) clearance or a PMA approval from the FDA.  Medical devices are classified into one of three classes - Class I, Class II, or Class III - depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness.  Devices deemed to pose lower risks are placed in either Class I or II, which requires the manufacturer to submit to the FDA a pre-market notification requesting permission to commercially distribute the device.  This process is generally known as 510(k) clearance.  Some low risk devices are exempted from this requirement.  Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are placed in Class III, requiring PMA approval.  Our Model 615 is considered a Class II device for its current primary marketed indication.

Pre-market Approval Pathway

A PMA application must be submitted to the FDA if the device cannot be cleared through the 510(k) process.  The PMA application process is much more demanding than the 510(k) pre-market notification process.  A PMA application must be supported by extensive data, including but not limited to technical information, preclinical data, clinical trials, manufacturing information and labeling to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device.

Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices which have a new intended use or use advanced technology, are Class III devices that almost always require formal clinical studies.  The PMA application, which is intended to demonstrate safety and efficacy, must contain data from clinical trials and a full description of the device and its components, the methods, facilities and controls used for manufacturing, and the proposed labeling.  If the FDA determines that a PMA application is sufficiently complete to permit a substantive review, the FDA will accept the application for review.  The Federal Food, Drug, and Cosmetic Act permits a modular review approach, whereby applicants are allowed to submit discrete sections of the PMA for review after each is completed.

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The FDA has 180 days to review a PMA application, although the review of an application generally occurs over a significantly longer period of time and can take up to several years.  During this review period, the FDA may request additional information or clarification of the information already provided.  Also, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device.  In addition, the FDA will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with quality system regulations.

510(k) Clearance Pathway

When a 510(k) clearance is required, we must submit a pre-market notification to the FDA demonstrating that our proposed device is substantially equivalent to a previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of a PMA application.  By regulation, the FDA is required to clear or deny a 510(k) pre-market notification within 90 days of submission of the application.  As a practical matter, clearance often takes significantly longer.  The FDA may require further information, including clinical data, to make a determination regarding substantial equivalence.  If the FDA determines that the device, or its intended use, is not substantially equivalent to a previously-cleared device or use, the FDA will place the device, or the particular use, into Class III.

Clinical Trials

Clinical trials are almost always required to support PMA approval and are sometimes required for 510(k) clearance.  In the United States, these trials generally require submission of an application for an investigational device exemption, or IDE, to the FDA.  The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.  The IDE must be approved in advance by the FDA for a specific number of patients unless the product is deemed a non-significant risk device eligible for more abbreviated IDE requirements.  Clinical trials for significant risk devices may not begin until the IDE application is approved by the FDA and the appropriate institutional review boards, or IRBs, at the clinical trial sites.  Any clinical trials we may do must be conducted under the oversight of an IRB at the relevant clinical trial sites and in accordance with the FDA regulations, including but not limited to those relating to good clinical practices.  We are also required to obtain patients’ informed consent that complies with both the FDA requirements and state and Federal privacy regulations.  Failure to meet these standards can result in the clinical data not being accepted by the FDA.

If we are required to pursue an IDE in the future, we will need to enroll patients in a feasibility study to evaluate the safety and effectiveness of the intended product for its intended indication.  A feasibility study involves a limited number of patients and is the first opportunity to evaluate device performance in humans under clinical conditions.  It is used to gather information on treatment methods of using a new device, clinical measures to be used in a pivotal study, and evaluate features that may be modified to optimize use of the device.  If the study results are favorable, we will be required to conduct a larger, pivotal, study to demonstrate the device’s safety and effectiveness.  A pivotal study usually involves a larger population at multiple locations and is designed to provide objective evidence of effectiveness based on significant clinical outcomes.  If any pivotal trial conducted by us in the future is successful, all the study data will form the clinical basis of the applicable PMA application for FDA approval of the intended product.

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We, the FDA or the IRB at each site at which a clinical trial is being performed may suspend a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the benefits.  Even if a trial is completed, the results of clinical testing may not demonstrate the safety and effectiveness of the device, may be equivocal or may otherwise not be sufficient to obtain PMA approval of the product.  Similarly, in Europe the clinical study must be approved by the local ethics committee and in some cases, including studies with high-risk devices, by the Ministry of Health in the applicable country.

Pervasive and Continuing Regulation

After a device is placed on the market, numerous regulatory requirements continue to apply.  These include:

• the FDA’s QSR requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;  

• labeling regulations and the FDA prohibitions against the promotion of products for uncleared or unapproved uses (known as off-label uses), as well as requirements to provide adequate information on both risks and benefits during promotion of the product;

• clearance or approval of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use;

• medical device reporting, or MDR, regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;

• post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device; and

• the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations.

After a device receives 510(k) clearance or PMA approval, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, will require a new clearance or approval.  The FDA requires each manufacturer to review changes that it makes and determine whether they are of a type that would require a new 510(k) or PMA filing.  This determination must be documented by us.  While we make this determination initially, the FDA can review any such decision and can disagree with a manufacturer’s determination.  The FDA may also make this determination on its own initiative.

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The MDR regulations require that we report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.  We have not filed any MDR reports to the FDA for Model 615 since we started selling the product.

We have registered with the FDA as a medical manufacturer.  The FDA has broad post-market and regulatory enforcement powers.  We are subject to unannounced inspections by the FDA to determine our compliance with the QSR and other regulations, and these inspections may include the manufacturing facilities of our suppliers.

Promotion and Advertising Restrictions

We may promote and advertise Model 615 only for emergency use.  However, physicians may prescribe Model 615 for uses that are not described in its FDA-approved labeling and for uses that differ from those tested by us and approved by the FDA.  Such off-label uses are common across medical specialties.  Physicians may believe that such off-label uses are the best treatment for some patients in varied circumstances.  The FDA does not regulate the behavior of physicians in their choice of treatments.  The FDA does, however, strictly prohibit a manufacturer’s communications regarding off-label uses.  Companies cannot actively promote FDA-approved devices for off-label uses.  If the FDA believes we are promoting Model 615 for off-label uses, we could be subject to negative publicity, warning letters, fines, civil and criminal penalties, injunctions and product seizures.

Our Product and Market Applications

We believe that our process and methodology for oxygen generation and delivery may have a significant impact on the emergency/short duration oxygen supply marketplace.  We believe that we make the delivery devices safer, more affordable, more accessible, easier to use or more consumer friendly.  We believe that we improve access to emergency oxygen that affects the survival, recovery and safety of individuals in two multi-billion dollar markets involving both established and expansion customer opportunities:

(1)   Individuals at risk for cardiac, respiratory or general medical distress needing immediate help prior to emergency medical care arrival; and

(2)   Those requiring immediate protection and escape from exposure situations or oxygen-deficient situations inindustrial, mining, military, or other public settings.

The first product being commercialized using our platform technology is the OxySure Model 615.  This product is simple to use, and allows a bystander or layperson to administer medical oxygen to a victim or patient during those first, critical minutes of a medical emergency while waiting for first responders to arrive.  Just like an Automated External Defibrillator (“AED”), Model 615 is designed to “bridge the gap” between the onset of a medical emergency and the time that the first responders arrive on the scene of the emergency.

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Model 615 utilizes a simple, one-step activation and has a reusable component and a disposable component.  The reusable component comprises an outer housing and an actuation mechanism, and the disposable component is a self-contained cartridge, within which the chemical reaction takes place.  Each disposable cartridge supplies in excess of 15 continuous minutes of medically pure (USP) oxygen at the FDA-standard 6 liters per minute.  If the need for oxygen lasts longer than 15 minutes, the cartridge is quickly replaced and the process repeated.  Each Model 615 sold includes one reusable housing, one disposable cartridge, and one disposable mask and tubing assembly.  We earn additional revenues from the sales of additional disposable cartridges and disposable mask and tubing assemblies.  Model 615 is primarily made of lightweight, thermoplastic materials and weighs approximately 11 pounds, inclusive of the cartridge.  We believe that Model 615 is significantly differentiated over traditional oxygen modalities (compressed gas, cryogenic, thermal decomposition), as it relates to emergency use by lay persons.  During the oxygen generation process in Model 615, there is less pressure, and no tanks, gauges, flame, electrical charge or other hazards typically associated with existing oxygen dispensing devices.  In addition, Model 615’s advantages include: (i) it does not represent an explosion hazard – the powders are inert, until oxygen is needed and is generated on demand when the unit is actuated with one simple step; (ii) the process does not present a toxicity hazard; (iii) the product is safe for transportation, however, we are required to label our products as hazardous to comply with our approval letter; (iv) it does not constitute an environmental hazard; (v) the product does not generate the extreme heat associated with older, chemical technologies; and most importantly (vi) it does not require any training to operate, and is designed for use by any lay person.

Currently, Model 615 is our only internally developed product that we  produce and sell.   If we can obtain sufficient financing, we plan to commercialize several additional products over the next three to five years, providing needed solutions for various vertical markets, including potential solutions for mining markets, aviation markets, sports and recreation markets, and emergency use markets where longer duration (longer than 15 minutes) are desired.

Market Analysis

We believe that Model 615 may create a new market category of emergency oxygen availability for the early administration or treatment of cardiovascular, respiratory and other medical emergencies.  By empowering a lay person to augment the services of first responders, we believe that Model 615 may follow a similar model to that of an Automated External Defibrillator (“AED”) or a fire extinguisher.  We believe that Model 615 can be safely pre-positioned in homes, buildings and other public and private settings to provide immediate medical grade oxygen in an emergency, but without the risk associated with compressed gas containers, and without the training required to operate such equipment. We believe that the OxySure Model 615 enables a loved one, bystander or even the victim themselves to administer medical oxygen in a convenient, safe and inexpensive manner while awaiting the arrival of emergency medical responders.  We believe Model 615 may also be helpful as a standby solution by providing temporary oxygen to aid escape in hazardous exposure situations, or when necessary long-term oxygen supplies are interrupted.

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We believe there is significant clinical support for the critical need for early oxygen administration during cardiovascular or respiratory emergencies.  During a cardiovascular or respiratory distress emergency, the availability of oxygen to the heart, brain, other vital organs or injured area is either stopped or impaired.  In less than 3 minutes without oxygen, brain cells begin to die.  In less than 8 minutes, the heart muscle cells begin to die.  Both of these conditions typically lead to permanent disability, since neither the brain nor the heart is considered regenerative.  In less than ten minutes the ability to sustain life is at risk.  Even if a victim survives, their future quality of life can be directly related to the number of minutes that they were deprived of oxygen.  Given that the response time of first responders can be between six and 15 minutes from the time 911 is called, the clinical significance and appeal of the Model 615 becomes apparent.

We have begun to introduce Model 615 into commercial , education and consumer markets and plan to expand into those markets on a larger scale.  As a general rule, these markets may comprise one or more of the following customer categories: (i) at risk markets; (ii) emergency placement markets; and/or (iii) preventative buyers.  There is a certain measure of overlap between or among these customer categories, but we believe the following market definitions to be generally accurate.

(i) At Risk Markets : At risk markets comprise individuals at risk of specific medical emergencies as a result of either being diagnosed with or having at least one risk factor associated with cardiovascular disease or respiratory diseases or ailments.  Respiratory diseases or ailments can include chronic obstructive pulmonary disease (“COPD”) and asthma.  Management believes that buyers in this At Risk segment will include persons, or relatives of persons, with known existing medical conditions such as cardiovascular disease or asthma in which the presence of on-demand emergency oxygen is highly appealing.

The American Heart Association estimates that there are over 80 million Americans who are afflicted with cardiovascular disease in one form or another. 1   Of the 80 million potential victims: (a) 40 million, or 50% are diagnosed with cardiovascular disease; (b) 40 million, or 50% exhibit at least one risk factor associated with cardiovascular disease; and (c) more than 2/3 are 50 years of age or older.  Management projects that, given the rapid onset of the aging baby boomer population, this ratio will increase substantially over the next decade and will likely increase the number of Americans suffering from such diseases.

Chronic Obstructive Pulmonary Disease (COPD) is refers to a group of lung diseases that can interfere with normal breathing.  It is estimated that at least 11% of the U.S. population has COPD, and with the aging of the population, the incidence is increasing.  There is a strong correlation with exposure to tobacco, which means that former and current tobacco users have greater risk of acquiring COPD.  Other factors that have the potential to play a role in the development of COPD include air pollution, occupational exposure to dust and chemicals, repeated lower respiratory tract infections, maternal smoking, poor nutrition, and prolonged and untreated asthma.

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1 American Heart Association, Heart Disease and Stroke Statistics, 2008.

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COPD is the second leading cause of death in America, up from the fifth leading cause only 16 years ago.  In 2002, 120,000 Americans died of COPD related illnesses.  It is estimated that 30 million Americans have COPD.  Of those 30 million Americans, the most severe 8% to 10% are actively treated with long-term oxygen therapy (LTOT).  The other 90% are not treated with LTOT, but do experience what is known as acute exacerbations.  These exacerbations are defined as a recent deterioration of the patient's clinical and functional state due to worsening of their COPD.  It is normally accompanied by dypsnea (shortness of breath) and almost always requires hospitalization.

Oxygen supplementation is one of the few known effective treatments for an exacerbation.  Similar to a severe asthma attack, these individuals never know when or where they will be when an exacerbation may occur.  Model 615 provides a portable, non-battery driven source of oxygen that will allow those with COPD to bridge the gap between the onset of an exacerbation and the availability of emergency care.

(ii) Emergency Placement Markets :  Management believes that organizations, corporations, educational customers, governmental entities will purchase Model 615 as an emergency response measure.  By pre-positioning it in an easily accessible way, either by itself or right next to an AED, Model 615 can serve as a first line of defense in the event of any medical or civil emergency.

We believe that there are a significant number of organizations, corporations and educational entities that may acquire Model 615 for placement in strategic locations in the event of an on-site emergency.  In addition, we believe that there may be significant applicability and appeal in various government markets for placement in strategic locations for medical emergencies and for civil emergencies.

In addition to the 40 million injury-related emergency room visits that were noted above, there are multitudes of potential emergencies that would benefit from the immediate application of oxygen.  For example, each year over 1 million Americans suffer a potentially fatal cardiac emergency - one person every 34 seconds.  About 460,000 of those cardiac emergencies are fatal, with death occurring before the victim can get professional medical attention.  There are nearly 4.5 million on-the-job injuries and illness each year, many of which would be administered oxygen if available.  Approximately 5,000 to 7,000 school-aged children die from sudden cardiac arrest each year without exhibiting prior symptoms.  Many of these deaths occur at school and related sporting events.

Additionally, with the events of 9/11 and Hurricane Katrina, national awareness of emergency preparedness has dynamically evolved.  The threat of a terrorist act or airborne illness such as Avian Flu has prompted government agencies, emergency medical personnel, and private corporations to pre-position emergency supplies in the event of a natural or man-made disaster or a civil emergency.

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The initial target locations for Emergency Placement are summarized below.  It is apparent that many of these targets would have multiple buildings and/or be of a facility size that would justify multiple units of Model 615 on-site.  Management believes that the availability of a non-pressurized tank, on-demand oxygen supply at Model 615’s selected price point may have the potential for governments, regulatory agencies and regulatory boards to require locating one or more such devices pre-positioned on-site.

Educational Facilities

There are approximately 102,265 educational campuses in the United States.  Of these, there are:

 ·    87,125 U.S. schools representing grades Kindergarten through 12th grade.2

 ·    11,000 accredited programs for infants to children of 8 years.  This includes day care and after school programs.3

 ·    4,140 United States College and Universities.4

Manufacturing Facilities

According to the U.S. Department of Commerce, Economics and Statistics Administration, there are 350,735 manufacturing facilities in the United States.

Residential Swimming Pools

The number of residential backyard swimming pools in the United States is estimated to be 6.5 million.  Drowning is the second-leading cause of injury-related death for children 1-14 years old.

Recreational Vehicles

According to a study completed by the University of Michigan, approximately 8 million US households own a least one RV.  This represents a 15% increase in RV ownership since 2001 and is largely attributed to the enormous baby boomer generation.5

Recreational Marine Vehicles

The National Marine Manufacturers Association estimates that there were approximately 18 million recreational boats in use in the United States in 2006.  Of these, 8.53 million were outboard boats, 1.12 million were inboard boats, 1.72 million were stern drive boats, 1.56 were sailboats and 3.58 million were classified as other.6

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2 National Association of State Boards of Education (1998-99 school year).

3 National Association for Education for Young Children’s annual report (August 2005).

4 National Center for Education Statistics, Digest of Education Statistics, 2005.

5 RVIA.org

6 http://www.nmma.org/facts/boatingstats/2006/files/populationstats2.asp

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Restaurants

The National Restaurant Association’s 37th Annual Industry Forecast (2004) reported 925,000 restaurants in the United States.

Churches

There are approximately 335 ,000 churches in the United States.7

Occupational Safety & Health Act (OSHA) Compliant Buildings

There are nearly 20 million locations for first aid alone called for in the OSHA Compliance Locations Publication.

U.S. Federal Government

We were awarded a multi-year contract by the General Services Administration (“GSA”) to supply our products to all branches of the U.S. Federal Government.  Our Federal Supply Schedule Contract number V797P-4153b is unrestricted, or a 100% set-aside contract for small business, and has an initial term ending November 14, 2013.  Thereafter, the contract may be renewed for up to three additional five-year terms.  Federal buyers will be able to purchase our products immediately, either directly from us or via GSA Advantage!®, the U.S. government’s online shopping and ordering system.

GSA awards contracts to responsible companies offering commercial items, at fair and reasonable prices.  We are a trusted emergency oxygen solution and has been approved and validated by third parties such as the FDA, UT Austin, Southwest Research Institute, and North Texas Enterprise Center for Medical Technology, and we have numerous documented cases of saved lives of people using our product.

Our Model 615’s use in military combat situations includes use in tactical vehicles (Stryker, Buffalo, Cougar, Humvee) and at operational bases and foreign operations bases (“FOBs”).  In the theater, the product enhances first response and forward resuscitative care significantly.  In non-combat situations our Model 615 is perfect for onsite and emergency response at all facilities, including barracks, training facilities and schools.  We also able to provide customized solutions for specific government requirements, including longer duration applications.

Preventive Buyers

Management believes that many individuals and homeowners may purchase Model 615 as a preventive/first aid measure in the event of an unforeseen emergency, including cardiovascular emergencies, respiratory emergencies and general medical emergencies.  Preventive buyers are defined as buyers with no known history or diagnosis of chronic disease, but are likely to buy Model 615 in preparation for a possible emergency.

Management believes that for the same reasons smoke alarms, first aid kits, AEDs and fire extinguishers are purchased for home use, the same consumers may be predisposed to purchase the Model 615 as part of their standard arsenal in the event of an emergency.

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7http://hirr.hartsem.edu/research/fastfacts/fast_facts.html

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Sales and Marketing Plan

We have adopted a dual direct and indirect sales strategy for developing push sales of our products.  We will accomplish our dual direct and indirect sales strategy by a sales team comprising direct sales persons and independent third party distributors.  We have targeted the education market as an early adopter market and have already achieved some initial success in penetrating that market.  As a result of our sales efforts during the 2008 launch year, Model 615 was sold into K-12 schools and school districts in more than 15 states.  We plan to continue to build on this early success in the education market.  In addition, we have had very limited initial success in selling Model 615 into churches and other commercial placement markets, and we will continue our effort to validate those early markets in the foreseeable future.  Our current direct sales capability is limited.  We plan to increase our sales capability by adding independent distributors and by expanding our direct sales force.  We plan to implement a marketing strategy designed to create market demand and sales through market awareness and education.

Strategic Marketing Efforts

Utilizing both online and above the line marketing activities, we plan to implement a marketing strategy that is designed to maximize market penetration within the three defined target segments:

1.   Emergency Placement;

2.    At-Risk; and

3.    Preventive Buyers.

We do not currently utilize any online marketing.  We have a commerce website for consumers to purchase product directly from us.

We plan to undertake above the line marketing activities such as advertising on television, radio, and in magazines and newspapers.  We do not currently engage in any above the line marketing activities.  We believe that through a combination of strategic marketing efforts, distribution partners, direct sales, direct-to-consumer advertising and education, we can achieve the desired market penetration into these defined segments.  Maximizing the Model 615’s penetration across all segments will achieve a sense of legitimacy that drives sales via both direct and distributor channels.

Our current marketing efforts are comprised of press releases, press releases disseminated by newspapers, and videos in retailer stores.

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Professional Organization Endorsements

Professional organizations serve as advocacy groups, central clearinghouses for information, and, oftentimes, as regulatory agencies for groups of industry professionals that have a vested interest in maximizing safety for patients and clients while they are on-site.  At this time, we have not obtained any professional organization endorsements, but we plan to pursue endorsements and “best practices” recommendations from such groups.  Management believes that in some cases, either at the state or national level of the professional organization, it may be possible to steer organizational bylaws to legislate on-demand, on-site oxygen as mandatory equipment for members of that organization.

Strategic Branding

We do not currently have any strategic branding activity.  We plan to, in the future, set aside a portion of our marketing budget for overall strategic branding efforts.  Targeted industry publications that appeal to key decision makers within the specialty medical community will be the primary focus of these branding and product awareness efforts.  Branded collateral with a targeted message, focus, and call to action will also be part of these expenditures.

Distributor Network

Our primary product, Model 615, is currently being sold through authorized distributors as well as through our own internal sales efforts.  We currently have 17 signed distributors in the United States and have signed our first international distribution agreement s in South Africa and Turkey .  We plan to continue to expand our U . S . network of distributors.  Distributors that we may pursue include:

 ·    distributors that have an established presence within the medical emergency and industrial safety markets;

 ·    automated external defibrillator (AED) manufacturers and distributors; and

 ·    specialty medical distributors that can tap into the cardiovascular disease, asthma and COPD market segments.

We plan to pursue international markets through distributors who are local to those markets and who have strong levels of sales and marketing capabilities in those markets.

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Retail Channel

We plan to pursue distribution partnerships with retailers that can merchandise Model 615 for at risk and preventive buyers.  We are currently conducting a pilot program in Phoenix, Arizona with the pharmacy division of a subsidiary of a large national grocery retailer.  The pilot program includes 20 selected stores, and each store has a display stand with the product displayed and a looped flash video playing on an LCD screen.  Our goal is to analyze the success of the pilot program and evaluate the feasibility of expanding the program.   Depending on the level of success we achieve with this pilot program, we may consider pursuing additional partnerships with other retailers that can merchandise Model 615 for at risk and preventative buyers.

e-Commerce Site

We currently have an e-commerce site where customers can purchase Model 615 and related accessories.  This micro-site, located at www.oxysurestore.com, allows customers to point, click, and purchase directly from us within a secure e-commerce environment.  We plan to target visitors seeking information or products related to asthma, COPD, heart disease, oxygen, oxygen therapy, supplemental oxygen use, and other key search terms and convert them to buyers via the e-commerce micro-site, and thereby we believe that the goal of increasing awareness and sales in a cost-effective manner will be enhanced.

Direct Response Television (DRTV)

Management believes that a direct response appeal to customers may be a cost-effective method for rapidly building awareness of the features, advantages and benefits of the Model 615.  We plan to test a DRTV campaign to appeal directly to at- risk customers through a targeted pilot in the form of short-duration commercials.  Utilizing space-available national media, sufficient audience reach can be obtained cost-effectively.  Based on the pilot validation, we plan to evaluate the potential of ongoing direct response television marketing efforts, possibly on larger scales.  To date, we have not conducted any direct response television campaigns or pilots.

Competition and Buying Patterns

We believe that our Model 615 portable emergency oxygen device is highly differentiated from all other emergency-duration medical oxygen supply products (compressed gas, cryogenic, thermal decomposition).  We believe that Model 615 makes on-demand, emergency-duration medical oxygen safer and more readily accessible for various classes of user markets.  Its process and the resulting product allow lay person use, as compared to all other competitive technologies where training is typically required and usage can be hazardous.  During oxygen generation in Model 615, there is less pressure, and no compressed tanks, regulator gauges, flames, electrical charge or other hazards typically associated with existing oxygen dispensing devices.  We believe that Model 615 allows a lay person, without training to administer medical oxygen in a medical emergency while waiting for first responders to arrive on the scene.

Alternative modalities for providing emergency oxygen include compressed tanks.  There are very large, well-funded companies who can provide emergency oxygen in compressed tanks, including companies such as Linde, Airgas ( NYSE : ARG), Air Products & Chemicals Inc. ( NYSE : APD), Air Liquide and Praxair.  Any or all of these companies could engage in a price war with us or aggressively pursue the consumer market.  If they did, such competitive actions could have a significant adverse impact on our business.

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Model 615 is indicated for emergency use, and compressed tanks can be utilized in certain instances for emergency use.  We believe that Model 615 is differentiated from compressed tanks for emergency use as follows:

·Model 615 requires minimal to no training to operate, as it is designed for lay person use.  Compressed tanks generally require training to be used.

·Model 615 is a safer option, as it does not represent an explosion hazard in fire situations.

·Model 615 does not require a prescription to be purchased, whereas compressed tanks may require a prescription if the regulator is not pre-set to a flow rate equal to 6 liters per minute or higher for a minimum of 15 minutes.

Market Research

In early 2002, we began some initial market research.  To date, this research has included hundreds of one-on-one interviews and discussions with executives of potential licensees, distribution partners and retail outlets, as well as medical professionals, thought leaders and industry professionals .  More than 90% of these individuals easily acknowledged the validity of the market opportunity and our value proposition.   Many other industry experts are extremely optimistic about the market reception of the Model 615.

We intend to continue our market research efforts, and additional primary research projects may be conducted as we move closer to retail sales.  We plan to employ an independent market research firm to better understand attitudes, awareness, and expectations about the product on both a qualitative and quantitative basis across the primary consumer US market segments.  Among issues to be addressed are:

§   Awareness of the role of oxygen in a medical emergency

§   Attitudes about availability of oxygen

§   Attitudes about the perceived benefits/liabilities/appeal of a portable on-demand oxygen product

§   Attitudes about perceived value, price and channel expectations

§   Perceptions regarding product appearance, labeling & persuasiveness

§   Purchasing intent

This updated direct market feedback on product, pricing and distribution; messaging and other relevant market issues will help guide final launch plans to at-risk markets and ongoing marketing strategy.  Meanwhile, a continuing market research effort will be part of our ongoing marketing program.

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Market Position

Since our inception, we have focused on the research, development and manufacture of the OxySure Model 615 portable oxygen system and other related oxygen technologies.  We believe that we have developed a level of expertise in the key technologies and the manufacturing requirements that will enable us to improve the quality of our products, reduce costs, and keep pace with current standards of the rapidly evolving consumer medical device industry.  We believe that we are able to bring to the market well-differentiated products that perform well against competitive offerings based on uniqueness , price, style, and brand recognition.  Our specific oxygen generation technology has broad application to consumer products and we believe it has allowed us and will continue to allow us to distinguish our products from those of our competitors.

Design and Production Capabilities

We employ a systematic approach to product design and production.  We have developed Standard Operating Procedures (SOPs) specific to our design and production processes, and we develop and track new concepts and ideas from a variety of sources, including direct customer feedback, trade shows, and industry conferences.

Experienced Management Team

We believe that our Board and management team has significant business and industry experience, including an understanding of changing market trends, consumer needs, technologies and our ability to capitalize on the opportunities resulting from these market changes.  Our founder, current Chairman, Chief Executive Officer, President and Chief Financial Officer, Julian T. Ross, who also controls our principal beneficial stockholder, has over 22 years of experience in business development, technology, operations, corporate finance and mergers and acquisitions, which has been a key factor in our development.  Other members of our management team also have significant experience with respect to key aspects of our operations, including research and development, product design, manufacturing, and sales and marketing.

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Distribution Channels

We currently have a number of distributors that distribute our products.  We plan to continue to expand our network of distributors and resellers allowing us to penetrate customer markets worldwide.  We also plan to expand our direct sales team in the United States in order to pursue large accounts in commercial, education, government, and retail markets and to pursue special situations.  We currently sell our products domestically in the United States and plan to continue those sales domestically as well as internationally through numerous channels, including independent specialty retailers, international and regional chains, mass merchants, and distributors.

Customer Service Expertise

We plan to work closely with our major customers in order to ensure high levels of customer satisfaction.  We plan to constantly evaluate and identify our strongest customers in each distribution channel and focus our sales efforts towards the largest and fastest growing distributors and resellers.  We expect to be an Original Equipment Manufacturer, or OEM, for certain customers in the future.  If we do acquire any OEM customers, we expect to provide a range of services, which may include the development of products from initial design through production to testing, distribution and after market support.

Brand Awareness

We currently only sell Model 615 under the OxySure name and we intend to promote our self-branded products, marketed under the brand-name OxySure, aggressively to become a recognized brand name in the United States, which we expect will assist us in growing our business over the course of the next few years.  We plan to develop and commercialize additional products targeted at various vertical markets under the OxySure brand name, and we believe that in time our consumer oxygen products will develop a solid reputation and an established a brand name in the U.S.

Intellectual Property

We rely on a combination of patent, trademark and trade secret protection and other unpatented proprietary information to protect our intellectual property rights and to maintain and enhance our competitiveness in the consumer medical industry.  As a matter of practice, we require assignment of intellectual property rights provisions in all our employment, consultant and subcontractor agreements.  We have legal ownership of six U.S. patents and one South African patent, in addition to numerous patent applications, that we use in our business operations.  These patents include design, utility, and invention patents that relate to our products.  In January 2004, we entered into an assignment and transfer agreement with Julian T. Ross, our current Chairman, Chief Executive Officer, President, and Chief Financial Officer and his affiliates for the transfer and assignment of the initial patent application to us, and for the transfer to us of any and all other initial intellectual property related to the prior research and development conducted by him in relation to our business.

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We also rely on unpatented technologies to protect the proprietary nature of our product and manufacturing processes.  We require that our management team and key employees enter into confidentiality agreements that require the employees to assign the rights to any inventions developed by them during the course of their employment with us.  All of the confidentiality agreements include non-competition and non-solicitation provisions that remain effective during the course of employment and for periods following termination of employment, which vary depending on position and location of the employee.

We have three registered trademarks in the United States.

(1) Registration Number 3346008 entitled “Oxysure Emergency Oxygen”

(2) Registration Number 3330496 entitled “Oxysure”

(3) Registration Number 3528998 entitled “Oxysure Pure Oxygen”

Our success will depend in part on our ability to obtain patents and preserve other intellectual property rights covering the design and operation of our products.  We intend to continue to seek patents on our inventions when we deem it commercially appropriate.  The process of seeking patent protection can be lengthy and expensive, and there can be no assurance that patents will be issued for currently pending or future applications or that our existing patents or any new patents issued will be of sufficient scope or strength or provide meaningful protection or any commercial advantage to us.  We may be subject to, or may initiate, litigation or patent office interference proceedings, which may require significant financial and management resources.  The failure to obtain necessary licenses or other rights or the advent of litigation arising out of any such intellectual property claims could have a material adverse effect on our operations.

We hold six U.S. patents comprising three utility patents and three design patents as follows:

(1) 7,407,632 entitled “Apparatus and delivery of medically pure oxygen”

(2) 7,381,377 entitled “Method for controlled production of a gas”

(3) 7,465,428 entitled “Method and apparatus for controlled production of a gas”

(4) D549,341 entitled “Breathing device utilizing a catalytic oxygen generation method”

(5) D549,342 entitled “Breathing device utilizing a catalytic oxygen generation method”

(6) D615,186 entitled “Chemical reaction activation plunger”

In addition, we hold one South African patent, number 2006/5051 entitled “Method and apparatus for generating oxygen. ”

U . S . patents numbered 1 through 3 are utility patents and are valid for 20 years from the date of each respective filing.  U . S . patents numbered 4 through 6 are design patents and are valid for 14 years from the grant date of each respective design patent.  The South African patent is valid for 20 years from the date of application, The U.S. utility patents cover methods and apparatuses associated with the production (from our chemical process), control, containment and delivery of oxygen (or a gas containing oxygen).  The U.S. design patents cover aspects of the design and features of our product, the Model 615.  The South African patent covers the process by which oxygen is generated.

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Strategy

Our goal is to become a global leader in the development and manufacture of consumer oxygen products.  We intend to achieve this goal by implementing the following strategies:

We plan to leverage our expertise in product design and development, our intellectual property platform, and develop our distribution network by continuing to develop and introduce new and enhanced products.  We plan to strengthen the performance of our technology to provide users with an easy-to-use products.  Our goal is to continue to enhance the functionality of our core features and making our products simpler to use.  We intend to invest additional resources in our research and development, applications and intellectual property to promote innovation and maintain customer preference for our products.

Build Partnerships with New and Existing Customers

We intend to strengthen relationships with our existing customers and our strategy is to establish partnerships with our current customers whereby we develop and manufacture new products based on their needs.

We also seek to leverage our technology to develop relationships and strategic alliances with third-party distributors, vendors, and manufacturers.  We believe OEMs of respiratory products and safety products, distributors and value-added resellers (“VARs”) can simplify the use and increase the safety of their products and services by integrating our products, resulting in broader market opportunities and significant competitive advantages.

Expand Global Presence

Though we have concentrated in the United States, we believe a strong and growing market for our products exists in countries outside of America, primarily to Europe, Asia, and South and North America.  We intend to further expand our international resources to better serve global customers and business associates and to leverage opportunities in markets such as Brazil, Canada, Europe, Australia, South Korea, India, and China.  We hope to add regional sales representatives and distributors in different geographic regions to better address demand for our products.

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Expand Sales Network and Distribution Channels

We intend to expand our sales network in America and develop relationships with a broader set of wholesalers, distributors and resellers, all in order to expand the market availability of our products in the United States.  We believe there exists vast opportunities to expand market presence.  We hope that these relationships will allow us to diversify our customer base and significantly increase the availability and exposure of our products.

Augment Marketing and Promotion Efforts to Increase Brand Awareness

We continue to devote our efforts towards brand development and utilize marketing concepts in an attempt to strengthen the marketability of our products.  We plan to carry out a brand development strategy based on product innovation, quality, and design excellence.  We have also participated and intend to continue to participate in various exhibitions and similar promotional events to promote our products and brand.

Supply of Raw Materials

We intend to procure materials to meet forecasted customer requirements.  Special products and large orders are quoted for delivery after receipt of orders at specific lead times.  We will maintain minimum levels of finished goods based on market demand in addition to inventories of raw materials, work in process, and sub-assemblies and components.  We reserve for inventory items determined to be either excess or obsolete.

At the current time, we have no material minimum purchase requirements with our raw material suppliers and we place orders with our suppliers on as needed basis.  Because we place orders on an as needed basis our pricing and availability of raw materials from all suppliers can be volatile, attributable to numerous factors beyond our control, including general economic conditions, currency exchange rates, industry cycles, production levels or a supplier’s limited supply.  To the extent that we experience cost increases we may seek to pass such cost increases on to our customers, but cannot provide any assurance that we will be able to do so successfully or that our business, results of operations and financial condition would not be adversely affected by increased volatility of the cost and availability of raw materials.

Our primary suppliers and the products they supply to us are listed below:

Name of Supplier	Products Supplied
AAA Aircare Systems	Air purification products
Activar Construction Products Group	Display systems
AMS Filling Systems, Inc.	Filling equipment
Avid Business Networks, Inc.	Voice & data products and services
Branson Ultrasonics Corporation	Ultrasonic welding equipment
Brenntag Southwest, Inc.	Chemical supplies
Colder Products	Fitments and connectors
D.B. Roberts Company	Hardware parts

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Displays2go	Display systems
Dymax Corporation	Adhesive systems and supplies
ETI Incorporated	Sealing parts
EXFO America Inc.	Production equipment and supplies
Filtertek Inc.	Filtration supplies
Fisher Scientific	Chemical and other supplies
GlobalMed Inc.	Tubing products
HeartSafe America	Safety equipment
Kaps-All Packaging Systems, Inc.	Filling equipment and supplies
Lee Spring	Springs
Marking Systems, Inc.	Product labels
McMaster-Carr	Hardware parts
Micro Plastics, Inc.	Clamps
Newcomb Spring of Texas	Springs
Packaging Technologies, Inc.	Sealing Equipment and supplies
Pfaltz & Bauer	Chemical supplies
Plastiform	Plastic Molds
Polo Custom Products	Carrying bags
Polymer Technology Corporation	Injection molded parts
Purest Colloids, Inc.	Water purification products
R.  S.  Hughes Company, Inc.	Sealing parts
Salter Labs	Tubing and respiratory supplies
Sealed Air Corporation	Insulation materials
Selig Sealing Products, Inc.	Sealing and separation equipment and materials
Smart Products, Inc.	Plastic Parts and valves
Spectrum Chemical Mfg.  Corp.	Chemical supplies
Stephen Gould Corporation	Packaging supplies
Texas Valve & Fitting Co.	Valves and fittings
TIP TEMPerature Products	Temperature labels
ULINE	Labels and packaging supplies
Unisource Worldwide Inc.	Shipping products and supplies

Presently, we believe our relationships with our suppliers are good and we expect that our suppliers will be able to meet the anticipated demand for our products in the future.  However, due to our dependence on a few suppliers for certain raw materials, we could experience delays in development and/or the ability to meet our customer demand for new products.  In addition, we have a number of longstanding business relationships with certain suppliers, and we believe that alternative suppliers are available.  Although we have not been subject to shortages for any of our components, we may be subject to cutbacks and price increases which we may not be able to pass on to our customers in the event that the demand for components generally exceeds the capacity of our suppliers.

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Production Operations

Our production operations involve the assembly of parts and components and the final assembly of all parts and sub-assemblies that comprise our products.  Many of the parts and components are manufactured by third party manufacturers.  Currently, our production operations are conducted Frisco, Texas, in a 16,200 square-foot facility, which houses a 10,000 square-foot production and warehousing area.  We use automated machinery to process key aspects of the production process to ensure high uniformity and precision, while leaving the other aspects of the production process to manual labor.  Some of the production is very labor intensive, thus, putting constraints and limitations in our production process.  The current constraints could be eliminated if we automate some or all of the production.  We intend to seek greater production capacity, production efficiencies and lower production costs in the future.  In doing so, we may elect to invest further in our production process, or we may elect to outsource some or all of our production processes as demand for our products grow.  If we invest further in our production processes, our goal would be to further streamline our production process and continue investing in our production infrastructure, which will allow us to further increase our production capacity, helping us to control the per unit cost of our products.  We do not currently have any material contracts with third party manufacturers or sub-contractors for the supply of parts, raw materials or components that require forecasting or minimum order quantities.

Quality Control

We consider quality control an important element of our business practices.  We have stringent quality control systems that are implemented by company-trained staff members to ensure quality control over each phase of the production process, from the purchase of raw materials through each step in the manufacturing process.  We utilize a scientific management system and precision inspection measurement, capable of ensuring our products are of high quality.

Our quality control process consists of the following functions:

· setting internal controls and regulations for semi-finished and finished products;

· testing samples of raw materials from suppliers;

· implementing sampling systems and sample files;

· maintaining quality of equipment and instruments; and

· articulating the responsibilities of quality control staff.

Research and Development

To enhance our product quality, reduce cost, and keep pace with technological advances and evolving market trends, we continue to engage in research and development.  We spent $43,472 and $278,633 on research and development in 2009 and 200 8 respectively.  Our research and development effort is focused on enhancing our technology by improving the performance of our current products and developing new products, in addition to developing related and alternative technologies.  We have made investments of capital and time to develop technology engines, intellectual property and industry expertise in technologies that we believe provide us with a competitive advantage in the markets where we compete.  Our technologies are based on complex formulas which require extensive amounts of data and expertise.  We continue to invest in technologies to maintain our market position and to develop new applications and products.

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We conduct substantially all of our research and development with an in-house staff, including research staff holding advanced degrees.  The duties of our core research function are to improve research and development management and market analysis, in addition to establishing and regulating the production projects.  All departments work together to research new material and techniques, test product performance, inspect products and to test performance of machines used in the manufacturing process.

In addition to the advancement of our current product, we believe that the future success of our business depends upon our ability to enhance our existing product, to develop compelling new products, to develop cost effective products, to qualify these products with our customers, to effectively introduce these products to existing and new markets on a timely basis, and to commence and sustain volume production to meet customer demands.  To avoid product obsolescence, we will continue to monitor technological changes, as well as users' demands for new technologies.  Failure to keep pace with future changes could adversely affect our revenues and operating results in the future.  Although we have attempted to determine the specific needs of the markets in which we participate, there can be no assurance that the markets will, in fact, materialize or that our existing and future products designed for these markets will gain market acceptance.

Warranties and Return Policy

We offer limited warranties for our products, comparable to those offered to consumers by our competitors.  Such warranties typically consist of a 30-day period for our oxygen product, under which we will pay for labor and parts, or offer a new or similar unit in exchange for a damaged unit.  Our customers may return products to us for a variety of reasons, such as damage to goods in transit, cosmetic imperfections and other issues, if within the warranty period.

Product Liability and Insurance

We do not currently carry any product liability insurance. Because of the nature of the products sold by us, we may be periodically subject to product liability claims resulting from personal injuries. We may become involved in various lawsuits incidental to our business. To date, we have not been subject to products liability litigation. While we intend to obtain product liability insurance in the foreseeable future, we may not be able to obtain it on reasonable terms or at all. Even if we do obtain it, it may not sufficiently shield us from any potential product liability claims, and we might not have sufficient funds available to pay any claims over the limits of our insurance. Accordingly, there can be no assurance that we will obtain or have sufficient product liability insurance and/or capital sufficient to cover any successful product liability claims made against us in the future, which could have a material adverse effect on our financial condition and results of operations.

Competition

We face competition from many other manufacturers, most of which have significantly greater name recognition and financial, technical, manufacturing, personnel, marketing, and other resources than we have.  The market in which we compete is subject to rapid technology changes, highly fragmented, and cyclical.

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We compete primarily on the basis of quality, price, design, reliability, and quality service and support to our customers.  We believe that our standard products are comparable in quality and performance with competitors in our market category.  Many of our competitors have a stronger competitive position than we do in that they have greater brand recognition and longer-standing customer relationships.

Environmental Regulations

We are subject to various federal, state and local environmental laws and regulations, including those governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process.  We believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations.  Although we believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations, it is possible that future environmental legislation may be enacted or current environmental legislation may be interpreted to create environmental liability with respect to our other facilities, operations, or products.

We constructed our manufacturing facilities with the environmental laws and requirements in mind.  If we fail to comply with the provisions of the environmental laws under which we are governed, we could be subject to fines, criminal charges or other sanctions by regulators, including the suspension or termination of our manufacturing operations.

Employees

As of the date hereof, we had eight full-time employees, including five employees in production and three employees in management , sales and marketing.  All of our employees are based in the United States.  Our employees are not represented by any labor union and are not organized under a collective bargaining agreement, and we have never experienced a work stoppage due to union activity.

Properties

We do not own any property at the present time and have no agreements to acquire any property.  Our executive offices are located at 10880 John W. Elliot Drive, Suite 600, Frisco Texas, 75034.  The space is approximately 16,200 square feet, and comprises approximately 6,200 square feet of office space and approximately 10,000 square feet of production and warehousing space.  This space is new and was purpose built for our production needs.  We feel that this space is adequate for our needs at this time, and we feel that we will be able to locate additional space in the future, if needed, on commercially reasonable terms.

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Legal Proceedings

We are not involved in any legal proceedings and we do not know of any legal proceedings, which are threatened or contemplated against us.

IMPACT Award Finalist

TECH Fort Worth recently announced that we have been named as a finalist in the health category for TECH Fort Worth’s second annual IMPACT awards.  The Fort Worth, Texas Business and Technology Incubator’s IMPACT Awards recognize new companies that will have a significant impact on the environment, community or health by bringing new technologies to market.  We were selected for the IMPACT awards because of our unique platform technology for creating medically pure oxygen on demand from two dry, inert powders, which eliminates the need for traditional tanks, storage, maintenance, testing and training.

Tech Titans Innovators Award

Dallas Business Journal recently announced that we have been named as a finalist in the “Eighth Annual Tech Titans.”  As a Finalist in the Innovator Award category, we are being recognized for our pioneering accomplishments in creating our revolutionary “oxygen from powder” emergency oxygen technology.

World’s Best Technologies Awards

We were named to 2008 World’s Best Technologies list for our unique, safe and easy to use portable emergency oxygen system, which provides medical oxygen without the need for compressed tanks.  The selection builds on our rapidly growing list of awards and recognitions.

OxySure® Launches in Turkey

We launched our products in Istanbul, Turkey during the first quarter of 2010.  We participated in the Health Management 2010 show and exhibition and the International Boat Show held in Istanbul, Turkey to bring about consumer awareness of our products in those markets.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Executive Officers and Directors

Our executive officers and directors are as follows:

Name	Age	Title
Julian T.  Ross	43	Director (Chairman), CEO, President, CFO
Donald Reed	75	Director
Vicki Jones	48	Director

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Julian T. Ross, Chairman, CEO, President & CFO

Mr. Ross is the primary developer of the OxySure® technology.  Mr. Ross founded our company and has been our Chief Executive Officer, President, and Chief Financial Officer since it was incorporated in 2004.  He brings over 22 years experience in technology, finance and manufacturing, having functioned both in consulting and operational capacities at senior management level.  He has worked for and with start-ups and established organizations, including Anglo American Corporation, Volt Information Sciences, Tandy Corporation, Merrill Lynch, Ernst & Young, Sun International and Isle of Capri, Inc.  Mr. Ross enjoyed an Academic Scholarship from Shell Petroleum (Engineering and Mathematics) and an Academic Scholarship from the Edwin L. Cox School of Business at Southern Methodist University, where he received an MBA in Finance.

Donald Reed, Director

Mr. Reed has been one of our Directors since June 2006.  Mr. Reed has been the President of Agave Resources, LLC since January 2005.   Mr. Reed was the CEO and Chairman of Geotrace Technologies, Inc. from August 1979 through December 2003.   Geotrace was founded by Mr. Reed under the name Geo-Trace Enterprises in 1979, and he was active in its growth and expansion until the company was sold in 2003.  Mr. Reed spent the 17 years prior to founding Geotrace Technologies with Amoco Production Company in various management, technical and exploration positions.   Mr. Reed has over 40 years of experience in business development, operations, mergers & acquisitions and general management.  Mr. Reed served in the U.S. Infantry as an Intelligence Specialist, and holds a B.A. (Math) and a B.S. (Geology) from the University of Texas.

Vicki Jones, Director

Ms. Jones has been one of our Directors since November 2008.  Ms. Jones has been  a Senior Vice President for AT&T since June 2005.   Ms. Jones has more than 28 years experience in the telecommunications and data networking industry, with expertise in profit and loss management, sales and sales management, installation, and customer service.  Ms. Jones brings to OxySure experience in product management, product development, process re-design, strategy and business development, channel management, and international business. 

Our directors hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified, or until his prior resignation or removal.  Our executive officers are appointed by the Board of Directors and hold office until resignation or removal by the Board of Directors.

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Executive Compensation

The following table sets forth information concerning the compensation for the two fiscal years ended December 31, 2009 and 200 8 of our executive officers.

Summary Compensation Table
Name and principal positn	Year	Salary ($)			Bonus ($)		Option Awards ($)			Total ($)
Julian T. Ross, CEO, President, and CFO	2009	$	180,000		$	0	$	142,497		$	322,497
	2008	$	180,000	8	$	0	$	0		$	180,000
Scott T. Freeman, Vice President of Operations2	2009	$	19,640		$	0	$	13,376		$	33,017
	2008	$	110,000	9,10	$	0	$	11,611	11	$	121,611

___________________

8. Mr. Ross’s initial employment agreement dated January 15, 2004 (“Initial Employment Agreement”) provided for him to be compensated $15,000 and 15,000 options convertible at $0.25 per month for a period of five years in exchange for Mr. Ross’s services.  In August 2008, Mr. Ross agreed with the Company to temporarily modify the Initial Employment Agreement.  This modification (the “Exchange Modification”) provided that Mr. Ross exchange each of his monthly salary payments of $15,000 per month for an increase in amount outstanding of the Senior Note of $15,000.  In addition, the Company is to issue JTR 7,000 warrants exercisable at $0.01 for each monthly salary amount of $15,000 exchanged.  We entered into a second employment agreement (the “Second Employment Agreement”) with Mr. Ross dated January 15, 2009, which provided that he shall be compensated $15,000 and 15,000 options convertible at $0.25 per month for a period of one year in exchange for Mr. Ross’s services, also with the Exchange Modification.  During the entire period of the Second Employment Agreement, Mr. Ross agreed to the Exchange Modification.  On June 30, 2010, the Second Employment Agreement was extended until January 15, 2012 (the “Second Employment Agreement Extension”) on the same terms.  As of the date of this Prospectus Mr. Ross has agreed to the Exchange Modification since the start of the Second Employment Agreement Extension on January 15, 2010.  See “Employment Agreement with Named Officers” below for further disclosure of Mr. Ross’s employment agreement.

9. Scott T. Freeman’s employment was terminated on October 1, 2009.

10. Mr. Freeman’s employment agreement dated January 15, 2009 provides that for the period commencing January 15, 2009 through July 15, 2009: (a) The monthly base salary shall be $3,000 per month subject to $9,000 in monthly sales margin contribution, (b) OxySure shall pay Freeman's medical insurance benefits; (c) OxySure shall issue Freeman stock options totaling 6,167 options per month, and the stock options shall have an exercise price of $0.82 per share. (d) OxySure shall pay Freeman commissions on product sales, generated by him in accordance with the following: (1) On the first $9,000 of monthly margin contribution, commission is 0%;(2)  The monthly margin contribution requirement is cumulative, starting on January 15,2009. For every dollar above $9,000 of monthly margin contribution, the commission rate is 50% of the margin contribution; (3)  If a sales transaction is shared with the Company or another sales person, then the commission rate after first $9,000 in monthly margin contribution is 25% of the margin contribution. Payment of commissions is based on funds received;  (4)  In the case of sales produced by distributors introduced and managed by Mr. Freeman, only the first four months of sales produced by the distributor is subject to Mr. Freeman’s commission schedule.  Reflects options to purchase 18,334 shares of Common Stock at an exercise price of $0.50 per share, which were granted on October 15, 2008 and expire October 15, 2013.  The value of options for 2009 is net of forfeitures.

The following table sets out equity awards for executive officers as of March 31, 2010.   We have not issued any additional stock awards as of the date of this disclosure.

11. Reflects options to purchase 53,450 shares of Common Stock at an exercise price of $0.82 per share, which were granted on March 7, 2007 and expire March 7, 2012.

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Outstanding Equity Awards as of March 31, 2010
Name	Number of securities underlying unexercised options (#)exercisable		Number of securities underlying unexercised options (#) unexercisable		Option Exercise Price ($)			Option Expiration Date
Julian T. Ross		828,962		0	$	0.25	(1)	1/15/2014
		180,000		0	$	0.25	(1)	1/15/2019
		30,000		150,000	$	0.25	(1)	1/15/2020
Scott T. Freeman13		51,450		0	$	0.79	(2)	9/6/2012
		9,000		0	$	0.82	(3)	12/1/10
		11,900		0	$	0.82	(3)	9/6/2011
		90,000		60,000	$	0.82	(4)	9/6/2010
		18,334		-	$	0.50	(3)	10/15/2013

(1).   Vests and becomes exercisable as to (i) 15,000 options per month with the first vesting date being February 15, 200 4 .  As at March 31, 2010 , 15 0 ,000 options were not vested and un exercisable.  As of March 31, 2010,, 71,038 options had been exercised.

(2).   Fully vested and exercisable.  As at December 31, 2009 , 2000 options had been exercised.

(3).   Fully vested and exercisable.

(4).   Vests and becomes exercisable as to (i) 30,000 options on September 1, 2007; (ii) 30,000 options on September 1, 2008; (iii) 30,000 options on September 1, 2009; and (iv) 30,000 options on September 1, 2010.   60,000 Options were forfeited upon termination on July 12, 2009.

Director Compensation

Directors are generally compensated with 1,000 stock options per meeting attended, with exercise prices equal to the prevailing market value of the stock at the time of issuance.  The following table reports all director compensation as of March 31, 2010.

_________________

13. Terminated on July 12, 2009.

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Director Compensation
Name	Fees earned or paid in cash ($)		Stock awards ($)		Option awards ($) 14			All other compensation ($)		Total ($)
Julian Ross		0		0		0	15		0		0
Don Reed		0		0	$	2,610	16		0	$	2,610
Vicki Jones		0		0	$	301	17		0	$	301

Employment Agreements with Named Officers

Julian T. Ross, Chief Executive Officer, President, and Chief Financial Officer

We entered into an initial employment agreement with Mr. Ross for five years, commencing on January 15, 2004 and ending on January 15, 2009 (the “Initial Employment Agreement”).  This agreement was renewed for one year, commencing on January 15, 2009 and ending on January 15, 2010 (the “Second Employment Agreement”).  The Second Employment Agreement provides for an annual salary equivalent of $180,000.   On June 30, 2010, the Second Employment Agreement was extended for two years, commencing on January 15, 2010 and ending on January 15, 2012.   In August 2008, Mr. Ross agreed to temporarily modify the Initial Employment Agreement.  This modification (the “Exchange Modification”) provided that Mr. Ross exchange each of his monthly salary payments of $15,000 per month for an increase in the amount outstanding of the Senior Note of $15,000.  In addition, we will issue Mr. Ross 7,000 penny warrants for each monthly salary amount of $15,000 exchanged.  In January 2009, Mr. Ross agreed to the Exchange Modification to be applied to his renewed employment agreement dated January 15, 2009 – the Second Employment Agreement.  As of June 22, 2009, there was a total of $446,900 outstanding under the Senior Note, and a total of 212,176 warrants issued to Mr. Ross pursuant to the terms of the Senior Note and the Exchange Modification.  Of the amount outstanding, $142,500 was related to the Exchange Modification.  Of the warrants issued, 66,500 were related to the Exchange Modification.

___________________________

14. The value of option awards granted to directors has been estimated pursuant to SFAS No. 123(R) for the options described in the footnotes below, except that for purposes of this table, we have assumed that none of the options will be forfeited.  The directors will not realize the estimated value of these awards in cash until these awards are vested and exercised or sold.  For information regarding our valuation of option awards, see “Stock-Based Compensation” in Note 1 of our financial statements for the period ended December 31, 2009.

15.  Does not include options earned as an employee.  Mr. Ross does not receive any compensation for serving on the Board of Directors.

16. In December 2008, we issued Mr. Reed 5,000 options to purchase shares of our common stock at an exercise price of $2.00 per share in connection with his services as a director during 2008.  These options expire on December 31, 2013.  In December 2006, we issued Mr. Reed 2,000 options to purchase shares of our common stock at an exercise price of $0.82 per share in connection with his services as a director during 2006.  These options expire on December 31, 2011.

17. In April 2009, we issued Ms. Jones 1,000 shares of our common stock at an exercise price of $1.00 per share in connection with her services as a director during 2009.  These options expire on April 1, 2014.

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The Second Employment Agreement provides that we will pay a sales bonus (the “Sales Bonus”) to Mr. Ross at the end of the one year Term if we achieve the following Target Net Revenues (“TNR”) during the 2009 fiscal year (or any subsequent year, if applicable):

 ·    If TNR are less than $1.0 million, no Sales Bonus is payable;

 ·    If TNR are equal to or greater than $1 million, the Sales Bonus is $50,000;

 ·    If TNR are between $1.0 million and $2.0 million, the Sales Bonus is $75,000;

 ·    If TNR are between $2.0 million and $3.0 million, the Sales Bonus is $100,000; or

 ·    If TNR are greater than $3.0 million, the Sales Bonus is $125,000 plus 1% of TNR in excess of $3.0 million.

The Second Employment Agreement also provides that we will pay a stock performance bonus (the “Stock Performance Bonus”) of $100,000 to Mr. Ross, which shall be paid in shares of common stock  or in cash, at Mr. Ross’ sole discretion, if our stock price maintains a 6-month average during any period in the Term of $1.50 or higher.

If Mr. Ross’s employment is terminated by us for cause, subject to the procedures set forth in his employment agreement, then Mr. Ross shall be entitled to receive his accrued benefits as of the termination date.  He shall not be entitled to the receipt of any termination payment.  If we terminate Mr. Ross for any reason other than cause, then he is entitled to a termination payment equal to 12 months’ base salary.  If Mr. Ross is terminated by an acquirer for anything other than cause in a change of control event, he shall receive a severance equal to three times his 12 months’ base salary.  For the purposes of Mr. Ross’s employment agreement, a public offering of our securities or any dilution to our shareholders resulting from a public offering does not constitute a change of control event.

Mr. Ross is currently acting as our Chief Financial Officer on an interim basis at no additional compensation.  We plan to hire a Chief Financial Officer when we can afford to do so and anticipate paying a salary of approximately $160,000 per year and provide benefits to the Chief Financial Officer.

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Stock Options

2004 Stock Option Plan.  We maintain a 2004 Stock Option Plan (the “2004 Plan”) under which our directors, officers, advisory board, other employees and other key individuals may be granted stock options.  Stock option awards to officers and employees under the 2004 Plan generally vest ratably over five years based on continuous service.  Stock option awards are generally granted with an exercise price equal to the fair value of our common stock at the date of grant and expire no later than ten years from the date of grant.  The maximum number of number of Shares to be issued pursuant to the exercise of all Options granted under the Plan is 5,000,000, as revised from the 3,000,000 originally provided for by the plan.  As of the date hereof, there were 2, 6 78,006 shares available for future grant under the 2004 Plan.

Long-Term Incentive Plans.  We do not provide our officers or employees with pension, stock appreciation rights, long-term incentive or other plans although we may adopt one or more of such plans in the future.

Employee Pension, Profit Sharing or other Retirement Plans.  We have used ADP Totalsource (“ADP”), a Professional Employer Organization (PEO) to administer our payroll and benefits and to provide certain other related human resource functions.  Through ADP we provide access to a voluntary 401(k) plan, but we do not provide any matching contributions at this time, although we may modify our company policy in this regard in the future.

We require employment agreements with our officers.  Our employment agreements generally provide for assignment of intellectual property rights.  We do not maintain any key man insurance on the life or in the event of disability of any of our officers.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the date hereof concerning beneficial ownership of our common stock by (i) each director, (ii) each executive officer, (iii) our directors and officers as a group, and (iv) each person known by us to own beneficially more than 5% of our common stock.  All percentages are based on 15,724,816 shares of common stock outstanding as of the date hereof.

Name and address of beneficial owner18	Amount and nature of beneficial ownership19			Percentage of class
Julian T. Ross, Chairman, CEO, President, CFO		14,727,945	20		85.37	%
Donald Reed, Director		2,417,000	21		13.97	%
Vicki Jones, Director		201,000	22		1.26	%
All Officers & Directors as a group (3 people)		17,345,945			91.23	%

JTR Investments, Limited23 5100 Eldorado Parkway Suite 102-801 McKinney, TX  75070	13,202,483	24	81.86	%
Agave Resources, LLC25 2215 S. Loop 288, Suite 418 Denton, TX  76205	2,290,000	26	13.24	%

18.   C/o our address, 10880 John W. Elliott Drive, Suite 600, Frisco, Texas  75034, unless otherwise noted.

19 .  Except as otherwise indicated, we believe that the beneficial owners of common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.  Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person.

20.   Includes 400,000 shares of common stock held by The Ross Family Trust u/t/a dated December 1999; 12,800,000 shares of common stock held by JTR Investments, Limited; 402,483 shares of common stock issuable upon exercise of warrants issued to JTR Investments, Limited expiring on dates ranging from 12/31/2013 through 3/31/2015; 1,038, 962 shares of common stock issuable upon exercise of stock options expiring on dates ranging from 1/15/2014 through 1/15/2020; 71, 500 shares of common stock upon exercise of stock options expiring on dates ranging from 3/1/2014 through 3/1/2019; 8,000 shares of common stock held by Pearl Ross; and 7,000 shares of common stock issuable upon exercise of warrants held by Pearl Ross, Mr. Ross’s spouse.

21.   Includes 120,000 shares of common stock owned by Donald Reed’s spouse, Nancy Reed; 720,000 shares of common stock held by Agave Resources, LLC; 1,220,000 shares of common stock convertible from 1,000,000 shares of preferred stock held by Agave Resources, LLC; 7,000 shares of common stock issuable upon exercise of stock options expiring on dates ranging from 12/31/2011 through 12/31/2013; and 350,000 shares of common stock issuable upon exercise of warrants issued to Agave Resources, LLC expiring April 15, 2013.

22.  Includes 1,000 shares of common stock issuable upon exercise of stock options expiring 4/1/2014; 17,000 shares of common stock, and 183,000 shares of common stock convertible from 150,000 shares of preferred stock, owned by Vicki Jones's spouse, Tim Hutton .

23.   Our Chairman, President, CEO, and CFO, Julian T. Ross, has sole voting power and control over JTR Investments, Limited.

24.   Includes 402,483 shares of common stock issuable upon exercise of warrants expiring on dates ranging from 12/31/2013 through 3/31/2015.

25.   Agave Resources, LLC is controlled by our Director, Don Reed; Tom Reed; John Reed; Maridon Reed; and a member of our Board of Advisors, Craig Turner, all of whom share voting and investment rights.

26 .  Includes 1,220,000 shares of common stock convertible from 1,000,000 shares of preferred stock; and 350,000 shares of common stock issuable upon exercise of warrants expiring on April 15, 2013 .

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Advisory Board

From time to time, our management meets with members of our Board of Advisors which has expertise in medicine, emergency medicine, clinical affairs, medical research and education, technology, respiratory therapy, and general business and finance.  Advisory Board members generally earn 750 stock options for every quarter served on the Advisory Board.  Our advisory board consists of: (1) Dr. R. Dean White; (2) Dr. Thomas Franklin; (3) Dr. Vincent Mossesso; (4) Mikael Ahlund; (5) Craig Turner; (6) Dr.  Jonathan Burke; (7) George Brody; and (8) Dr. James R. Winn.

Family Relationships

There are no family relationships among any of the officers and directors.

Indemnifications of Directors and Executive Officers and Limitations of Liability

Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act.  Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders.  This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law.  In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law.  The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

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Our bylaws provide for the indemnification of our directors to the fullest extent permitted by the Delaware General Corporation Law.  Our bylaws further provide that our Board of Directors has discretion to indemnify our officers and other employees.  We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the bylaws or otherwise.  We are not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably and promptly made by our Board of Directors by a majority vote of a quorum of disinterested Board members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to us or our stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable sections of our bylaws.

We have been advised that in the opinion of the SEC, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.  In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection.  As of the date of the Share Exchange, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future.  Such indemnification agreements may require us, among other things, to:

· indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;

· advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or

· obtain directors’ and officers’ insurance.

At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

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DESCRIPTION OF SECURITIES

The following description of our capital stock discloses all material information relating to our common stock but is not a full summary of all information relating to our common stock.  The description is subject to and qualified in its entirety by our Articles of Incorporation and Bylaws, which are included as exhibits to the Registration Statement of which this Prospectus forms a part.

Common Stock

We are authorized to issue 100,000,000 shares of common stock, $0.0004 par value per share, of which 15,724,816 shares are issued and outstanding as of the date of this Prospectus.   Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders.

Holders of our common stock:

(i)  have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors;

(ii)  are entitled to share ratably in all of our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up;

(iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and

(iv)  are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders.

The holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of outstanding shares voting for the election of directors can elect all of our directors if they so choose and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

Our directors, executive officers and principal stockholders together beneficially own a majority of our outstanding shares of common stock.  Accordingly, after completion of the Direct Public Offering, these stockholders can control all of our affairs.

Preferred Stock

We may issue up to 25,000,000 shares of our preferred stock, par value $0.0005 per share, from time to time in one or more series.  As of the date of this Prospectus there are 3,126,434shares (net of prior conversions) of Series A Convertible Preferred stock held by 5 3 shareholders of record.  The number of shares of Common Stock into which each share of Series A Convertible Preferred will convert will be determined by dividing the original issue price by $0.82 resulting in each share of the Series A Convertible Preferred becoming 1.22 shares of common stock.

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Our Board of Directors, without further approval of our stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series.  Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock and prior series of preferred stock then outstanding.

Warrants and Options

As of the date of this Prospectus, we had an aggregate of 2,321,994 options and 1,897,317 warrants to purchase shares of our common stock outstanding with exercise prices ranging from $0.01 to $2.50 per share.

Market Price of Our Common Stock

There is no market for our securities.  We intend to seek quotation of our common stock by a market maker on the an OTC electronic quotation system subsequent to the date of this Prospectus.   If our common stock is accepted for quotation on the OTCBB or another electronic quotation medium or stock exchange, the price of our common stock will fluctuate.  The stock market in general has experienced extreme stock price fluctuations in the past few years.  In some cases, these fluctuations have been unrelated to the operating performance of the affected companies.  Many companies have experienced dramatic volatility in the market prices of their common stock.  We believe that a number of factors, both within and outside our control, could cause the price of our common stock to fluctuate substantially, when and if our common stock is approved for trading.  Factors such as the following could have a significant adverse impact on the market price of our common stock:

 ·    Our financial position and results of operations;

 ·    Concern as to, or other evidence of, the reliability and safety of our products and services or our competitors’ products and services;

 ·    Our ability to obtain additional financing and, if available, the terms and conditions of the financing;

 ·    Announcements of innovations or new products or services by us or our competitors;

 ·    Federal and state regulatory actions and the impact of such requirements on our business;

 ·    The development of litigation against us;

 ·    Changes in estimates of our performance by any securities analysts;

 ·    The issuance of new equity securities pursuant to a future offering or acquisition;

 ·    Changes in interest rates;

 ·    Competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

 ·    Period-to-period fluctuations in our operating results;

 ·    Investor perceptions of us; and

 ·    General economic and other national conditions.

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Delaware Anti-Takeover Law and Charter Bylaws Provisions

We are subject to Section 203 of the Delaware General Corporation Law.  This provision generally prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:

 ·    upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 ·    prior to such date, the Board of Directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; or

 ·    on or subsequent to such date, the business combination is approved by the Board of Directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

 Section 203 defines a business combination to include:

 ·    any merger or consolidation involving the corporation and the interested stockholder;

 ·    any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

 ·    subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

 ·    any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

 ·    the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation at any time within three years prior to the time of determination of interested stockholder status; and any entity or person affiliated with or controlling or controlled by such entity or person.

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Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control of our company, including changes a stockholder might consider favorable.  In particular, our certificate of incorporation and bylaws, as applicable, among other things, will:

 ·    provide our board of directors with the ability to alter our bylaws without stockholder approval;

 ·    provide for an advance notice procedure with regard to the nomination of candidates for election as directors and with regard to business to be brought before a meeting of stockholders; and

 ·    provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.

Such provisions may have the effect of discouraging a third-party from acquiring us, even if doing so would be beneficial to our stockholders.  These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control of our company.  These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights.  We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts.  These provisions also may have the effect of preventing changes in our management.

All shares offered by the Selling Security Holder s are validly issued fully paid and non-assessable shares of our capital stock.

We have advised the Selling Security Holders that they and any securities broker/dealers or others who may be deemed to be statutory underwriters will be subject to the Prospectus delivery requirements under the Securities Act.  We also advised each Selling Security Holder that in the event of a “distribution” of the shares owned by the Selling Security Holder , such Selling Security Holder, any “affiliated purchasers”, and any broker/dealer or other person who participates in the distribution may be subject to Rule 102 of Regulation M under the Exchange Act until their participation in that distribution is complete.  Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class, as is the subject of the distribution.  A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transaction by the magnitude of the offering and the presence of special selling efforts and selling methods”.  We also advised the Selling Security Holders that Rule 101 of Regulation M under the Exchange Act prohibits any “stabilizing bid” or “stabilizing purchase” for purpose of pegging, fixing or stabilizing the price of the common stock in connection with this Offering.

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No Selling Security Holde r has, or had, any material relationship with us or our officers or directors.  To our knowledge, no Selling Security Holder is affiliated with a broker/dealer.

Transfer Agent

The transfer agent and registrar for our common stock is Action Stock Transfer Corp., 7069 S. Highland Dr., Suite 300, Salt Lake City, UT  8412 1 , telephone number (801) 274-1088.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this Prospectus as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to be connected with us as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

Sam Kan & Company, LLC has reviewed our Financial Statements for the quarter ended March 31, 2010 , and has audited our Financial Statements for the years ended  December 31, 2009 and December 31, 2008 and to the extent set forth in its report s , which are included herein in reliance upon the authority of said person as an expert in accounting and auditing.

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DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES

We have adopted provisions on our bylaws that eliminate to the fullest extent permissible under Delaware Statutes, the liability of our directors to us for monetary damages.  Such limitations of liability do not affect the availability of your equitable such as injunctive relief or rescission.

Our bylaws provide that the company shall indemnify our directors and officers to the fullest extent permitted by Delaware law including circumstances in which indemnification is otherwise discretionary under Delaware law.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the forgoing provisions or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy and is, therefore, unenforceable.

There is no currently pending litigation or proceeding involving a director, officer, employee or other agent of the company in which indemnification would be required or permitted.  We are not aware of any threatened litigation or proceeding, which may result in a claim for such indemnification.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions

During March 2008, we completed a $1 million financing package consisting of a promissory note for $750,000 (“First Note”) and a promissory note with a draw down provision for $250,000 (“Second Note”) (collectively, the “Notes”).  The Notes are subordinated notes and are due and payable on the earlier of (i) completion of our next financing round or (ii) one year after the Notes are issued.  The holder of the First Note is Agave Resources, LLC (“Agave”), and the President of Agave is Donald Reed, one of our Directors.  In connection with the First Note, on April 15, 2008, Agave was also issued warrants to purchase 350,000 shares of common stock at an exercise price of $0.01 per share.  The warrants are immediately exercisable and expire on April 15, 2013.  The holder of the Second Note is JTR Investments, Limited (“JTR”) a company controlled by Julian T. Ross, our Chairman, Chief Executive Officer, President, and Chief Financial Officer.  To date, $250,000 has been drawn against the Second Note.  In connection with the Second Note, on December 31, 2008 JTR was issued warrants to purchase 116,667 shares of common stock at an exercise price of $0.01 per share.  There is no interest payable on either the First Note or the Second Note.  The basis for issuing warrants at an exercise price of $0.01 per share in connection with the First Note and the Second Note include, but are not limited to, the fact that no interest is payable on the notes, our ability (or inability, as the case may be) to attract new investment at the time, market conditions and other factors.  Given these factors, the Board of Directors has deemed the terms of these transactions to be fair.  No third party fairness opinion was obtained in relation to these transactions.

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In July 2008, JTR agreed to provide us with additional working capital to fund continuing operations (the “Senior Note Interim Funding”).  On November 1, 2008, we agreed with JTR on the terms of a loan with a draw down provision of up to $750,000.  This is a Senior Note (the “Senior Note”) with no interest payable.  All amounts advanced by JTR during the Senior Note Interim Funding are draw downs on the Senior Note.  In connection with the Senior Note, we will issue 0.47 warrants at an exercise price of $0.01 per share for every dollar drawn under this facility.  As of March 31, 2010, the outstanding balance under the Senior Note was $583,300 and the number of warrants issued to JTR pursuant to the Senior Note was 285,817.  As of March 31, 2010, the total balance owed to JTR on both the Second Note and the Senior Note was $833,300, and the number of warrants issued to JTR pursuant to the Second Note and the Senior Note was 402,484.  The basis for issuing warrants at an exercise price of $0.01 per share in connection with the Senior Note include, but are not limited to, the fact that no interest is payable on the note, our ability (or inability, as the case may be) to attract new investment at the time, market conditions, the terms previously agreed to in connection with the First Note and Second Note, and other factors.  Given these factors, the Board of Directors has deemed the terms of this transaction to be fair.  No fairness opinion was obtained in relation to this transaction.

The total amount of related party loans outstanding as of March 31, 2010 was $1,618,050.

All warrants issued to date in connection with the related party financings are immediately exercisable.

Subsequent Events– In March 2009 the First Note and the Second Note were modified by extending the maturity date in each case to April 15, 2010. On December 31, 2009, the First Note and the Second Note were further modified by extending the maturity date in each case to April 15, 2011.

A summary of the related party financings as at March 31, 2010 is as follows:

	First Note	Second Note	Senior Note	Other
Holder	Agave Resources, LLC	JTR Investments, Limited	JTR Investments, Limited	Related Party
Amount	$750,000	$250,000	$583,300	$34,750
Interest rate	0%	0%	0%	0%
Maturity	April 15, 2011	April 15, 2011	$160,450<12 Months $422,850>12 Months	<12 Months

89

On March 26, 2010, we entered into a license agreement with Afritex Medical Products (Pty) Ltd, a South African company (“Afritex”).  This license agreement (the “Afritex License Agreement”) conveys to Afritex the right to develop derivative products (“Afritex Derivative Products”) using our intellectual property and know-how.  Pursuant to the Afritex License Agreement, we also simultaneously entered into a distribution agreement for Afritex to distribute our existing products (“Afritex Distribution Agreement”).  The Afritex License Agreement provides for Afritex to pay us a non-recurring, up-front license fee of $225,000, plus a royalty of 8% on all Afritex Derivative Products sold, if any.  The Afritex Distribution Agreement provides for Afrirex to purchase in initial order for $145,000 in existing products, and an annual volume commitment of $480,000 in existing products.  Further, we issued Afritex a note and warrants in connection with the transaction.  The following summarizes the terms of the agreements:

1.   Afritex agreed to pay us a non-recurring, upfront license fee in the amount of $225,000;

2.   Afritex agreed to pay us a royalty of 8% on all Afritex Derivative Products sold;

3.   Afritex agreed to make an initial purchase of $145,000 in existing products;

4.   Afritex agreed to purchasing an annual minimum of $480,000 in existing products;

5.   We granted Afritex exclusive distribution rights for the following countries: South Africa, Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, and Zimbabwe;

6.   We issued Afritex a convertible note in the amount of $270,000. The note is convertible into our common stock at a conversion rate of $1.00 per share, carries a 16% annual interest rate, and has a maturity of 270 days subsequent to issuance. The note is convertible into the common stock of us at any time on or before maturity, at our option; and

7.   We issued Afritex a warrant to purchase 270,000 shares of our common stock at an exercise price of $2.50 per share. The warrant is exercisable in whole or in part at any time on or before March 26, 2015.  The fair value of these warrants was estimated to be $70,267 using a minimum value option pricing model with a volatility of 55.17% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.50%. The fair value of the warrants was recorded as a license expense during the quarter ended March 31, 2010.

Julian T. Ross, our Chairman, Chief Executive Officer, President, and Chief Financial Officer is also a shareholder and director of Afritex.

April 2009 Investor Relations Agreement

In April 2009, we entered into a consulting agreement with IR Services, Inc. (“IRSVS”), which agreement was further amended on June 22, 2009 (the “IRSVS Agreement”).  In accordance with the agreement, as amended, IRSVS provided us with or otherwise retained the appropriate professionals to provide us with business services, investor relations services, and other services related to our direct public Offering.

In connection with the IRSVS agreement, we paid IRSVS $50,000 and issued IRSVS 125,000 shares of common stock.  IRSVS is a third-party investor relations firm that does not have any other relationship or common ownership with us or any of our affiliates.  IRSVS is a promoter of us and is considered an “underwriter” within the meaning of the Securities Act of 1933 (the “Securities Act”).  On December 15, 2009, we entered into a Cancellation Agreement and Mutual Release with IRSVS, which terminated our relationship with IRSVS effective December 15, 2009, effectively cancelling 843,418 warrants.

90

Assignment and Transfer of Intellectual Property Rights

On January 15, 2004, we executed an Asset Purchase and Stock Transfer Agreement with entities controlled by Julian T. Ross, our current Chairman, Chief Executive Officer, President, and Chief Financial Officer.  In connection with this agreement, we acquired certain assets, including certain rights, title and interest to intellectual property, relating to the oxygen method and apparatus, developed by Mr. Ross.  Subsequent to January 15, 2004, we adopted a policy requiring that substantially all employment agreements (including that of Mr. Ross), subcontractor agreements and other appropriate agreements contain a provision assigning to us all applicable intellectual property rights developed during the performance of such agreements.

Private Placements

September 2008 Private Placement

In September 2008, we commenced a private placement of common stock pursuant to which we sold an aggregate of 335 ,500 shares of common stock to 14 accredited investors, under Rule 506 of Regulation D of the Act, at an aggregate purchase price of $1.00 per share, for gross proceeds of $ 335, 500.  This private placement ended in April 2009.  No officers, directors, or affiliates purchased securities in this private placement.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is not quoted on any stock exchange or over-the counter quotation medium, such as the OTCBB, at the present time.

There is no trading market for our common stock at present and there has been no trading market to date.  There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue.  It is our intention to request a market maker to make application to FINRA to have our common stock quoted on the OTCBB.

The SEC adopted Rule 15g-9 which established the definition of a “penny stock,” for purposes relevant to our common stock, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person’s account for trans- actions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transaction in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.  The broker or dealer must also deliver, prior to any transaction in penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.  Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.  Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

91

Quantitative and Qualitative Disclosure Regarding Market Risk

Interest Rate Risk

We may face some risk from potential fluctuations in interest rates, although our debt obligations are primarily short-term in nature, but some bank loans have variable rates.  If interest rates have great fluctuations, our financing cost may be significantly affected.

Foreign Currency Risk

Substantially all of our operations are conducted in the United States and our primary operational currency is the US Dollar (“USD”).  As a result, currently the effect of the fluctuations of USD exchange rates has no appreciable impact on our business operations, but will be increasingly material as we introduce our products widely into new international markets.  Substantially all of our revenues and expenses are denominated in USD, and we use the United States dollar for financial reporting purposes.  As we introduce our products widely into new international markets, there can be no assurance that any applicable exchange rates will not be volatile or that any particular currencies will not devalue significantly against the U.S. dollar.  Exchange rate fluctuations may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations, if any, outside of the United States.

Shareholders

As of the date of this Prospectus , we had 15,724,816 shares of our common stock issued and outstanding, held by 53 holders of record.  In addition, we had 3,126,434 shares of convertible preferred stock (net of prior conversions) which are convertible into 3,814,249 common shares at a conversion rate of 1.22: 1 held by 50 holders of record.

This registration registers 9,240,565 shares of common stock held by 94 individuals and entities.

AVAILABLE INFORMATION

We have filed with the SEC a Registration Statement on Form S-1(together with all the amendments and exhibits) under the Securities Act, with respect to the Securities offered by this Prospectus .  This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC .  For further information, reference is made to the Registration Statement, which may be read and copied at the Commission’s Public Reference Room at 100 F.  Street, N.E., Washington, D.C.  20549.  The public may obtain information on the operation of the public Reference Room by calling the Commission at 1-800-SEC-0330.  The registration statement is also available at www.sec.gov, the website of the SEC.

92

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

Effective on or about January 4, 2010, we dismissed our independent auditor, The Blackwing Group, LLC (“Blackwing”), because the PCAOB revoked the registration of The Blackwing Group, LLC on December 22, 2009 because of violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in auditing the financial statements of two issuer clients from 2006 to 2008, violations of PCAOB rules and auditing standards, noncooperation with a Board inspection, and noncooperation with a Board investigation.

We engaged Blackwing on December 8, 2008.  During their engagement, there were no disagreements with Blackwing on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Blackwing would have caused Blackwing to make reference to the matter in their reports.

Effective January 19, 2010, we appointed Sam Kan & Company LLC (“Kan”) as our new registered independent certified public accounting firm.  Kan is located at 1151 Harbor Bay Pkwy, Suite 101, Alameda, CA 94502.

93

OXYSURE SYSTEMS INC.

 BALANCE SHEETS

	March 31,						December 31,
	2010			2009			2009			2008
ASSETS	(Unaudited)			(Unaudited)			(Audited)			(Audited)
Current assets
Cash and cash equivalents	$	(1,808	)	$	(2,512	)	$	73,077		$	393
Accounts receivable, net of allowances for sales returns and allowance for doubtful accounts		228,709			3,194			36,365			3,401
Inventories		175,091			272,441			138,737			284,736
Prepaid Expenses and other current assets		86,951			69,063			86,851			52,673
Total current assets		488,943			342,185			335,030			341,203
Property and equipment, net		451,254			817,011			518,976			921,860
Intangible assets, net		502,624			611,256			502,624			597,724
Other assets		421,696			13,132			151,696			32,415
TOTAL ASSETS	$	1,864,517		$	1,783,583		$	1,508,326		$	1,893,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	410,247		$	443,915		$	332,701		$	342,594
Capital leases - current		311,294			277,569			326,057			275,343
Notes payable - current		625,200			1,344,282			310,600			484,350
Deferred revenue		-			91,207			-			91,207
Total current liabilities		1,346,741			2,156,974			969,358			1,193,494
Long-term liabilities
Capital leases		46,673			310,132			47,036			106,891
Notes payable		1,761,059			-			1,761,059			1,004,732
Total long-term liabilities		1,807,732			310,132			1,808,095			1,111,624
TOTAL LIABILITIES		3,154,473			2,467,106			2,777,453			2,305,117
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005, 25,000,000 shares authorized
3,126,434 shares issued and outstanding in 1Q 2010, 1Q 2009, 2009 and 2008 (Note 5)		1,563			1,563			1,563			1,563
Voting Common stock, par value $0.0004,  100,000,000 shares authorized;
15,724,816 shares issued and outstanding in 1Q 2010 and 2009; 15,550,325 and 15,482,316  shares issued and outstanding in 1Q 2009 and 2008 respectively		6,290			6,220			6,290			6,193
Warrants issuance		167,750			75,000			167,750			-
Additional Paid-in Capital		8,260,469			7,484,818			8,150,084			6,990,329
Accumulated deficit		(9,726,028	)		(8,251,124	)		(9,594,814	)		(7,410,000	)
TOTAL EQUITY		(1,289,956	)		(683,523	)		(1,269,127	)		(411,915	)
TOTAL LIABILITIES  AND STOCKHOLDERS’ EQUITY	$	1,864,517		$	1,783,583		$	1,508,326		$	1,893,202

See accompanying notes to financial statements

F-1

OXYSURE SYSTEMS INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

	For the quarter ended March 31, 2010			For the quarter ended March 31, 2009			For the year ended December 31, 2009			For the year ended December 31, 2008
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
REVENUE	$	267,177		$	106,431		$	387,361		$	97,060
COST OF SALES		22,832			32,312			194,518			50,433
GROSS PROFIT		244,345			74,119			192,843			46,626
OPERATING EXPENSES
Selling, general and administrative		377,411			915,913			2,388,235			2,888,456
LOSS FROM OPERATING EXPENSES		(133,066	)		(841,794	)		(2,195,392	)		(2,841,830	)
OTHER INCOME / (EXPENSES)		1,853			671			(48,244	)		(58,563	)
Net loss		(131,214	)		(841,123	)		(2,243,636	)		(2,900,393	)
Accumulated deficit - beginning of the period		(9,594,814	)		(7,410,001	)		(7,410,001	)		(4,508,980	)
Prior period adjustment		-			-			58,822			(627	)
Accumulated deficit - end of the period	$	(9,726,028	)	$	(8,251,124	)	$	(9,594,814	)	$	(7,410,000	)

See accompanying notes to financial statements

F-2

OXYSURE SYSTEMS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

ACCUMULATED FOR THE PERIOD FROM DATE OF INCEPTION

ON JANUARY 15, 2004

(Expressed in US Dollars)

(Unaudited)

										Additional		Additional
										Paid In		Paid In							Total
	Convertible									Capital -		Capital -		Additional					Stockholders'
	Preferred Stock				Common Stock				Warrants	Preferred		Warrant and		Paid In		Decficit			Equity
	Shares		Value		Shares		Par Value		issuance	Stock		Option		Capital		Accumulated			(Deficit)
- Common Stock issued to acquire intangible assets						14,000,000		5,600							1,400					7,000
- Common Stock issued for cash						311,066		124							126,376		-			126,500
- Preferred Series A stock warrents issued for cash		125,000		62		0		0					124,936				-			124,998
- Stock warrants issued in connection with																				-
license agreement													58,983				-			58,983
Net loss for period ending December 31, 2004																	(203,398	)		(203,398	)
Balance as of December 31, 2004		125,000		62		14,311,066		5,724			0		183,919		127,776		(203,398	)		114,083
- Preferred Series A stock issued for cash		600,000		300		-		-			599,700						-			600,000
- Preferred Series A stock issued for services		12,500		6		-		-			12,495						-			12,501
- Preferred Series A stock issued for services		25,000		13		-		-			24,987						-			25,000
- Stock warrants issued in connection with																				-
license agreement													19,661				-			19,661
- Stock based compensation													22,405							22,405
- Stock warrants and options issued for services													6,791							6,791
																				-
Net loss for year ending December 31, 2005																	(423,997	)		(423,997	)
Balance as of December 31, 2005		762,500		381		14,311,066		5,724			637,182		232,776		127,776		(627,395	)		376,444
- Common Stock issued for cash						25,000		10							49,990		-			50,000
- Preferred Series A stock issued for cash		2,325,000		1,163		-		-			2,323,837						-			2,325,000
- Preferred Series A stock issued for intangibles		25,000		13							24,987									25,000
- Preferred Series A stock issued for equipment		24,979		12							60,912									60,924
- Common Stock options issued for compensation													29,155							29,155
- Stock warrants and options issued for services													47,007							47,007
																				-
Net loss for year ending December 31, 2006																	(1,385,728	)		(1,385,728	)
Balance as of December 31, 2006		3,137,479		1,569		14,336,066		5,734			3,046,918		308,938		177,766		(2,013,123	)		1,527,802
- Common Stock issued for cash						635,000		254							1,587,246					1,587,500
- Common Stock issued for services						20,000		8							49,992					50,000
- Common Stock Options exercised						59,250		24					24,044							24,068
- Preferred Series A stock issued for equipment		5,758		3							17,551									17,554

See accompanying notes to financial statements

F-3

												Additional		Additional							Total
	Convertible											Paid In Capital		Paid In Capital		Additional					Stockholders'
	Preferred Stock						Common Stock				Warrants	- Preferred		- Warrant and		Paid In		Decficit			Equity
	Shares			Value			Shares		Par Value		issuance	Stock		Option		Capital		Accumulated			(Deficit)
- Stock options and warrants issued for services															356,461							356,461
- Common Stock options issued for compensation, net															146,356							146,356
of forfeitures
Net loss for year ending December 31, 2007																			(2,495,857	)		(2,495,857	)
Balance as of December 31, 2007		3,143,237			1,572			15,050,316		6,020			3,064,469		835,799		1,815,004		(4,508,980	)		1,213,884
- Common Stock warrants exercised								120,000		48					1,152							1,200
- Common Stock options exercised								35,000		14					8,736							8,750
- Common Stock issued for cash								10,000		4							24,996					25,000
- Common Stock issued for cash								5,000		2							12,498					12,500
- Common Stock issued for cash								5,000		2							12,498					12,500
- Common Stock issued for cash								20,000		8							49,992					50,000
- Common Stock issued for cash								50,000		20							30,980					31,000
- Common Stock issued for cash								30,000		12							29,988					30,000
- Common Stock issued for cash								50,000		20							49,980					50,000
- Common Stock issued for cash								20,000		8							19,992					20,000
- Common Stock issued for cash								5,000		2							4,998					5,000
- Common Stock issued for cash								17,000		7							16,993					17,000
- Common Stock issued for cash								25,000		10							24,990					25,000
- Common Stock issued for cash								25,000		10							24,990					25,000
- Common Stock issued for cash								10,000		4							9,996					10,000
- Common Stock issued for cash								5,000		2							4,998					5,000
- Preferred Series A stock returned in legal settlement		(25,000	)		(13	)																(13	)
- Preferred Series A stock sold for cash		8,197			4								24,996									25,000
- Common Stock warrants issued pursuant to financing															677,681							677,681
- Common Stock warrants issued for community grant															10,959							10,959
- Common Stock options issued for compensation															89,957							89,957
- Common Stock warrants and options issued for services															143,687							143,687
- Prior period adjustment																			(627	)		(627	)
																						-
Net loss for year ending December 31, 2008																			(2,900,393	)		(2,900,393	)
Balance as of December 31, 2008		3,126,434			1,563			15,482,316		6,193			3,089,465		1,767,971		2,132,893		(7,410,000	)		(411,915	)

See accompanying notes to financial statements

F-4

											Additional		Additional
											Paid In		Paid In							Total
	Convertible										Capital		Capital							Stockholders'
	Preferred Stock				Common Stock				Warrants		- Preferred		- Warrant and		Additional		Decficit			Equity
	Shares		Value		Shares		Par Value		issuance		Stock		Option		Paid In Capital		Accumulated			(Deficit)
												-
- Common Stock issued for cash						35,000		14								34,986					35,000
- Common Stock issued for cash						25,000		10								24,990					25,000
- Common Stock issued for cash						7,500		3								7,497					7,500
- Common Stock issued for cash						50,000		20								49,980					50,000
- Common Stock warrants exercised						125,000		50						1,200							1,250
- Common Stock warrants issued pursuant to financing														135,729							135,729
- Common Stock warrants issued for investor relations, net														123,909							123,909
of cancellations
- Common Stock warrants issued pursuant to rent														132,574							132,574
satisfaction agreement
- Common Stock options issued for compensation														133,604							133,604
- Common Stock options and warrants issued for services														515,286							515,286
- Prepaid Warrants										167,750											167,750
- Prior period adjustment																		58,822			58,822
Net Loss for year ending December 31, 2009																		(2,243,636	)		(2,243,636	)
Balance as of December 31, 2009		3,126,434		1,563		15,724,816		6,290		167,750		3,089,465		2,810,273		2,250,346		(9,594,814	)		(1,269,127	)
- Common Stock options issued for compensation														19,304							19,304
- Common Stock warrants issued pursuant to financing														20,815							20,815
- Common Stock warrants issued pursuant to licensing														70,267							70,267
- Prior period adjustment																		-			-
Net Loss for quarter ending March 31, 2010																		(131,214	)		(131,214	)
Balance as of March 31, 2010		3,126,434		1,563		15,724,816		6,290		167,750		3,089,465		2,920,658		2,250,346		(9,726,028	)		(1,289,956	)

See accompanying notes to financial statements

F-5

OXYSURE SYSTEMS INC.

STATEMENTS OF CASH FLOWS

	Quarter Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(131,214	)	$	(841,123	)	$	(2,243,636	)	$	(2,900,393	)
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation		68,160			104,735			421,040			439,587
Amortization		-			-			5,120			47,754
Impairment of intangible assets		-			-			100,978			-
Prior period adjustment		-			-			58,822			(627	)
Changes in current assets and liabilities
Accounts receivable		(192,344	)		207			(32,964	)		(5,204	)
Inventory		(36,354	)		12,296			145,999			(164,559	)
Prepaid expenses and other current assets		(100	)		2,893			(153,459	)		29,306
Accounts payable and accrued liabilities		77,546			103,270			(9,893	)		(108,793	)
Deferred revenue		-			-			(91,207	)		91,205
NET CASH USED IN OPERATING ACTIVITIES		(214,305	)		(617,722	)		(1,799,199	)		(2,571,724	)
CASH FLOWS FROM INVESTING ACTIVITIES
Other assets		-			(3,043	)		(10,998	)		-
Purchases of property and equipment		(439	)		(10,375	)		(18,156	)		(92,317	)
NET CASH USED IN INVESTING ACTIVITIES		(439	)		(13,418	)		(29,154	)		(92,317	)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds		44,600			68,200			582,577			1,306,717
Payment of capital leases		(15,126	)		(9,481	)		(9,142	)		(237,262	)
Issuance of Preferred Stock		-			-			-			24,987
Issuance of Common Stock		-			67,500			117,550			318,062
Proceeds from issuance of common stock and warrants to employees and non-employees		110,385			502,015			1,210,052			932,172
NET CASH PROVIDED BY FINANCING ACTIVITIES		139,859			628,234			1,901,037			2,344,676
NET DECREASE IN CASH AND CASH EQUIVALENTS		(74,885	)		(2,905	)		72,684			(319,365	)
CASH AND CASH EQUIVALENTS, at beginning of period		73,077			393			393			319,758
CASH AND CASH EQUIVALENTS, at end of period	$	(1,808	)	$	(2,512	)	$	73,077		$	393
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest		-			-			8,427		$	58,563
Income taxes	$	-		$	-		$	-		$	-

See accompanying notes to financial statements

F-6

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies of OxySure® Systems, Inc. (“OxySure” or the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Business– OxySure® Systems, Inc. (the “Company” or “OSI”) was incorporated on January 15, 2004 as a Delaware corporation. The Company is located in Frisco, Texas and is a medical technology company focused on the design, manufacture and distribution of specialty respiratory products.  The Company and its founder have developed a unique catalytic process and methodology to generate medically pure (USP) oxygen instantly from two dry, inert powders. The Company has been issued seven patents on this technology, and it has several additional patents pending. On December 9, 2005, the Company received approval from the Food and Drug Administration (510K, Class II) for its first product utilizing this technology. This product is referred to as the OxySure® Portable Emergency Oxygen Generator, Model 615, (or Model 615 for short) and the FDA approval is for over-the-counter purchase (without the need of a prescription).

The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

On July 19, 2004, the Company affected a 1-for-5 reverse stock split of the Company’s common stock. All share numbers and common stock numbers, including stock options and warrants, have been retroactively adjusted to reflect the reverse stock split.

While the Company has effectively managed its working capital deficit the going concern risk remains an issue for the company to manage.  The Company has implemented, and plans to further implement several different strategies in order to help the Company ease the going concern issue.  Refer to Note 15, “Going concern” of Notes to Reviewed Financial Statements for a partial list of the Company’s plans to mitigate the going concern issue.

 .

Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded; and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition of the Company.

Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period.  Actual results could differ from those estimated.

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OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition - The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured.  Revenues are recognized from product sales, net of discounts and rebates.  Fees from licensees desiring to manufacture and distribute the Company’s products or derivative products using the Company’s intellectual property include initial license fees and royalties.  Initial license fees are generally recognized upon granting of the license to the licensee.  Royalties are recognized in the period earned.

Deferred Revenue and Income - The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. Deferred revenue and income do not include amounts from products delivered to distributors that the distributors have not yet sold through to their end customers.

Cash and Cash Equivalents - Cash consists of all highly liquid investments purchased with maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed Federally-insured limits. To minimize this risk, the Company places its cash and cash equivalents with high credit quality institutions.

Inventory – The Company’s inventory consists of raw material components for its portable oxygen systems as well as completed products and accessories. Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in-first-out basis. Inventory components are work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. The Company writes down its inventory value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values.

.

Concentration of Credit Risk – The Company sells all of its products throughout North America.  Sales to its recurring customers are generally granted on net 30-day credit terms. The Company performs periodic credit evaluations of its recurring customers and generally do not require collateral.  An allowance for doubtful accounts is maintained for potential credit losses, which losses historically have not been significant.

The Company invests its cash in deposits and money market funds with major financial institutions.  The Company places it cash investments in instruments that meet high credit quality standards, as specified in its investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Fair Value of Financial Instruments - The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  The Company believes that the recorded values of all of its other financial instruments approximate their recorded values because of their nature and respective maturity dates or durations.

F-8

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years.  Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms.  Depreciation expense was $68,160 and $104,735 the quarters ended March 31, 2010 and 2009 respectively.

Other Long-Lived Assets – The Company has two types of intangible assets – patents and trademarks.  Intangible assets are carried at cost, net of accumulated amortization.  Amortization expense was $0 for each of the quarters ended March 31, 2010 and 2009.

Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified.  Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Certain events and circumstances the Company considered in determining whether the carrying value of identifiable intangible assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in its business strategy.  In determining if an impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.  If an impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

No impairment loss on patents was recorded for the quarters ended March 31, 2010 and 2009.

Allowance for Doubtful Accounts - The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments.  The Company periodically reviews these allowances, including an analysis of the customers’ payment history and information regarding the customers’ creditworthiness.  Actual write-offs have not been materially different from the estimated allowance.

Research and Development Costs – Costs associated with the development of the Company’s products are charged to expense as incurred.

Income Taxes - The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements, but have not been reflected in the Company's taxable income.  A valuation allowance has been established to reduce deferred tax assets to their estimated realizable value.  Therefore, the Company provides a valuation allowance to the extent that the Company does not believe it is more likely than not that it will generate sufficient taxable income in future periods to realize the benefit of its deferred tax assets.  The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

F-9

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation – The Company accounts for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, the Company issues warrants tothe consultants and related parties.  The Company is required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. The Company has estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model requires the input of certain assumptions.  Changes in the assumptions used in Black-Scholes model can materially affect the fair value estimates. The Company evaluates the assumptions used to value stock options on a quarterly basis. The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding.

The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees.  Upon the adoption of the accounting guidance, the Company continued to use historical volatility in deriving its expected volatility assumption as allowed under GAAP because it believes that future volatility over the expected term of the stock options is not likely to differ materially from the past. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the stock options. The expected dividend assumption is based on the history and expectation of dividend payouts.  The fair values generated by the Black-Scholes model may not be indicative of the actual fair values of the equity awards, as the Company does not consider other factors important to those awards to employees, such as continued employment, periodic vesting requirements and limited transferability.  The amount of stock based compensation expenses is net of an estimated forfeiture rate, which is also based on historical data. For the quarters ended March 31, 2010 and 2009, stock based compensation expense was approximately $19,304 and $52,107, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to the employees and consultants.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with EITF Issue 96-18, these stock options and warrants issued as compensation for services to be provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. For the quarters ended March 31, 2010 and 2009 stock based compensation expense was approximately $91,081.42 and $367,886, respectively, which consisted primarily of stock-based compensation expense related to stock options and warrants recognized under GAAP issued to consultants and other non-employees.

Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues.

Research and development - Research and development costs are expensed as incurred.

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OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs - Advertising costs are charged to operations when incurred.  During in the quarters ended March 31, 2010 and 2009 the Company incurred $3,381 and $22,850 respectively in advertising costs.

Litigation and Settlement Costs - Legal costs are expensed as incurred. The Company is involved in disputes, litigation and other legal actions in the ordinary course of business. The Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. This generally occurs when an agreement in principle has been reached by both parties that include substantive terms, conditions and amounts.

Net Income (Loss) per Share - The Company computes net income (loss) per share by dividing net income by the weighted average number of shares of common stock outstanding for the reporting period.  Diluted net income (loss) per share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s stock-based compensation plans and the weighted average number of shares of common stock outstanding during the reporting period.  Dilutive common share equivalents include the dilutive effect of in-the-money options to purchase shares, which is calculated based on the average share price for each period using the treasury stock method.  Under the treasury stock method, the exercise price of an option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in paid-in capital, if any, when the option is exercised are assumed to be used to repurchase shares in the current period.

Reclassifications - Certain financial statement items have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on previously reported net loss.

Recent Accounting Pronouncements

In April 2009, the FASB issued an update to ASC 820, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides guidance on determining fair value when there is no active market or where the price inputs being used represent distressed sales.  This update to ASC 820 was effective for interim and annual periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009.  The adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2009, the FASB issued ASC 855, “Subsequent Events”.  ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC 855, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, was effective for interim or annual periods ending after June 15, 2009.  The Company adopted this standard as of June 30, 2009; however, the adoption of ASC 855 had no impact to the Company’s consolidated financial statements.

F-11

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In June 2009, the FASB issued ASU 2009-17, Consolidation (ASC 810) “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires ongoing qualitative reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  This new standard also requires additional disclosures about an enterprise’s involvement in variable interest entities. The Company adopted this pronouncement on January 1, 2010 but there was no significant impact on its financial statements.

In June 2009, the FASB issued ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”.  ASC 105 establishes the FASB Accounting Standards Codification (“Codification”), as the single source of authoritative accounting and reporting standards in the United States for all non-government entities, with the exception of the Securities and Exchange Commission and its staff.  It does not include any new guidance or interpretations of US GAAP, but merely eliminates the existing hierarchy and codifies the previously issued standards and pronouncements into specific topic areas.  The Codification was adopted on July 1, 2009 for the Company’s financial statements for the year ended December 31, 2009.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements.”  This update will require (1) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (2) information about purchases, sales, issuances and settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs).  This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and require disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs.  The new disclosures and clarifications of existing disclosure are effective for fiscal years beginning after December 15, 2009, except for the disclosure requirements for related to the purchases, sales, issuances and settlements in the roll forward activity of Level 3 fair value measurements.  Those disclosure requirements are effective for fiscal years ending after December 31, 2010.  The Company is still assessing the impact on this guidance and does not believe the adoption of this guidance will have a material impact to its financial statements.  Management does not believe that other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants or the SEC have a material impact on the Company’s present or future financial statements.

F-12

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 2 -- BALANCE SHEET COMPONENTS

	March 31,			December 31,
	2010			2009
Cash and cash equivalents:
Cash		(1,808	)	$	73,077
Total cash and cash equivalents	$	(1,808	)	$	73,077
Inventories:
Total inventories	$	175,091		$	138,737
Property and equipment, net:
Machinery and equipment	$	1,084,864		$	930,367
Leasehold improvements		547,855			547,855
Computer equipment and furniture and fixtures		32,283			186,406
Software		10,691			10,626
		1,675,693			1,675,255
Accumulated depreciation and amortization		(1,224,439	)		(1,156,279	)
Total property and equipment, net	$	451,254		$	518,976
Accounts payable and accrued expenses
Accounts payable		185,484			108,157
Accrued interest		39,817			39,817
Other accrued liabilities	$	184,946			184,727
Total accounts payable and accrued expenses	$	410,247		$	332,701

NOTE 3 – INTANGIBLES ASSETS

The Company has two types of intangible assets: patents and trademarks.  The Company capitalizes expenditures associated with patents and trademarks related to the Company’s various technologies. Capitalized costs include amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications. These assets are amortized on a straight-line method over their legal life.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with applicable accounting guidance. There are no impairment charges for quarters ended March 31, 2010 and 2009.

On January 15, 2004, the Company executed an Asset Purchase and Stock Transfer Agreement with entities controlled by the founder of the Company. In connection with this agreement, the Company acquired certain

assets, including certain rights, title and interest to intellectual property, relating to the oxygen method and apparatus, developed by the founder of the Company prior to January 15, 2004.  As consideration for the purchase, the Company issued 14,000,000 shares of common stock and a promissory note for $150,000 to these entities. The common stock was valued at $7,000 using the par value of the common stock on the date

of issuance, which approximates these entities’ basis (which is not indicative of fair value)? The non-recourse promissory note bore interest at 6.5% per annum and was paid in full during 2006.

F-13

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 3 – INTANGIBLES ASSETS (CONTINUED)

The carrying value of the Company’s amortized acquired intangible assets as of March 31, 2010 is as follows:

	March 31, 2010
	Gross		Accumulated Amortization and write off			Net
Patents	$	608,642	$	(151,741	)	$	456,901
Trademarks		45,723		-			45,723
Total	$	654,365	$	(151,741	)	$	502,624

Of the net amount of $502,624 in intangible assets as of March 31, 2010, approximately 90.9% is in patents and 9.1% is in trademarks.  Of the total amount for patents, $157,000 was acquired from entities controlled by the founder of the Company in January 2004. The remaining $345,624 represents amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications, net of amortization and impairment.

NOTE 4 – NOTES PAYABLE

Frisco Note. On April 3, 2007 the Company entered into a note agreement with the City of Frisco, Texas for $243,000 pursuant to an economic incentive package provided through the Frisco Economic Development Corporation. The note requires varying annual principal payments through August 2012.  The note is non-interest bearing; however, interest has been imputed at 12.18% per annum. The unamortized discount at March 31, 2010 is $66,468. Individual annual payments will be forgiven if certain performance targets are achieved which include the number of full time employees, square feet occupied and taxable value of business and personal property in the City of Frisco. The first annual payment for 2008 in the amount of $30,000 was forgiven and the Company recognized the entire $30,000 under “Other income” in the Statement of Operations and Accumulated Deficit for the year ended December 31, 2007.  The balance of the note payable to the City of Frisco as at March 31, 2010 is $213,000.

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OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

Agave/JTR Subordinated Notes.  During March 2008, the Company completed a $1 million financing package consisting of a promissory note for $750,000 (“First Note”) and a promissory note with a draw down provision for $250,000 (“Second Note”) (collectively, the “Notes”). The Notes are subordinated notes and are due and payable on the earlier of (i) completion of the next financing round completed by the Company or (ii) one year after the Notes are issued. In March 2009 the First Note and the Second Note were modified by extending the maturity date in each case to April 15, 2010. On December 31, 2009 the First Note and the Second Note were further modified by extending the maturity date in each case to April 15, 2011.  The holder of the First Note is Agave Resources, LLC (“Agave”), and the President of Agave is Donald Reed, one of the Company’s Directors.  In connection with the First Note, on April 15, 2008 Agave was also issued penny warrants to purchase 350,000 shares of common stock.  The warrants are immediately exercisable and expire on April 15, 2013.  The holder of the Second Note is JTR Investments, Limited (“JTR”) a company controlled by Julian T. Ross, the Company’s founder.

As at December 31, 2009 the maximum of $250,000 has been drawn against the Second Note.  In connection with the Second Note, on December 31, 2008 JTR was also issued penny warrants to purchase 116,667 shares of common stock.  Both Notes are non-interest bearing.  The basis for issuing penny warrants in connection with the First Note and the Second Note include, but are not limited to, the fact that no interest is payable on the Notes, the Company’s ability to attract new investment at the time, market conditions and other factors.  Given these factors, the Board of Directors has deemed the terms of these transactions to be fair.  No third party fairness opinion was obtained in relation to these transactions.

JTR Senior Note. In July, 2008, JTR agreed to provide the Company with additional working capital to fund continuing operations (the “Senior Note Interim Funding”).  On November 1, 2008 the Board agreed with JTR on the terms of a loan with a draw down provision of up to $750,000.  This is a Senior Note (the “Senior Note”) with no interest payable.  All amounts advanced by JTR during the Senior Note Interim Funding are draw downs on the Senior Note.  In connection with the Senior Note, the Company will issue .47 penny warrants for every dollar drawn under this facility.  As of March 31, 2010 the outstanding balance under the Senior Note was $583,300.  As of March 31, 2010 the number of penny warrants issued to JTR pursuant to the Senior Note was 285,817.  The basis for issuing penny warrants in connection with the Senior Note include, but are not limited to, the fact that no interest is payable on the note, its ability to attract new investment at the time, market conditions, the terms previously agreed to in connection with the First Note and Second Note, and other factors.  Given these factors, the Board of Directors has deemed the terms of this transaction to be fair.  No third party fairness opinion was obtained in relation to this transaction.

Alcedo Subordinated, Convertible Note.  On December 10, 2009 the Company entered into a Note Purchase Agreement with the Tony & Judy Alcedo Family Trust (“Alcedo Trust”). The Company received $100,000 in cash from the Alcedo Trust, in exchange for a Subordinated Convertible Note with a face amount of $100,000 (the “Alcedo Note”). The Alcedo Note bears interest at a rate of 16% per annum, and matures on September 6, 2010. The Alcedo Note is convertible into the common stock, at

the option of the Company on or before September 6, 2010, at a conversion price of $1.00 per share, in accordance with the following:

Maturity Date: The then outstanding Principal Amount, together with accrued and unpaid interest thereon as set forth above, or the Optional Conversion Shares (as described below) as the case may be, shall become due on the 270th Day subsequent to December 10, 2009 (the "Maturity Date").

Conversion Rights: At any time on or prior to the Maturity Date, at the option of the Company in its sole discretion, all or any portion of the then outstanding Principal Amount and accrued but unpaid interest of this Note may be converted (the "Optional Conversion") into a number of shares of the Company’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount plus the then accrued but unpaid interest to be converted, divided by the Conversion Price which shall be $1.00 per Optional Conversion Share.

In addition to the Alcedo Note, the Company issued the Alcedo Trust 100,000 warrants pursuant to the Note Purchase Agreement.  The warrants are exercisable into the common stock of the Company at an exercise price of $2.50 per share, and expire on December 10, 2014.

Sinacola Subordinated Convertible Notes.On December 10, 2009 the Company entered into a Rent Satisfaction Agreement (the “2009 RSA”) with its landlord, Sinacola Commercial Properties, Ltd.

F-15

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

(“Sinacola”). In terms of the 2009 RSA, all of the Company’s outstanding rent obligations under its lease agreement, up to and including December 31, 2009 including, but not limited to, base rent, deferred rent, and its share of operating costs, are deemed to be satisfied in full.  The Company issued Sinacola two Promissory Notes pursuant to the 2009 RSA, as follows:

First Landlord Note:  The first note (the “First Landlord Note”) is a subordinated convertible note in the principal amount of $125,000. The First Landlord Note carries no interest and is convertible, at Sinacola’s option, into the common stock of the Company at an exercise price of $1.00 per common share on the maturity date.

Second Landlord Note:  The second note (the “Second Landlord Note”) is a subordinated convertible note in the principal amount of $126,407. The Second Landlord Note carries no interest and is convertible into the common stock of the Company at an exercise price of $1.50 per common share on the maturity date.  However, if the common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Second Landlord Note is convertible at the Company’s option.

Maturity Date – Each of the First Landlord Note and the Second Landlord Note has a maturity date defined as follows:

The then outstanding Principal Amount shall become due and payable on the earlier to occur of: (i) December 31, 2011; or (ii) the closing of the next equity financing round (the “Equity Event”) completed by the Company (in each case, the "Maturity Date"); provided that; (a) if the Equity Event is in an amount exceeding $1,000,000 but less than $1,500,000, then only 20% of the Principal Amount shall be due and payable; (b) if the Equity Event is in an amount exceeding $1,500,000 but less than $2,000,000, then only 40% of the Principal Amount shall be due and payable; (c) if the Equity Event is in an amount exceeding $2,000,000 but less than $3,000,000, then only 60% of the Principal Amount shall be due and payable; (d) if the Equity Event is in an amount exceeding $3,000,000 but less than $4,000,000, then only 80% of the Principal Amount shall be due and payable; (e) if the Equity Event is in an amount exceeding $4,000,000, then 100% of the Principal Amount shall be due and payable. For any partial Principal Amount paid under (ii) (a) - (ii) (d) above, the balance of the outstanding Principal

Amount would continue to be due and payable on the earlier to occur of this (i) or (ii) (a-e) above.  In the event of a partial payment, any subsequent payment resulting from an Equity Event shall be based on the percentage of the original Principal Amount and not a percentage of the outstanding Principal Amount after a partial payment under this maturity provision.

The Company also issued Sinacola with 163,415 penny warrants pursuant to the 2009 RSA (the “New Landlord Warrant”).  The New Landlord Warrant is convertible into 163,415 shares of its common stock, and is exercisable in whole or in part at any time on or before December 31, 2014 at an exercise price of $.01 per share.  In addition, the Company agreed to modify that certain prior warrant issued to Sinacola on August 23, 2007 (the “First Landlord Warrant”).  The First Landlord Warrant provided for Sinacola to purchase 50,000 shares of common stock on of before March 1, 2012 at an exercise price of $2.00 per share.  Pursuant to the 2009 RSA the exercise price of the First Landlord Warrant was modified to $1.00 per share, while all other terms and conditions remained the same.  The Company issued warrants to Sinacola and those warrants are considered as prepaid rent, which will be amortized in 5 years; the Company recorded prepaid short-term and prepaid long-term rent of $46,709 and $138,564 for the years ended December 31, 2009, respectively.

F-16

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

Afritex Subordinated, Convertible Note.  On March 26, 2010 (“Afritex Note Effective Date”) the Company issued a Subordinated Convertible Note (the “Afritex Note”) to Afritex Medical Products (Pty) Ltd., a South African company, in which the Company’s President is also a shareholder (“Afritex”). The Afritex Note was issued in connection with a certain licensing agreement entered into between the Company and Afritex on March 26, 2010.  The Afritex Note has a face amount of $270,000 and bears interest at a rate of 16% per annum, and matures 270 days subsequent to the Afritex Note Effective Date.  The Afritex Note is convertible into the common stock, at the option of the Company on or before the Maturity Date, at a conversion price of $1.00 per share, in accordance with the following:

Maturity Date: The then outstanding Principal Amount, together with accrued and unpaid interest thereon as set forth above, or the Optional Conversion Shares (as described below) as the case may be, shall become due on the 270th Day subsequent to March 26, 2010 (the "Maturity Date").

Conversion Rights: At any time on or prior to the Maturity Date, at the option of the Company in its sole discretion, all or any portion of the then outstanding Principal Amount and accrued but unpaid interest of this Note may be converted (the "Optional Conversion") into a number of shares of the Company’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount plus the then accrued but unpaid interest to be converted, divided by the Conversion Price which shall be $1.00 per Optional Conversion Share.

In addition to the Afritex Note, the Company issued the Afritex 270,000 warrants pursuant to that said license agreement.  The warrants are exercisable into the common stock of the Company at an exercise price of $2.50 per share, and expire on March 26, 2015.

The following table reflects the carrying value of the Company’s of the short-term and long-term notes payable as at March 31, 2010.

	March 31, 2010
Current notes payable
JTR – Senior Note	$	160,450
Misc Notes		370,000
Frisco EDC		60,000
Related Party Loans		34,750
Total short-term notes payable		625,200
Long-term notes payable
Agave, First Note	$	750,000
JTR – Senior Note		422,850
JTR, Second Note		250,000
Sinacola, First Landlord Note		125,000
Sinacola, Second Landlord Note		126,407
Frisco EDC		86,802
Total long-term notes payable	$	1,761,059
Total short-term and long-term notes payable	$	2,386,259

F-17

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 5 - SHAREHOLDERS’ EQUITY

Preferred Shares Rights

On December 31, 2005, the Company’s Board of Directors adopted a Preferred Shares Rights Agreement (the “Original Rights Agreement”).   Pursuant to the Agreement, the Board authorized to issue 5,000,000 shares of preferred stock, par value $0.0005 per share. As of December 31, 2005, the Company had authorized the issuance of 2,000,000 shares of preferred stock designated as Series A Convertible Preferred Stock (“Series A Preferred”). On March 22, 2006 the Company authorized an increase in the issuance of the Series A Preferred to 3,100,000 shares of preferred stock. On July 2, 2008 the Company further authorized an increase in the issuance of the Series A Preferred to 3,143,237 shares of preferred stock. As of March 31, 2010 there were 3,126,434 Series A Preferred shares issued and outstanding. The original issue price of the Series A Preferred is $1.00 per share.

From December 31, 2004 through March 31, 2010, the Company issued shares of Series A Preferred Stock as follows:

During 2004, the Company sold 125,000 shares of Series A Preferred at a price of $1.00 per share.  During 2005, the Company sold 600,000 shares of Series A Preferred at a price of $1.00 per share.  In May 2005, the Company issued 25,000 shares of Series A Preferred to a service provider for services performed in lieu of cash payment. These shares were valued at $25,000 using the original issue price of the Series A Preferred, which is in the management’s best estimate of fair value.  In June 2005, the Company issued 12,500 shares of Series A Preferred in lieu of cash payment for management fee (see Note 8). These shares were valued at $12,500 using the original issue price of the Series A Preferred, which is management’s best estimate of fair value.

In February 2006, the Company issued 25,000 shares of Series A Preferred to a service provider for service performed in lieu of cash payment. These shares were valued at $25,000 using the original issue price of the Series A Preferred which is management’s best estimate of fair value. In March 2006, the Company sold 2,325,000 shares of Series A Preferred at a price of $1.00 per share.  During 2007 and 2006, the Company issued 5,728 and 24,979 shares, respectively, of Series A Preferred in lieu of cash payment for premiums on its capital leases (see Note 10). These shares were valued at $17,554 and $60,924, respectively, using the fair value of the shares on the date of issuance. The value of these shares has been recorded as a discount to the capital lease obligation and is being amortized into interest expense over the term of the related lease.  During 2008, 25,000 shares of Series A Preferred were returned to us pursuant to a settlement with a former service provider.  These returned shares were sold for $25,000 in cash, and of the shares sold, 16,803 shares of Series A Preferred were converted into Common Stock. As at March 31, 2010 the Company had 3,126,434 shares of Series A Preferred issued and outstanding.

A summary of the designations and preferences of its Series A Preferred stock is as follows:

Ranking – The Series A Preferred ranks senior to common stock.

Dividends – Series A Preferred may be entitled to receive a quarterly non-cumulative dividend in the amount of $.01 per share upon approval from the Board of Directors.

Liquidation Preference – In the event of any liquidation, dissolution, or winding up of the Company, the holders of Series A Preferred are entitled to receive 100% of the original issue price of $1.00 per share.

F-18

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 5 - SHAREHOLDERS’ EQUITY (CONTINUED)

Conversion Rights – Each share of Series A Preferred is convertible at any time, at the option of the holder into 1.22 shares of common stock, subject to adjustment. Series A Preferred are subject toautomatic conversion upon consummation of underwritten offering by the Company of shares of common stock to the public, in which the aggregate cash proceeds are at least $3 million and the price paid per share is at least $5.00.

Redemption Rights – All of the Series A Preferred may be called at any time by the Company within ten years, but not prior to two years after issuance. The redemption value is $1.00 per share, plus an amount equal to all unpaid dividends thereon.

Voting Rights – The holder of each share of Series A Preferred has the right to one vote for each share of common stock into which such share of Series A Preferred could be converted.

Common Stock

The Company has authorized 100,000,000 shares of $0.0004 par value common stock.

On January 15, 2004, the Company issued 14,000,000 shares of common stock valued at $7,000 for the acquisition of certain intangible assets;  please refer to Note 3, “Intangible Assets” for detail.  During 2004, the Company sold 310,000 shares of common stock for proceeds of $126,500.  In addition, the Company issued 1,066 shares of common stock for stock options exercised for zero proceeds pursuant to services valued at $5,000.  During 2006, the Company sold 25,000 shares of common stock for proceeds of $50,000.  During 2007, the Company sold 635,000 shares of common stock for proceeds of $1,587,500.  Moreover, during 2007, the Company issued 20,000 shares of common stock for services valued at $50,000 based on the fair value of the common stock on the date of issuance and 59,250 shares were issued for stock options exercised for proceeds of $24,068.  For detail, please refer to Note 6, “Stock Options and Warrants.”

During 2008, the Company sold 277,000 shares of common stock for proceeds of $318,000. Furthermore, during 2008, the Company issued 120,000 shares for warrants exercised for proceeds of $1,200.  For detail, please refer to Note 6, “Stock Options and Warrants.”  In addition, the Company issued 35,000 shares for stock options exercised for proceeds of $8,750.

During 2009, the Company sold 117,500 shares of common stock for proceeds of $117,500. Furthermore, during 2009, the Company issued 125,000 shares for warrants exercised for proceeds of $1,250. For detail, please refer to Note 6, “Stock Options and Warrants.”  As at March 31, 2010 the Company had 15,724,816 shares of Common Stock issued and outstanding.

NOTE 6 - STOCK OPTIONS AND WARRANTS

Equity Incentive Plans

In April 2004, the Company’s Board of Directors and the stockholders at that time approved the adoption of a Voting Stock Option Plan (“the Plan”), which provides for the issuance of stock options to eligible employees of the Company to acquire up to a maximum of 5,000,000 shares of common stock.

The Company’s Board of Directors, which determines the number of options that will be granted, the effective dates of the grants, the option process and the vesting schedules, administers the Plan. In the absence of an established market for the common stock of the Company, the Board of Directors

F-19

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

determines the fair market value of the Company’s common stock. Options expire five years from the date of grant and automatically terminate 90 days after such optionee ceases to be an eligible individual under the Plan other than by reason of death or disability.

The portion of options granted that is not exercisable on the date the optionee ceases to be an eligible individual under the Plan by reason other than death, shall terminate and be forfeited to the Company on the date of such cessation. An optionee has no right as a stockholder with respect to any shares covered by the options granted to him until a certificate representing such shares is issued to them.

Stock Options

The following table summarizes the Company’s stock option activities for the quarter ended March 31, 2010:

	Employee					Non-Employee
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Combined Total Options
Granted		1,254,000		$	0.3826		1,966		$	0.1147		1,255,966
Exercised	None			None			(1,066	)		0.0004		(1,066	)
Outstanding at December 31, 2004		1,254,000			0.3826		900			0.2500		1,254,900
Granted		451,250			0.7819		27,014			0.9273		478,264
Forfeited/Cancelled		(65,000	)		0.7200		- -			- -		(65,000	)
Outstanding at December 31, 2005		1,640,250			0.4791		27,914			0.9055		1,668,164
Granted		252,350			1.8216		14,188			1.8252		266,538
Forfeited/Cancelled		- -			- -		- -			- -		- -
Outstanding at December 31, 2006		1,892,600			0.6581		42,102			1.2154		1,934,702
Granted		187,300			1.20		35,000			0.00		222,300
Exercised		(59,250	)		0.4590		- -			- -		(59,250	)
Forfeited/Cancelled		(153,800	)		0.89		- -			- -		(153,800	)
Outstanding at December 31, 2007		1,866,850			0.70		77,102			0.89		1,943,952
Granted		64,259			1.33		2,280			2.50		66,539
Exercised		(35,000	)		0.25		- -			- -		(35,000	)
Forfeited/Cancelled		(86,500	)		1.69		- -			- -		(86,500	)
Outstanding at December 31, 2008		1,809,609			0.68		79,382			0.94		1,888,991
Granted		328,003			0.65		15,000			1.00		309,503
Exercised		- --			-		-			-		-
Forfeited/Cancelled		- --			- --		- --			- --		- --
Outstanding at December 31, 2009		2,047,612			0.65		94,382			0.95		2,141,994
Granted		180,000			0.25		- -			- -		180,000
Exercised		- -			- -		- -			- -		- -
Forfeited/Cancelled		- --			- --		- --			- --		- --
Outstanding at March 31, 2010		2,227,612			0.62		94,382			0.95		2,321,994

F-20

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

Valuation Assumptions

The Company values its stock-based payment awards granted using the Black-Scholes model, during the quarter ended March 31, 2010.  The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Black-Scholes model requires the input of certain assumptions. The Company’s stock options have characteristics significantly different from those of traded options, and changes in the assumptions can materially affect the fair value estimates.

For the quarter ended March 31, 2010, the fair value of options granted were estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:

		Q1 2010
Expected terms (in years)		5.00
Volatility		55	%
Risk-free interest rate		2.55	%
Expected dividend rate		0.00	%
Weighted average fair value	$	0.80

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of option by employees.  The Company uses historical volatility in deriving its expected volatility assumption because it believes that future volatility over the expected term of the stock options is not likely to differ from the past.  The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of options to purchase OxySure common stock. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

As stock-based compensation expense recognized in the Statements of Operations for the quarter ended March 31, 2010 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 505 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.  The Company adjusts stock-based compensation expense based on its actual forfeitures on an annual basis, if necessary.

Warrants.

The following table summarizes the Company’s warrant activities for the quarter ended March 31, 2010:

F-21

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

	Number of Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2005		296,419			0.03
Granted		100,000			0.82
Forfeited/Cancelled		-			-
Outstanding at December 31, 2006		396,419			0.23
Granted		170,000			0.60
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at December 31, 2007		566,419			0.34
Granted		777,985			0.05
Exercised		(120,000	)		0.01
Forfeited/Cancelled		-			-
Outstanding at December 31, 2008		1,224,404			0.19
Granted		1,350,332			0.20
Exercised		(125,000	)		0.01
Forfeited/Cancelled		(843,419	)		0.01
Outstanding at December 31, 2009		1,606,317			0.31
Granted		291,000			2.32
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at March 31, 2010		1,897,317			0.62

NOTE 7 - INCOME TAXES

The Company adopted the provisions of ASC 830-740, “Accounting for Uncertainty in Income Taxes,” on January 1, 2008.  The Company did not recognize any material additional liability as a result of the implementation of ASC 830-740.

Income before provision for income taxes and cumulative effect of change in accounting principle is as follows:

	Quarter Ended 2010		FY Dec 31, 2009
(Doller in thousands)
United States	$	-	$	-
Foreign		-		-
	$	-	$	-

F-22

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 7 - INCOME TAXES (CONTINUED)

The provision (benefit) for income taxes is comprised of the following:

(Dollars in thousands)	Quarter Ended Dec 31, 2010		FY Dec 31, 2009
Current:
Federal	$	-	$	-
State		-		-
Foreign		-		-
	$	-	$	-
Deferred:
Federal
State
Foreign		-		-
		–		–
	$	-	$	-

In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The amount of and ultimate realization of the benefits from the operating loss carry forwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the net deferred tax assets, the Company has established a valuation allowance equal to their tax effect and, therefore, no deferred tax asset has been recognized as of March 31, 2010.

F-23

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 7 - INCOME TAXES (CONTINUED)

The deferred tax assets (liabilities) are comprised of the following:

	March 31,
(Dollars in thousands)	2010
Deferred income tax assets:
Benefit computed at federal statutory rate	$	-
Effect of change in state tax rate		-
Permanent differences		-
State income tax (benefit)		-
Other		-
Deferred income tax assets		-
Valuation allowance		-
Deferred income  tax assets, net		-
Total deferred income tax liabilities:
Amortization		-
Unremitted earnings of foreign subsidiaries		-
Total deferred income tax liabilities		-
Net deferred income tax assets	$	-

NOTE 8 – LICENSE AND SERVICE AGREEMENTS

During April 2004, the Company entered into a one-year agreement for the use of office space and common areas. The monthly payment under this license agreement varies based on the amount of space occupied. During the year ended December 31, 2005, the monthly payment ranged from $1,316 to $2,648. Upon the expiration of the one-year term, the license agreement continued on a month-to-month basis.

In connection with the execution of the license agreement during April 2004, the Company issued the licensor 281,200 warrants to purchase common stock of the Company at $0.0005 per share. The fair value of these warrants was estimated to be $78,643 using a minimum value option pricing model with no volatility and the following assumptions: no dividend yield, life of 10 years and a risk-free interest rate of 4.21%. The fair value of the warrants was recorded as rent expense over the one-year term of the license agreement.

On March 26, 2010 the Company entered into a licensing agreement and a distribution agreement with a new distributor in South Africa, called Afritex Medical Products (Pty) Ltd. (“Afritex”), of which the president of the Company is also a stockholder.  The license agreement provides for the following: (a) Afritex received the rights to develop derivative products utilizing the Company’s intellectual property; and (b) Afritex agreed to pay OxySure an upfront, non-refundable license fee, as well as a royaly of 8% on all sales of derivative products.  The distribution agreement, on the other hand provided Afritex certain territorial exclusivity for the sale of existing OxySure products, as well as a minimum initial order commitment and an annual minimum order quantity commitment.  The following summarizes the combined terms of the agreements:

F-24

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 8 – LICENSE AND SERVICE AGREEMENTS (CONTINUED)

1.   Afritex agreed to pay the Company a one-time, upfront license fee in the amount of $225,000;

2.   Afritex agreed to pay a royalty of 8% of gross sales of all derivative products sold;

3.   Afritex agreed to make an initial purchase of $145,000 in existing OxySure products;

4.   Afritex committed to purchasing an annual minimum of $480,000 in existing OxySure products;

5.   Afritex received exclusive distribution rights for the following countries: South Africa, Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, and Zimbabwe;

6.   The Company issued Afritex a convertible note in the amount of $270,000. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share, carries a 16% annual interest rate, and has a maturity of 270 days subsequent to issuance. The note is convertible into the common stock of the Company at any time on or before maturity, at the Company’s option; and

7.   The Company issued Afritex a warrant to purchase 270,000 shares of the Company’s common stock at an exercise price of $2.50 per share. The warrant is exercisable in whole or in part at any time on or before March 26, 2015.  The fair value of these warrants was estimated to be $70,267 using a minimum value option pricing model with a volatility of 55.17% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.50%. The fair value of the warrants was recorded as a license expense in the quarter.

NOTE 9 – COMMITMENTS AND CONTINGENCY

Leases

Operating Lease – During 2007, the Company entered into a long-term non-cancelable lease for office space, which expires in 2012. In connection with the execution of this lease agreement, the Company received leasehold improvements totaling $324,000. The leasehold improvements are recorded as deferred rent and are being amortized as a reduction to rent expense of the lease term. Additionally, the Company issued 50,000 warrants in connection with the lease agreement.

On December 10, 2009 the Company entered into a Rent Satisfaction Agreement (the “2009 RSA”) with its landlord, Sinacola Commercial Properties, Ltd. (“Sinacola”). In terms of the 2009 RSA, all of the Company’s prior deferred rents and other related obligations under its lease agreement, up to and including December 31, 2009 including, but not limited to, base rent, deferred rent, and its share of operating costs, are deemed to be satisfied in full.  The Company issued Sinacola two Promissory Notes pursuant to the 2009 RSA, as follows:

First Landlord Note:  The first note (the “First Landlord Note”) is a subordinated convertible note in the principal amount of $125,000. The First Landlord Note carries no interest and is convertible, at Sinacola’s option, into the common stock of the Company at an exercise price of $1.00 per common share on the maturity date.

F-25

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

Second Landlord Note:  The second note (the “Second Landlord Note”) is a subordinated convertible note in the principal amount of $126,407. The Second Landlord Note carries no interest and is convertible into the common stock of the Company at an exercise price of $1.50 per common share on the maturity date.  However, if the common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Second Landlord Note is convertible at the Company’s option.  Please Note 4 – “Notes Payable.”

At March 31, 2010, future minimum lease payments under the non-cancelable operating lease for the years ended December 31, 2010, 2011, and 2012 were as follows:

2010	$	146,660
2011		199,310
2012		159,496
	$	554,066

Rental expense for the quarter ended March 31, 2010 was $48,600 of which $42,226 was deferred.

Capital lease –The Company leases certain of equipments under capital lease agreements that expire at various dates through 2012. Capital lease obligations are included in other liabilities. The future minimum lease payments for all capital leases and operating leases at March 31, 2010 were as follows:

During 2006 the Company entered into a master lease agreement with a VenCore Solutions, LLC that allows the Company to lease up to $750,000 of equipment. This maximum amount available under this lease was subsequently increased to $805,000. The lease agreement requires a security deposit of 10% of the amount of each individual lease schedule, a payment of Series A Convertible Preferred Stock shares equal to 5% of the lease divided by $1.00, and 36 monthly payments of 3.33% of the lease. The Company has the option to purchase the equipment at the end of each lease term at the lesser of 12% of the original equipment cost or the fair market value.

During 2007, the Company entered into agreements with other finance companies to acquire equipment with interest rates ranging from 7% to 15% with five-year lease terms. Minimum future noncancellable lease payments required under the capital leases as at March 31, 2010 are as follows:

Total minimum lease payments
2010	$	311,294
2011		24,279
2012		21,814
2013		580
Total minimum lease payments		357,967
Less: amount representing interest		-
Less: unamortized discount related to Series A convertible preferred stocks		-
Total capital lease obligations	$	357,967
Less: current portion		(311,294	)
Long-term capital lease obligations	$	46,673

F-26

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

Legal Proceedings

OxySure is not presently involved in any legal proceedings and was not involved in any such proceedings during the quarter ended March 31, 2010.

Indemnification

Under the indemnification provisions of the Company’s customer agreements, the Company agrees to indemnify and defend its customers against infringement of any patent, trademark, or copyright of any country or the misappropriation of any trade secret, arising from the customers’ legal use of the Company’s services. The exposure to the Company under these indemnification provisions is generally limited to the total amount paid by the customers under pertinent agreements. However, certain indemnification provisions potentially expose the Company to losses in excess of the aggregate amount received from the customer. To date, there have been no claims against the Company or its customers pertaining to such indemnification provisions and no amounts have been recorded.

General

From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business. While the Company cannot be certain about the ultimate outcome of any litigation, management does not believe any pending legal proceeding will result in a judgment or settlement that will have a material adverse effect on the Company’s business, financial position, results of operation or cash flows.

NOTE 10 – RELATED PARTY TRANSACTIONS

As discussed in Note 4, “Notes Payable” of Notes to Reviewed Financial Statements, several of the notes payable are entered among related parties.

A summary of the related party financings as at March 31, 2010 is as follows:

	First Note	Second Note	Senior Note	Other
Holder	Agave Resources, LLC(1)	JTR Investments, Limited(2)	JTR Investments, Limited(2)	Related Party
Amount	$750,000	$250,000	$583,300	$34,750
Interest rate	0%	0%	0%	0%
Maturity	April 15, 2011	April 15, 2011	$160,450<12 Months $422,850>12 Months	<12 Months

(1) Agave Resources, LLC is controlled by one of its Directors, Donald Reed.

(2) JTR Investments, Ltd. is a limited partnership controlled by its President and CEO, Julian Ross.

F-27

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 10 – RELATED PARTY TRANSACTIONS (CONTINUED)

Other than related parties Notes and the Senior Notes discussed in Note 4, “Notes Payable”, of Notes to Reviewed Financial Statements, the Company received additional $34,750 in advances from related parties as of March 31, 2010.

As the related parties offered non-interest bearing notes payable to the Company, the Company issued various warrants to its related parties; please refer to Note 4, “Notes Payable” for detail.

NOTE 11 – NET INCOME (LOSS) PER SHARE

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

	Quarter Ended			Year Ended  December 31,
(Dollars in thousands, except per share data)	March 31, 2010			2009
Net income (loss)		(82,829	)	$	(2,243,636	)
Shares used in computing basic per share amounts (weighted ave.)		15,724,816			15,595,024
Dilutive potential common shares (1)		8,033,560			7,562,560
Shares used in computing diluted per share amounts		23,758,376			23,157,584
Net income (loss) per share:
Basic	$	(0.01	)	$	(0.14	)
Diluted	$	(0.01	)	$	(0.14	)
Potentially dilutive securities (1)

(1) Dilutive potential common shares consist of convertible preferred stock, stock options and warrants.  The potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share for the above periods because their effect would have been anti-dilutive.

NOTE 12 – FAIR VALUE MEASUREMENTS

Effective January 1, 2009, the Company adopted new fair value accounting guidance. The adoption of the guidance was limited to financial assets and liabilities and did not have a material effect on the Company’s financial condition or results of operations.

The guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact business and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The guidance establishes three levels of inputs that may be used to measure fair value:

F-28

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs to the valuation methodology that is significant to the measurement of fair value of assets or liabilities.

Assets Measured at Fair Value on a Recurring Basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis which were comprised of the following types of instruments as of March 31, 2010:

	Total			Level 1			Level 2		Level 3
Cash (1)	$	(1,808	)	$	(1,808	)		-		-
Total cash equivalents as of March 31, 2010	$	(1,808	)	$	(1,808	)	$	-	$	-

(1)   Included in Cash and cash equivalents on the Company’s Balance Sheet.

NOTE 13 – OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company.

F-29

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 14 – SEGMENT INFORMATION

The Company is organized as, and operates in, one reportable segment: the development and sale of specialty respiratory products. The Company’s chief operating decision-maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of evaluating financial performance and allocating resources, accompanied by information about revenue by geographic regions. The Company’s assets are primarily located in the United States of America and not allocated to any specific region and it does not measure the performance of its geographic regions based upon asset-based metrics. Therefore, geographic information is presented only for revenue. Revenue by geographic region is based on the ship to address on the customer order.

The following presents total revenue by geographic region for the quarter ended March 31, 2010 and for the year ended December 31, 2009:

	Quarter Ended March 31,		Year Ended December 31,
	2010		2009
Revenues:
United States	$	42,177	$	351,341
ROW	$	225,000	$	36,020
Total revenues	$	267,177	$	387,361

NOTE 15 – GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis and/or obtain financing as may be required.  As of March 31, 2010 and December 31, 2009, the Company has incurred net losses from operations and has stockholders’ deficits of $9,677,643 and $9,594,814 respectively.  The Company has a working capital deficit of approximately $809,413 as of March 31, 2010 and $656,983 as of December 31, 2009. These factors raise doubt about the Company’s ability to continue as a going concern.

During the next 12 months, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with reviewing or investigating any potential business ventures.  The Company may experience a cash

F-30

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 15 – GOING CONCERN (CONTINUED)

shortfall and be required to raise additional capital. Historically, it has relied upon internally generated funds and funds from the sale of shares of stock and loans from its shareholders and private investors to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing.  The Company’s failure to do so could have a material and adverse affect upon it and its shareholders.

The Company has a series of plans to mitigate the going concern:

1.   Lower Cash Burn: Cash burn was $1.8 million in 2007, $1.4 million in 2008 and approx. $680,000 in 2009. The Company has aggressively and successfully trimmed its expenses, and has worked to create implement a cost model that is as variable as possible.

2.   Management has a draw down provision in place – the JTR Senior Note, which allows the Company to draw down up to $750,000. The Company has approximately $138,000 available under this facility.

3.   The Company has recently concluded a $370,000 license and distribution agreement with a new distributor in South Africa, which includes an annual commitment of $480,000 in sales.

4.   The Company has commenced a bridge financing of up to $1 million, of which $100,000 was already raised.

5.   The Company is in the process of filing an S-1 registration statement with the Securities & Exchange Commission, and plans to raise $5 million in a Direct Public Offering.

6.   The Company’s sales during 2010 will be derived from existing markets (schools/districts, churches, commercial), government markets (government budgets for the 2010 fiscal year will be depleted by September 30, 2010 and the Company plans a significant effort on this market) and international markets.

7.   International: The Company has received ANVISA approval in Brazil in March 2010. The Company has appointed a distributor in Brazil who is contracted to purchase a minimum of 3,000 units per annum to maintain exclusivity. In addition, the Company has concluded a significant distribution agreement in South Africa, and other countries are pending. In addition, the Company has concluded a Memorandum of Understanding with an AED manufacturer in Europe for distribution in thirteen countries. Management expects that a portion of those sales will be realized in late 2010 or early 2011.

8.   The Company plans to add delivery capacity through additional distributors – the Company has approx.  17 in the US and management expects that to grow to approximately 30 by the end of 2010. In addition, the Company has three international distributors and it plans to increase that to approximately six by the end of 2010.

F-31

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

MARCH 31, 2010

(Unaudited)

NOTE 15 – GOING CONCERN (CONTINUED)

9.   The Company has migrated to selling solutions, thereby diversifying its revenue opportunities. The Company has added new products, and recently added higher priced items like AEDs.

10.   Rent Satisfaction Agreement: The Company has successfully partnered with its landlord to find a creative solution for past rent expenses. Further, the Company has successfully lowered its cash requirements for expenses for 2010 – the Company is currently only paying operating expenses and any differences deferred are expected to be converted to equity or a combination of debt/equity.

11.   The Company has successfully partnered with Vencore Solutions to defer its cash requirements for capital lease payments toward Vencore. Management expects that any amounts deferred will be satisfied in the future through a possible combination of cash, equity, and/or new debt obligations.

F-32

OXYSURE SYSTEMS INC.

BALANCE SHEETS

(Audited)

	December 31,
	2009			2008
ASSETS
Current assets
Cash and cash equivalents	$	73,077		$	393
Accounts receivable, net of allowances for sales returns and allowance for doubtful accounts		36,365			3,401
Inventories		138,737			284,736
Prepaid Expenses and other current assets		86,851			52,673
Total current assets		335,030			341,203
Property and equipment, net		518,976			921,860
Intangible assets, net		502,624			597,724
Patent, net		456,901			562,999
Trademarks		45,723			34,725
Other assets		151,696			32,415
TOTAL ASSETS	$	1,508,326		$	1,893,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	332,701		$	342,594
Capital leases - current		326,057			275,343
Notes payable - current		310,600			484,350
Deferred revenue		0			91,207
Total current liabilities		969,358			1,193,494
Long-term liabilities
Capital leases		47,036			106,891
Notes payable		1,761,059			1,004,732
Total long-term liabilities		1,808,095			1,111,624
TOTAL LIABILITIES		2,777,453			2,305,117
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005, 25,000,000 shares authorized
3,126,434 shares issued and outstanding in 2009 and 2008 (Note 5)		1,563			1,563
Voting Common stock, par value $0.0004,  100,000,000 shares authorized;
15,724,816 and 15,482,316 shares issued and outstanding in 2009 and 2008 respectively		6,290			6,193
Warrants issuance		167,750			0
Additional Paid-in Capital		8,150,084			6,990,329
Accumulated deficit		(9,594,814	)		(7,410,000	)
TOTAL EQUITY		(1,269,127	)		(411,915	)
TOTAL LIABILITIES  AND STOCKHOLDERS’ EQUITY	$	1,508,326		$	1,893,202

See accompanying notes to financial statements

F-33

OXYSURE SYSTEMS INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

(Audited)

	For the year ended December 31, 2009			For the year ended December 31, 2008
REVENUE	$	387,361		$	97,060
COST OF SALES		194,518			50,433
GROSS PROFIT		192,843			46,626
OPERATING EXPENSES
Selling, general and administrative		2,388,235			2,888,456
LOSS FROM OPERATING EXPENSES		(2,195,392	)		(2,841,830	)
OTHER INCOME / (EXPENSES)
Interest expenses		(48,244	)		(58,563	)
TOTAL EXPENSES
Net loss		(2,243,636	)		(2,900,393	)
Accumulated deficit - beginning of the year		(7,410,001	)		(4,508,980	)
Prior year adjustment		58,822			(627	)
Accumulated deficit - end of the year	$	(9,594,814	)	$	(7,410,000	)

See accompanying notes to financial statements

F-34

OXYSURE SYSTEMS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

ACCUMULATED FOR THE PERIOD FROM DATE OF INCEPTION

ON JANUARY 15, 2004

(Expressed in US Dollars)

(Audited)

												Additional
										Additional		Paid In
										Paid In		Capital -							Total
	Convertible Preferred Stock				Common Stock				Warrants	Capital -  Preferred		Warrant and		Additional  Paid In		Decficit			Stockholders' Equity
	Shares		Value		Shares		Par Value		issuance	Stock		Option		Capital		Accumulated			(Deficit)
- Common Stock issued to acquire intangible assets						14,000,000		5,600							1,400					7,000
- Common Stock issued for cash						311,066		124							126,376		-			126,500
- Preferred Series A stock warrents issued for cash		125,000		62		0		0					124,936				-			124,998
- Stock warrants issued in connection with																				-
license agreement													58,983				-			58,983
Net loss for period ending December 31, 2004																	(203,398	)		(203,398	)
Balance as of December 31, 2004		125,000		62		14,311,066		5,724			0		183,919		127,776		(203,398	)		114,083
				.
- Preferred Series A stock issued for cash		600,000		300		-		-			599,700						-			600,000
- Preferred Series A stock issued for services		12,500		6		-		-			12,495						-			12,501
- Preferred Series A stock issued for services		25,000		13		-		-			24,987						-			25,000
- Stock warrants issued in connection with																				-
license agreement													19,661				-			19,661
- Stock based compensation													22,405							22,405
- Stock warrants and options issued for services													6,791							6,791
																				-
Net loss for year ending December 31, 2005																	(423,997	)		(423,997	)
Balance as of December 31, 2005		762,500		381		14,311,066		5,724			637,182		232,776		127,776		(627,395	)		376,444
- Common Stock issued for cash						25,000		10							49,990		-			50,000
- Preferred Series A stock issued for cash		2,325,000		1,163		-		-			2,323,837						-			2,325,000
- Preferred Series A stock issued for intangibles		25,000		13							24,987									25,000
- Preferred Series A stock issued for equipment		24,979		12							60,912									60,924
- Common Stock options issued for compensation													29,155							29,155
- Stock warrants and options issued for services													47,007							47,007
																				-
Net loss for year ending December 31, 2006																	(1,385,728	)		(1,385,728	)
Balance as of December 31, 2006		3,137,479		1,569		14,336,066		5,734			3,046,918		308,938		177,766		(2,013,123	)		1,527,802
- Common Stock issued for cash						635,000		254							1,587,246					1,587,500
- Common Stock issued for services						20,000		8							49,992					50,000
- Common Stock Options exercised						59,250		24					24,044							24,068
- Preferred Series A stock issued for equipment		5,758		3							17,551									17,554

See accompanying notes to financial statements

F-35

												Additional		Additional
												Paid In		Paid In							Total
	Convertible											Capital -		Capital -		Additional					Stockholders'
	Preferred Stock						Common Stock				Warrants	Preferred		Warrant and		Paid In		Decficit			Equity
	Shares			Value			Shares		Par Value		issuance	Stock		Option		Capital		Accumulated			(Deficit)
- Stock options and warrants issued for services															356,461							356,461
- Common Stock options issued for compensation, net															146,356							146,356
of forfeitures
Net loss for year ending December 31, 2007																			(2,495,857	)		(2,495,857	)
Balance as of December 31, 2007		3,143,237			1,572			15,050,316		6,020			3,064,469		835,799		1,815,004		(4,508,980	)		1,213,884
- Common Stock warrants exercised								120,000		48					1,152							1,200
- Common Stock options exercised								35,000		14					8,736							8,750
- Common Stock issued for cash								10,000		4							24,996					25,000
- Common Stock issued for cash								5,000		2							12,498					12,500
- Common Stock issued for cash								5,000		2							12,498					12,500
- Common Stock issued for cash								20,000		8							49,992					50,000
- Common Stock issued for cash								50,000		20							30,980					31,000
- Common Stock issued for cash								30,000		12							29,988					30,000
- Common Stock issued for cash								50,000		20							49,980					50,000
- Common Stock issued for cash								20,000		8							19,992					20,000
- Common Stock issued for cash								5,000		2							4,998					5,000
- Common Stock issued for cash								17,000		7							16,993					17,000
- Common Stock issued for cash								25,000		10							24,990					25,000
- Common Stock issued for cash								25,000		10							24,990					25,000
- Common Stock issued for cash								10,000		4							9,996					10,000
- Common Stock issued for cash								5,000		2							4,998					5,000
- Preferred Series A stock returned in legal settlement		(25,000	)		(13	)																(13	)
- Preferred Series A stock sold for cash		8,197			4								24,996									25,000
- Common Stock warrants issued pursuant to financing															677,681							677,681
- Common Stock warrants issued for community grant															10,959							10,959
- Common Stock options issued for compensation															89,957							89,957
- Common Stock warrants and options issued for services															143,687							143,687
- Prior period adjustment																			(627	)		(627	)
																						-
Net loss for year ending December 31, 2008																			(2,900,393	)		(2,900,393	)
Balance as of December 31, 2008		3,126,434			1,563			15,482,316		6,193			3,089,465		1,767,971		2,132,893		(7,410,000	)		(411,915	)

See accompanying notes to financial statements

F-36

											Additional		Additional
											Paid In		Paid In							Total
	Convertible										Capital -		Capital -		Additional					Stockholders'
	Preferred Stock				Common Stock				Warrants		Preferred		Warrant and		Paid In		Decficit			Equity
	Shares		Value		Shares		Par Value		issuance		Stock		Option		Capital		Accumulated			(Deficit)
- Common Stock issued for cash						35,000		14								34,986					35,000
- Common Stock issued for cash						25,000		10								24,990					25,000
- Common Stock issued for cash						7,500		3								7,497					7,500
- Common Stock issued for cash						50,000		20								49,980					50,000
- Common Stock warrants exercised						125,000		50						1,200							1,250
- Common Stock warrants issued pursuant to financing														135,729							135,729
- Common Stock warrants issued for investor relations, net														123,909							123,909
of cancellations
- Common Stock warrants issued pursuant to rent														132,574							132,574
satisfaction agreement
- Common Stock options issued for compensation														133,604							133,604
- Common Stock options and warrants issued for services														515,286							515,286
- Prepaid Warrants										167,750											167,750
- Prior period adjustment																		58,822			58,822
Net Loss for year ending December 31, 2009																		(2,243,636	)		(2,243,636	)
Balance as of December 31, 2009		3,126,434		1,563		15,724,816		6,290		167,750		3,089,465		2,810,273		2,250,346		(9,594,814	)		(1,269,127	)

See accompanying notes to financial statements

F-37

OXYSURE SYSTEMS INC.

STATEMENTS OF CASH FLOWS

(Audited)

	Year Ended December 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,243,636	)	$	(2,900,393	)
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation		421,040			439,587
Amortization		5,120			47,754
Impairment of intangible assets		100,978			-
Prior period adjustment		58,822			(627	)
Changes in current assets and liabilities
Accounts receivable		(32,964	)		(5,204	)
Inventory		145,999			(164,559	)
Prepaid expenses and other current assets		(153,459	)		29,306
Accounts payable and accrued liabilities		(9,893	)		(108,793	)
Deferred revenue		(91,207	)		91,205
NET CASH USED IN OPERATING ACTIVITIES		(1,799,199	)		(2,571,724	)
CASH FLOWS FROM INVESTING ACTIVITIES
Other assets		(10,998	)		-
Purchases of property and equipment		(18,156	)		(92,317	)
NET CASH USED IN INVESTING ACTIVITIES		(29,154	)		(92,317	)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds		582,577			1,306,717
Payment of capital leases		(9,142	)		(237,262	)
Issuance of Preferred Stock		-			24,987
Issuance of Common Stock		117,550			318,062
Proceeds from issuance of common stock and warrants to employees and non-employees		1,210,052			932,172
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,901,037			2,344,676
NET DECREASE IN CASH AND CASH EQUIVALENTS		72,684			(319,365	)
CASH AND CASH EQUIVALENTS, at beginning of year		393			319,758
CASH AND CASH EQUIVALENTS, at end of year	$	73,077		$	393
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest		8,427		$	58,563
Income taxes	$	-		$	-

See accompanying notes to financial statements

F-38

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies of OxySure® Systems, Inc. (the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Business– OxySure® Systems, Inc. (the “Company” or “OSI”) was incorporated on January 15, 2004 as a Delaware corporation. The Company is located in Frisco, Texas and is a medical technology company focused on the design, manufacture and distribution of specialty respiratory products.  The Company and its founder have developed a unique catalytic process and methodology to generate medically pure (USP) oxygen instantly from two dry, inert powders. The Company has been issued seven patents on this technology, and it has several additional patents pending. On December 9, 2005, the Company received approval from the Food and Drug Administration (510K, Class II) for its first product utilizing this technology. This product is referred to as the OxySure® Portable Emergency Oxygen Generator, Model 615, (or Model 615 for short) and the FDA approval is for over-the-counter purchase (without the need of a prescription).

The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

On July 19, 2004, the Company affected a 1-for-5 reverse stock split of the Company’s common stock. All share numbers and common stock numbers, including stock options and warrants, have been retroactively adjusted to reflect the reverse stock split.

While the Company has reduced its working capital deficit by 23% from 2008 to 2009 the going concern risk remains an issue for the company to manage.  The Company has implemented, and plans to further implement several different strategies in order to help the Company ease the going concern issue.  Refer to Note 14, “Going concern” of Notes to Audited Financial Statements for a partial list of the Company’s plans to mitigate the going concern issue.

 .

Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded; and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition of the Company.

Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period.  Actual results could differ from those estimated.

F-39

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition - The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured.  Revenues are recognized from product sales, net of discounts and rebates.  

Deferred Revenue and Income - The Company defers revenue and income when advance payments are received from customers before performance obligations have been completed and/or services have been performed. Deferred revenue and income do not include amounts from products delivered to distributors that the distributors have not yet sold through to their end customers.

Cash and Cash Equivalents - Cash consists of all highly liquid investments purchased with maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed Federally-insured limits. To minimize this risk, the Company places its cash and cash equivalents with high credit quality institutions.

Inventory – The Company’s inventory consists of raw material components for its portable oxygen systems as well as completed products and accessories.   Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in-first-out basis. Inventory components are work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. The Company writes down its inventory value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values.

.

Concentration of Credit Risk – The Company sells all of its products throughout North America.  Sales to its recurring customers are generally granted on net 30-day credit terms. The Company performs periodic credit evaluations of its recurring customers and generally do not require collateral.  An allowance for doubtful accounts is maintained for potential credit losses, which losses historically have not been significant.

The Company invests its cash in deposits and money market funds with major financial institutions.  The Company places it cash investments in instruments that meet high credit quality standards, as specified in its investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Fair Value of Financial Instruments - The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  The Company believes that the recorded values of all of its other financial instruments approximate their recorded values because of their nature and respective maturity dates or durations.

Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when

F-40

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years.  Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms.  Depreciation expense was $421,040 and $439,587 for December 31, 2009 and 2008, respectively.

Other Long-Lived Assets – The Company has two types of intangible assets – patents and trademarks.  Intangible assets are carried at cost, net of accumulated amortization.  Amortization expense was $5,120 and $47,754 for December 31, 2009 and 2008, respectively.

Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified.  Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Certain events and circumstances the Company considered in determining whether the carrying value of identifiable intangible assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in its business strategy.  In determining if an impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.  If an impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

During the year ended December 31, 2009, management determined that some of the existing patents cannot be used in the future product developments and projected that no future revenues can be generated from the existing patents.  As a result, during the year ended December 31, 2009, the Company recognized a $100,978 impairment loss on patents and the entire $100,978 was recorded under “Selling, general and administrative”.  See Note 3, “Intangible Assets,” for the details of long-lived assets in years 2009 and 2008.

Allowance for Doubtful Accounts - The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments.  The Company periodically reviews these allowances, including an analysis of the customers’ payment history and information regarding the customers’ creditworthiness.  Actual write-offs have not been materially different from the estimated allowance.

Research and Development Costs – Costs associated with the development of the Company’s products are charged to expense as incurred.

Income Taxes - The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements, but have not been reflected in the Company's taxable income.  A valuation allowance has been established to reduce deferred tax assets to their estimated realizable value.  Therefore, the Company provides a valuation allowance to the extent that the Company does not believe it is more likely than not that it will generate

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

sufficient taxable income in future periods to realize the benefit of its deferred tax assets.  The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

Stock-Based Compensation – The Company accounts for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, the Company issues warrants tothe consultants and related parties.  The Company is required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. The Company has estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model requires the input of certain assumptions.  Changes in the assumptions used in Black-Scholes model can materially affect the fair value estimates. The Company evaluates the assumptions used to value stock options on a quarterly basis. The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding.

The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees.  Upon the adoption of the accounting guidance, the Company continued to use historical volatility in deriving its expected volatility assumption as allowed under GAAP because it believes that future volatility over the expected term of the stock options is not likely to differ materially from the past. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the stock options. The expected dividend assumption is based on the history and expectation of dividend payouts.  The fair values generated by the Black-Scholes model may not be indicative of the actual fair values of the equity awards, as the Company does not consider other factors important to those awards to employees, such as continued employment, periodic vesting requirements and limited transferability.  The amount of stock based compensation expenses is net of an estimated forfeiture rate, which is also based on historical data. For the years ended December 31, 2009 and 2008, stock based compensation expense was approximately $165,275 and $89,957, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to the employees and consultants.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with EITF Issue 96-18, these stock options and warrants issued as compensation for services to be provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. For the years ended December 31, 2009 and 2008, stock based compensation expense was approximately $762,529 and $807,670, respectively, which consisted primarily of stock-based compensation expense related to stock options and warrants recognized under GAAP issued to consultants and other non-employees.

Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues.

Research and development - Research and development costs are expensed as incurred.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs - Advertising costs are charged to operations when incurred.  During in the years ended December 31, 2009 and 2008 the Company incurred $47,164 and $50,082 respectively in advertising costs.

Litigation and Settlement Costs - Legal costs are expensed as incurred. The Company is involved in disputes, litigation and other legal actions in the ordinary course of business. The Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. This generally occurs when an agreement in principle has been reached by both parties that include substantive terms, conditions and amounts.

Net Income (Loss) per Share - The Company computes net income (loss) per share by dividing net income by the weighted average number of shares of common stock outstanding for the reporting period.  Diluted net income (loss) per share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s stock-based compensation plans and the weighted average number of shares of common stock outstanding during the reporting period.  Dilutive common share equivalents include the dilutive effect of in-the-money options to purchase shares, which is calculated based on the average share price for each period using the treasury stock method.  Under the treasury stock method, the exercise price of an option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in paid-in capital, if any, when the option is exercised are assumed to be used to repurchase shares in the current period.

Reclassifications - Certain financial statement items have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on previously reported net loss.

Recent Accounting Pronouncements

In April 2009, the FASB issued an update to ASC 820, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides guidance on determining fair value when there is no active market or where the price inputs being used represent distressed sales.  This update to ASC 820 was effective for interim and annual periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009.  The adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2009, the FASB issued ASC 855, “Subsequent Events”.  ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC 855, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, was effective for interim or annual periods ending after June 15, 2009.  The Company adopted this standard as of June 30, 2009; however, the adoption of ASC 855 had no impact to the Company’s consolidated financial statements.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In June 2009, the FASB issued ASU 2009-17, Consolidation (ASC 810) “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires ongoing qualitative reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  This new standard also requires additional disclosures about an enterprise’s involvement in variable interest entities. The Company adopted this pronouncement on January 1, 2010 but there was no significant impact on its financial statements.

In June 2009, the FASB issued ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”.  ASC 105 establishes the FASB Accounting Standards Codification (“Codification”), as the single source of authoritative accounting and reporting standards in the United States for all non-government entities, with the exception of the Securities and Exchange Commission and its staff.  It does not include any new guidance or interpretations of US GAAP, but merely eliminates the existing hierarchy and codifies the previously issued standards and pronouncements into specific topic areas.  The Codification was adopted on July 1, 2009 for the Company’s financial statements for the year ended December 31, 2009.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements.”  This update will require (1) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (2) information about purchases, sales, issuances and settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs).  This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and require disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs.  The new disclosures and clarifications of existing disclosure are effective for fiscal years beginning after December 15, 2009, except for the disclosure requirements for related to the purchases, sales, issuances and settlements in the roll forward activity of Level 3 fair value measurements.  Those disclosure requirements are effective for fiscal years ending after December 31, 2010.  The Company is still assessing the impact on this guidance and does not believe the adoption of this guidance will have a material impact to its financial statements.  Management does not believe that other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants or the SEC have a material impact on the Company’s present or future financial statements.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 2 -- BALANCE SHEET COMPONENTS

	December 31,
	2009			2008
Cash	$	73,077		$	393
Total cash and cash equivalents	$	73,077		$	393
Inventories:
Finished goods	$	128,317		$	262,042
Work in process		10,420			22,694
Total inventories	$	138,737		$	284,736
Property and equipment, net:
Machinery and equipment	$	930,367		$	919,017
Leasehold improvements		547,855			547,855
Computer equipment and furniture and fixtures		186,406			179,738
Software		10,626			10,489
		1,675,255			1,657,099
Accumulated depreciation and amortization		(1,156,279	)		(735,239	)
Total property and equipment, net	$	518,976		$	921,860
Accounts payable and accrued expenses
Deferred rent		170,771			232,873
Accounts payable		108,157			95,764
Accrued interest		39,817			-
Other accrued liabilities		13,956			13,957
Total accounts payable and accrued expenses	$	332,701		$	342,594

NOTE 3 – INTANGIBLES ASSETS

The Company has two types of intangible assets: patents and trademarks.  The Company capitalizes expenditures associated with patents and trademarks related to the Company’s various technologies. Capitalized costs include amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications. These assets are amortized on a straight-line method over their legal life.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with applicable accounting guidance. During the year ended December 31, 2009, due to the change in business strategy, the Company determined that some of its existing patent applications cannot be used in future product developments and expected that no future revenues can be generated from those patents.  Consequently, the Company wrote off $100,978 related to patents abandoned under “Selling, general and administrative” in the Statement of Operations and Accumulated Deficit for the year ended December 31, 2009.

On January 15, 2004, the Company executed an Asset Purchase and Stock Transfer Agreement with entities controlled by the founder of the Company. In connection with this agreement, the Company acquired certain

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 3 – INTANGIBLES ASSETS (CONTINUED)

assets, including certain rights, title and interest to intellectual property, relating to the oxygen method and apparatus, developed by the founder of the Company prior to January 15, 2004.  As consideration for the purchase, the Company issued 14,000,000 shares of common stock and a promissory note for $150,000 to these entities. The common stock was valued at $7,000 using the par value of the common stock on the date of issuance, which approximates these entities’ basis (which is not indicative of fair value)? The non-recourse promissory note bore interest at 6.5% per annum and was paid in full during 2006.

The carrying values of the Company’s amortized acquired intangible assets as of the December 31, 2009 and 2008, respectively, are as follows:

	December 31, 2009							December 31, 2008
	Gross		Accumulated Amortization and write off			Net		Gross		Accumulated Amortization and write off			Net
Patents	$	608,642	$	(151,741	)	$	456,901	$	608,642	$	(45,643	)	$	562,999
Trademarks		45,723		-			45,723		35,204		(479	)		34,725
Total	$	654,365	$	(151,741	)	$	502,624	$	643,846	$	(46,122	)	$	597,724

As of December 2009, the Company estimates the future amortization expense of the intangible assets for December 31, 2010, 2011, 2012 and 2013, to be as follows:

2010	$	29,566
2011		29,566
2012		29,566
2013		29,566
Thereafter		384,360
	$	502,624

Due to the nature of the intangible assets, the Company has amortized the cost of the patents and trademarks over their estimated useful lives. The nature of the estimate did not change from 2008 to 2009. Of the net amount of $502,624 in intangible assets as of December 31, 2009, approximately 90.9% is in patents and 9.1% is in trademarks.  Of the total amount for patents, $157,000 was acquired from entities controlled by the founder of the Company in January 2004. The remaining $345,624 represents amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications, net of amortization and impairment.

NOTE 4 – NOTES PAYABLE

Frisco Note. On April 3, 2007 the Company entered into a note agreement with the City of Frisco, Texas for $243,000 pursuant to an economic incentive package provided through the Frisco Economic Development Corporation. The note requires varying annual principal payments through August 2012.  The note is non-interest bearing; however, interest has been imputed at 12.18% per annum. The unamortized discount at December 31, 2009 is $66,468. Individual annual payments will be forgiven if certain performance targets are achieved which include the number of full time employees, square feet

occupied and taxable value of business and personal property in the City of Frisco. The first annual payment for 2008 in the amount of $30,000 was forgiven and the Company recognized the entire $30,000 under “Other income” in the Statement of Operations and Accumulated Deficit for the year ended December 31, 2007.  The balance of the note payable to the City of Frisco as at December 31, 2009 is $213,000.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

Agave/JTR Subordinated Notes.  During March 2008, the Company completed a $1 million financing package consisting of a promissory note for $750,000 (“First Note”) and a promissory note with a draw down provision for $250,000 (“Second Note”) (collectively, the “Notes”). The Notes are subordinated notes and are due and payable on the earlier of (i) completion of the next financing round completed by the Company or (ii) one year after the Notes are issued. In March 2009 the First Note and the Second Note were modified by extending the maturity date in each case to April 15, 2010. On December 31, 2009 the First Note and the Second Note were further modified by extending the maturity date in each case to April 15, 2011.  The holder of the First Note is Agave Resources, LLC (“Agave”), and the President of Agave is Donald Reed, one of its Directors.  In connection with the First Note, on April 15, 2008 Agave was also issued penny warrants to purchase 350,000 shares of common stock.  The warrants are immediately exercisable and expire on April 15, 2013.  The holder of the Second Note is JTR Investments, Limited (“JTR”) a company controlled by Julian T. Ross, the Company’s founder.  As at December 31, 2009 the maximum of $250,000 has been drawn against the Second Note.  In connection with the Second Note, on December 31, 2008 JTR was also issued penny warrants to purchase 116,667 shares of common stock.  Both Notes are non-interest bearing.  The basis for issuing penny warrants in connection with the First Note and the Second Note include, but are not limited to, the fact that no interest is payable on the Notes, the Company’s ability to attract new investment at the time, market conditions and other factors.  Given these factors, the Board of Directors has deemed the terms of these transactions to be fair.  No third party fairness opinion was obtained in relation to these transactions.

JTR Senior Note. In July, 2008, JTR agreed to provide the Company with additional working capital to fund continuing operations (the “Senior Note Interim Funding”).  On November 1, 2008 the Board agreed with JTR on the terms of a loan with a draw down provision of up to $750,000.  This is a Senior Note (the “Senior Note”) with no interest payable.  All amounts advanced by JTR during the Senior Note Interim Funding are draw downs on the Senior Note.  In connection with the Senior Note, the Company will issue .47 penny warrants for every dollar drawn under this facility.  As of December 31, 2009 and 2008 the outstanding balances under the Senior Note were $538,700 and $331,050 respectively.  As of December 31, 2009 and 2008 the number of penny warrants issued to JTR pursuant to the Senior Note was 264, 817 and 163, 819 respectively.  The basis for issuing penny warrants in connection with the Senior Note include, but are not limited to, the fact that no interest is payable on the note, its ability to attract new investment at the time, market conditions, the terms previously agreed to in connection with the First Note and Second Note, and other factors.  Given these factors, the Board of Directors has deemed the terms of this transaction to be fair.  No third party fairness opinion was obtained in relation to this transaction.

Alcedo Subordinated, Convertible Note.  On December 10, 2009 the Company entered into a Note Purchase Agreement with the Tony & Judy Alcedo Family Trust (“Alcedo Trust”). The Company received $100,000 in cash from the Alcedo Trust, in exchange for a Subordinated Convertible Note with a face amount of $100,000 (the “Alcedo Note”). The Alcedo Note bears interest at a rate of 16% per annum, and matures on September 6, 2010. The Alcedo Note is convertible into the common stock, at the option of the Company on or before September 6, 2010, at a conversion price of $1.00 per share, in accordance with the following:

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

Maturity Date: The then outstanding Principal Amount, together with accrued and unpaid interest thereon as set forth above, or the Optional Conversion Shares (as described below) as the case may be, shall become due on the 270th Day subsequent to December 10, 2009 (the "Maturity Date").

Conversion Rights: At any time on or prior to the Maturity Date, at the option of the Company in its sole discretion, all or any portion of the then outstanding Principal Amount and accrued but unpaid interest of this Note may be converted (the "Optional Conversion") into a number of shares of the Company’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount plus the then accrued but unpaid interest to be converted, divided by the Conversion Price which shall be $1.00 per Optional Conversion Share.

In addition to the Alcedo Note, the Company issued the Alcedo Trust 100,000 warrants pursuant to the Note Purchase Agreement.  The warrants are exercisable into the common stock of the Company at an exercise price of $2.50 per share, and expire on December 10, 2014.

Sinacola Subordinated Convertible Notes.On December 10, 2009 the Company entered into a Rent Satisfaction Agreement (the “2009 RSA”) with its landlord, Sinacola Commercial Properties, Ltd. (“Sinacola”). In terms of the 2009 RSA, all of the Company’s outstanding rent obligations under its lease agreement, up to and including December 31, 2009 including, but not limited to, base rent, deferred rent, and its share of operating costs, are deemed to be satisfied in full.  The Company issued Sinacola two Promissory Notes pursuant to the 2009 RSA, as follows:

First Landlord Note:  The first note (the “First Landlord Note”) is a subordinated convertible note in the principal amount of $125,000. The First Landlord Note carries no interest and is convertible, at Sinacola’s option, into the common stock of the Company at an exercise price of $1.00 per common share on the maturity date.

Second Landlord Note:  The second note (the “Second Landlord Note”) is a subordinated convertible note in the principal amount of $126,407. The Second Landlord Note carries no interest and is convertible into the common stock of the Company at an exercise price of $1.50 per common share on the maturity date.  However, if the common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Second Landlord Note is convertible at the Company’s option.

Maturity Date – Each of the First Landlord Note and the Second Landlord Note has a maturity date defined as follows:

The then outstanding Principal Amount shall become due and payable on the earlier to occur of: (i) December 31, 2011; or (ii) the closing of the next equity financing round (the “Equity Event”) completed by the Company (in each case, the "Maturity Date"); provided that; (a) if the Equity Event is in an amount exceeding $1,000,000 but less than $1,500,000, then only 20% of the Principal Amount shall be due and payable; (b) if the Equity Event is in an amount exceeding $1,500,000 but less than $2,000,000, then only 40% of the Principal Amount shall be due and payable; (c) if the Equity Event is in an amount exceeding $2,000,000 but less than $3,000,000, then only 60% of the Principal Amount shall be due and payable; (d) if the Equity Event is in an amount exceeding $3,000,000 but less than $4,000,000, then only 80% of the Principal Amount shall be due and payable; (e) if the Equity Event is in an amount exceeding $4,000,000, then 100% of the Principal Amount shall be due and payable. For any partial Principal Amount paid under (ii) (a) - (ii) (d) above, the balance of the outstanding Principal

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

Amount would continue to be due and payable on the earlier to occur of this (i) or (ii) (a-e) above.  In the event of a partial payment, any subsequent payment resulting from an Equity Event shall be based on the percentage of the original Principal Amount and not a percentage of the outstanding Principal Amount after a partial payment under this maturity provision.

The Company also issued Sinacola with 163,415 penny warrants pursuant to the 2009 RSA (the “New Landlord Warrant”).  The New Landlord Warrant is convertible into 163,415 shares of its common stock, and is exercisable in whole or in part at any time on or before December 31, 2014 at an exercise price of $.01 per share.  In addition, the Company agreed to modify that certain prior warrant issued to Sinacola on August 23, 2007 (the “First Landlord Warrant”).  The First Landlord Warrant provided for Sinacola to purchase 50,000 shares of common stock on of before March 1, 2012 at an exercise price of $2.00 per share.  Pursuant to the 2009 RSA the exercise price of the First Landlord Warrant was modified to $1.00 per share, while all other terms and conditions remained the same.  The Company issued warrants to Sinacola and those warrants are considered as prepaid rent, which will be amortized in 5 years; the Company recorded prepaid short-term and prepaid long-term rent of $46,709 and $138,564 for the years ended December 31, 2009, respectively.

The following table reflects the carrying value of the Company’s of the short-term and long-term notes payable for the years ended December 31, 2009 and 2008.

	December 31,
	2009		2008
Current notes payable
JTR – Senior Note	$	115,850	$	422,850
Misc Notes		100,000		-
Frisco EDC		60,000		50,000
Related Party Loans		34,750		11,500
Total short-term notes payable		310,600		484,350
Long-term notes payable
Agave, First Note	$	750,000		750,000
JTR – Senior Note		422,850		-
JTR, Second Note		250,000		250,000
Sinacola, First Landlord Note		125,000		-
Sinacola, Second Landlord Note		126,407		-
Frisco EDC		86,802		4,732
Total long-term notes payable	$	1,761,059	$	1,004,732
Total short-term and long-term notes payable	$	2,071,659	$	1,489,082

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 5 - SHAREHOLDERS’ EQUITY

Preferred Shares Rights

On December 31, 2005, the Company’s Board of Directors adopted a Preferred Shares Rights Agreement (the “Original Rights Agreement”).   Pursuant to the Agreement, the Board authorized to issue 5,000,000 shares of preferred stock, par value $0.0005 per share. As of December 31, 2005, the Company had authorized the issuance of 2,000,000 shares of preferred stock designated as Series A Convertible Preferred Stock (“Series A Preferred”). On March 22, 2006 the Company authorized an increase in the issuance of the Series A Preferred to 3,100,000 shares of preferred stock. On July 2, 2008 the Company further authorized an increase in the issuance of the Series A Preferred to 3,143,237 shares of preferred stock. As of December 31, 2009 there were 3,126,434 Series A Preferred shares issued and outstanding. The original issue price of the Series A Preferred is $1.00 per share.

From December 31, 2004 through December 31, 2009, the Company issued shares of Series A Preferred Stock as follows:

During 2004, the Company sold 125,000 shares of Series A Preferred at a price of $1.00 per share.  During 2005, the Company sold 600,000 shares of Series A Preferred at a price of $1.00 per share.  In May 2005, the Company issued 25,000 shares of Series A Preferred to a service provider for services performed in lieu of cash payment. These shares were valued at $25,000 using the original issue price of the Series A Preferred, which is in the management’s best estimate of fair value.  In June 2005, the Company issued 12,500 shares of Series A Preferred in lieu of cash payment for management fee (see Note 8). These shares were valued at $12,500 using the original issue price of the Series A Preferred, which is management’s best estimate of fair value.

In February 2006, the Company issued 25,000 shares of Series A Preferred to a service provider for service performed in lieu of cash payment. These shares were valued at $25,000 using the original issue price of the Series A Preferred which is management’s best estimate of fair value. In March 2006, the Company sold 2,325,000 shares of Series A Preferred at a price of $1.00 per share.  During 2007 and 2006, the Company issued 5,728 and 24,979 shares, respectively, of Series A Preferred in lieu of cash payment for premiums on its capital leases (see Note 10). These shares were valued at $17,554 and $60,924, respectively, using the fair value of the shares on the date of issuance. The value of these shares has been recorded as a discount to the capital lease obligation and is being amortized into interest expense over the term of the related lease.  During 2008, 25,000 shares of Series A Preferred were returned to us pursuant to a settlement with a former service provider.  These returned shares were sold for $25,000 in cash, and of the shares sold, 16,803 shares of Series A Preferred were converted into Common Stock. As at December 31, 2009 the Company had 3,126,434 shares of Series A Preferred issued and outstanding.

A summary of the designations and preferences of its Series A Preferred stock is as follows:

Ranking – The Series A Preferred ranks senior to common stock.

Dividends – Series A Preferred may be entitled to receive a quarterly non-cumulative dividend in the amount of $.01 per share upon approval from the Board of Directors.

Liquidation Preference – In the event of any liquidation, dissolution, or winding up of the Company, the holders of Series A Preferred are entitled to receive 100% of the original issue price of $1.00 per share.

Conversion Rights – Each share of Series A Preferred is convertible at any time, at the option of the holder into 1.22 shares of common stock, subject to adjustment. Series A Preferred are subject to

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 5 - SHAREHOLDERS’ EQUITY (CONTINUED)

automatic conversion upon consummation of underwritten offering by the Company of shares of common stock to the public, in which the aggregate cash proceeds are at least $3 million and the price paid per share is at least $5.00.

Redemption Rights – All of the Series A Preferred may be called at any time by the Company within ten years, but not prior to two years after issuance. The redemption value is $1.00 per share, plus an amount equal to all unpaid dividends thereon.

Voting Rights – The holder of each share of Series A Preferred has the right to one vote for each share of common stock into which such share of Series A Preferred could be converted.

Common Stock

The Company has authorized 100,000,000 shares of $0.0004 par value common stock.

On January 15, 2004, the Company issued 14,000,000 shares of common stock valued at $7,000 for the acquisition of certain intangible assets;  please refer to Note 3, “Intangible Assets” for detail.  During 2004, the Company sold 310,000 shares of common stock for proceeds of $126,500.  In addition, the Company issued 1,066 shares of common stock for stock options exercised for zero proceeds pursuant to services valued at $5,000.  During 2006, the Company sold 25,000 shares of common stock for proceeds of $50,000.  During 2007, the Company sold 635,000 shares of common stock for proceeds of $1,587,500.  Moreover, during 2007, the Company issued 20,000 shares of common stock for services valued at $50,000 based on the fair value of the common stock on the date of issuance and 59,250 shares were issued for stock options exercised for proceeds of $24,068.  For detail, please refer to Note 6, “Stock Options and Warrants.”

During 2008, the Company sold 277,000 shares of common stock for proceeds of $318,000. Furthermore, during 2008, the Company issued 120,000 shares for warrants exercised for proceeds of $1,200.  For detail, please refer to Note 6, “Stock Options and Warrants.”  In addition, the Company issued 35,000 shares for stock options exercised for proceeds of $8,750.

During 2009, the Company sold 117,500 shares of common stock for proceeds of $117,500. Furthermore, during 2009, the Company issued 125,000 shares for warrants exercised for proceeds of $1,250. For detail, please refer to Note 6, “Stock Options and Warrants.”  As at December 31, 2009 the Company had 15,724,816 shares of Common Stock issued and outstanding.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS

Equity Incentive Plans

In April 2004, the Company’s Board of Directors and the stockholders at that time approved the adoption of a Voting Stock Option Plan (“the Plan”), which provides for the issuance of stock options to eligible employees of the Company to acquire up to a maximum of 5,000,000 shares of common stock.

The Company’s Board of Directors, which determines the number of options that will be granted, the effective dates of the grants, the option process and the vesting schedules, administers the Plan. In the absence of an established market for the common stock of the Company, the Board of Directors determines the fair market value of the Company’s common stock. Options expire five years from the

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

date of grant and automatically terminate 90 days after such optionee ceases to be an eligible individual under the Plan other than by reason of death or disability.

The portion of options granted that is not exercisable on the date the optionee ceases to be an eligible individual under the Plan by reason other than death, shall terminate and be forfeited to the Company on the date of such cessation. An optionee has no right as a stockholder with respect to any shares covered by the options granted to him until a certificate representing such shares is issued to them.

Stock Options

The following table summarizes the Company’s stock option activities for the years ended December 31, 2008 and 2009:

	Employee					Non-Employee
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Combined Total Options
Granted		1,254,000		$	0.3826		1,966		$	0.1147		1,255,966
Exercised	None			None			(1,066	)		0.0004		(1,066	)
Outstanding at December 31, 2004		1,254,000			0.3826		900			0.2500		1,254,900
Granted		451,250			0.7819		27,014			0.9273		478,264
Forfeited/Cancelled		(65,000	)		0.7200		- -			- -		(65,000	)
Outstanding at December 31, 2005		1,640,250			0.4791		27,914			0.9055		1,668,164
Granted		252,350			1.8216		14,188			1.8252		266,538
Forfeited/Cancelled		- -			- -		- -			- -		- -
Outstanding at December 31, 2006		1,892,600			0.6581		42,102			1.2154		1,934,702
Granted		187,300			1.20		35,000			0.00		222,300
Exercised		(59,250	)		0.4590		- -			- -		(59,250	)
Forfeited/Cancelled		(153,800	)		0.89		- -			- -		(153,800	)
Outstanding at December 31, 2007		1,866,850			0.70		77,102			0.89		1,943,952
Granted		64,259			1.33		2,280			2.50		66,539
Exercised		(35,000	)		0.25		- -			- -		(35,000	)
Forfeited/Cancelled		(86,500	)		1.69		- -			- -		(86,500	)
Outstanding at December 31, 2008		1,809,609			0.68		79,382			0.94		1,888,991
Granted		328,003			0.65		15,000			1.00		309,503
Exercised		- --			-		-			-		-
Forfeited/Cancelled		- --			- --		- --			- --		- --
Outstanding at December 31, 2009		2,047,612			0.68		94,382			- --		2,141,994

F-52

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Valuation Assumptions

The Company values its stock-based payment awards granted using the Black-Scholes model, during the year ended December 31, 2009 and 2008.  The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Black-Scholes model requires the input of certain assumptions. The Company’s stock options have characteristics significantly different from those of traded options, and changes in the assumptions can materially affect the fair value estimates.

For the years ended December 31, 2009 and 2008, respectively, the fair value of options granted were estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:

	2009			2008
Expected terms (in years)		5.00			5.00
Volatility		50%-55	%		41.00	%
Risk-free interest rate		2.40	%		2.60	%
Expected dividend rate		0.00	%		0.00	%
Weighted average fair value	$	0.50		$	1.02

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of option by employees.  The Company uses historical volatility in deriving its expected volatility assumption because it believes that future volatility over the expected term of the stock options is not likely to differ from the past.  The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of options to purchase Trident common stock. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

As stock-based compensation expense recognized in the Statements of Operations for the years ended December 31, 2009 and 2008 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 505 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.  The Company adjusts stock-based compensation expense based on its actual forfeitures on an annual basis, if necessary.

Warrants.

The following table summarizes the Company’s warrant activities for the years ended December 31, 2008 and 2009:

F-53

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

	Number of Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2005		296,419			0.03
Granted		100,000			0.82
Forfeited/Cancelled		-			-
Outstanding at December 31, 2006		396,419			0.23
Granted		170,000			0.60
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at December 31, 2007		566,419			0.34
Granted		777,985			0.05
Exercised		(120,000	)		0.01
Forfeited/Cancelled		-			-
Outstanding at December 31, 2008		1,224,404			0.19
Granted		1,350,332			0.20
Exercised		(125,000	)		0.01
Forfeited/Cancelled		(843,419	)		0.01
Outstanding at December 31, 2009		1,606,317			0.44

NOTE 7 - INCOME TAXES

The Company adopted the provisions of ASC 830-740, “Accounting for Uncertainty in Income Taxes,” on January 1, 2008.  The Company did not recognize any material additional liability as a result of the implementation of ASC 830-740.

Income before provision for income taxes and cumulative effect of change in accounting principle is as follows:

	Year Ended December 31,
(Dollars in thousands)	2009		2008
United States	$	-	$	-
Foreign		-		-
	$	-	$	-

F-54

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 7 - INCOME TAXES (CONTINUED)

The provision (benefit) for income taxes is comprised of the following:

	Year Ended December 31,
(Dollars in thousands)	2009		2008
Current:
Federal	$	-	$	-
State		-		-
Foreign		-		-
	$	-	$	-
Deferred:
Federal
State
Foreign		-		-
		–		–
	$	-	$	-

In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The amount of and ultimate realization of the benefits from the operating loss carry forwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the net deferred tax assets, the Company has established a valuation allowance equal to their tax effect and, therefore, no deferred tax asset has been recognized as of December 31, 2009 and 2008.

F-55

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 7 - INCOME TAXES (CONTINUED)

The deferred tax assets (liabilities) are comprised of the following:

	December 31,
(Dollars in thousands)	2009		2008
Deferred income tax assets:
Benefit computed at federal statutory rate	$	-	$	(692,959	)
Effect of change in state tax rate		-		(44,800	)
Permanent differences
State income tax (benefit)		-		693,868
Other		-		43,891
Deferred income tax assets		–		–
Valuation allowance		–		–
Deferred income  tax assets, net		–		–
Total deferred income tax liabilities:
Amortization		–		–
Unremitted earnings of foreign subsidiaries		-		-
Total deferred income tax liabilities		-		-
Net deferred income tax assets	$	–	$	–

NOTE 8 – LICENSE AND SERVICE AGREEMENTS

During April 2004, the Company entered into a one-year agreement for the use of office space and common areas. The monthly payment under this license agreement varies based on the amount of space occupied. During the year ended December 31, 2005, the monthly payment ranged from $1,316 to $2,648. Upon the expiration of the one-year term, the license agreement continued on a month-to-month basis.

In connection with the execution of the license agreement during April 2004, the Company issued the licensor 281,200 warrants to purchase common stock of the Company at $0.0005 per share. The fair value of these warrants was estimated to be $78,643 using a minimum value option pricing model with no volatility and the following assumptions: no dividend yield, life of 10 years and a risk-free interest rate of 4.21%. The fair value of the warrants was recorded as rent expense over the one-year term of the license agreement. Rent expense related to these warrants totaled $19,661 during the year ended December 31, 2005. Total rent expense under this license agreement for the years ended December 31, 2009 and 2008 was approximately $6,266 and $15,858.

F-56

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

Leases

Operating Lease – During 2007, the Company entered into a long-term non-cancelable lease for office space, which expires in 2012. In connection with the execution of this lease agreement, the Company received leasehold improvements totaling $324,000. The leasehold improvements are recorded as deferred rent and are being amortized as a reduction to rent expense of the lease term. Additionally, the Company issued 50,000 warrants in connection with the lease agreement. Minimum future lease payments required under the operating leases at December 31, 2008 are as follows:  At December 31, 2009, future minimum lease payments under the non-cancelable operating lease for the years ended December 31, 2010, 2011, and 2012 were as follows:

2010	$	195,260
2011		199,310
2012		159,496
	$	554,066

Rental expense for the years ended December 31, 2009 and 2008 was $207,912 and $57,635, respectively.

Capital lease –The Company leases certain of equipments under capital lease agreements that expire at various dates through 2012. Capital lease obligations are included in other liabilities. The future minimum lease payments for all capital leases and operating leases at March 28, 2010 were as follows:

During 2006 the Company entered into a master lease agreement with a VenCore Solutions, LLC that allows the Company to lease up to $750,000 of equipment. This maximum amount available under this lease was subsequently increased to $805,000. The lease agreement requires a security deposit of 10% of the amount of each individual lease schedule, a payment of Series A Convertible Preferred Stock shares equal to 5% of the lease divided by $1.00, and 36 monthly payments of 3.33% of the lease. The Company has the option to purchase the equipment at the end of each lease term at the lesser of 12% of the original equipment cost or the fair market value.

During 2007, the Company entered into agreements with other finance companies to acquire equipment with interest rates ranging from 7% to 15% with five-year lease terms. Minimum noncancellable lease payments required under the capital leases for the years ended December 31, 2009 are as follows:

Total minimum lease payments
	December 31,
2010	$	326,057
2011		24,279
2012		21,814
2013		943
Total minimum lease payments		373,093
Less: amount representing interest		-
Less: unamortized discount related to Series A convertible preferred stocks		-
Total capital lease obligations	$	373,093
Less: current portion		(326,057	)
Long-term capital lease obligations	$	47,036

F-57

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

Legal Proceedings

The Company was a party to a lawsuit involving a former service provider. During May 2008, a settlement was reached between the Company and this service provider in which the Company agreed to pay $75,000 on or before September 1, 2008 and the service provider agreed to return to the Company 25,000 shares of preferred stock in the Company. The $75,000 settlement due to the service provider has been paid in full. The provider has returned the shares of preferred stock to the Company’s counsel.

Indemnification

Under the indemnification provisions of the Company’s customer agreements, the Company agrees to indemnify and defend its customers against infringement of any patent, trademark, or copyright of any country or the misappropriation of any trade secret, arising from the customers’ legal use of the Company’s services. The exposure to the Company under these indemnification provisions is generally limited to the total amount paid by the customers under pertinent agreements. However, certain indemnification provisions potentially expose the Company to losses in excess of the aggregate amount received from the customer. To date, there have been no claims against the Company or its customers pertaining to such indemnification provisions and no amounts have been recorded.

General

From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business. While the Company cannot be certain about the ultimate outcome of any litigation, management does not believe any pending legal proceeding will result in a judgment or settlement that will have a material adverse effect on the Company’s business, financial position, results of operation or cash flows.

NOTE 10 – RELATED PARTY TRANSACTIONS

As discussed in Note 4, “Notes Payable” of Notes to Audited Financial Statements, several of the notes payable are entered among related parties.

A summary of the related party financings as at December 31, 2009 is as follows:

	First Note	Second Note	Senior Note	Other
Holder	Agave Resources, LLC(1)	JTR Investments, Limited(2)	JTR Investments, Limited	Related Party
Amount	$750,000	$250,000	$538,700	$34,750
Interest rate	0%	0%	0%	0%
Maturity	April 15, 2011	April 15, 2011	$115,850<12 Months $422,850>12 Months	<12 Months

(1) Agave Resources, LLC is controlled by one of its Directors, Donald Reed.

(2) JTR Investments, Ltd. is a limited partnership controlled by its President and CEO, Julian Ross.

F-58

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 10 – RELATED PARTY TRANSACTIONS (CONTINUED)

Other than related parties Notes and the Senior Notes discussed in Note 4, “Notes Payable”, of Notes to Audited Financial Statements, the Company received additional $34, 750 in advances from related parties as of December 31, 2009.

As the related parties offered non-interest bearing notes payable to the Company, the Company issued various warrants to its related parties;  please refer to Note 4, “Notes Payable” for detail.

NOTE 11 – NET INCOME (LOSS) PER SHARE

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

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008
Net income (loss)	$	(2,243,636	)	$	(2,900,393	)
Shares used in computing basic per share amounts (weighted ave.)		15,595,024			15,203,649
Dilutive potential common shares (1)		7,468,178			6,848,262
Shares used in computing diluted per share amounts		23,063,202			22,051,911
Net income (loss) per share:
Basic	$	(0.14	)	$	(0.19	)
Diluted	$	(0.14	)	$	(0.19	)
Potentially dilutive securities (1)

(1) Dilutive potential common shares consist of convertible preferred stock, stock options and warrants.  The potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share for the above periods because their effect would have been anti-dilutive.

NOTE 12 – FAIR VALUE MEASUREMENTS

Effective January 1, 2009, the Company adopted new fair value accounting guidance. The adoption of the guidance was limited to financial assets and liabilities and did not have a material effect on the Company’s financial condition or results of operations.

The guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact business and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The guidance establishes three levels of inputs that may be used to measure fair value:

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 12 – FAIR VALUE MEASUREMENTS (CONTINUED)

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs to the valuation methodology that is significant to the measurement of fair value of assets or liabilities.

Assets Measured at Fair Value on a Recurring Basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis which were comprised of the following types of instruments as of December 31, 2009 and 2008:

	Total		Level 1		Level 2		Level 3
Cash (1)	$	73,077	$	73,077		-		-
Total cash equivalents as of December 31, 2009	$	73,077	$	73,077	$	-	$	-

(1)   Included in Cash and cash equivalents on the Company’s Balance Sheet.

	Total		Level 1		Level 2		Level 3
Cash (1)	$	393	$	393		-		-
Total cash equivalents as of December 31, 2008	$	393	$	393	$	-	$	-

(1) Included in Cash and cash equivalents on the Company’s Balance Sheet.

F-60

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 13 – OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company.

NOTE 14 – SEGMENT INFORMATION

The Company is organized as, and operates in, one reportable segment: the development and sale of specialty respiratory products. The Company’s chief operating decision-maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of evaluating financial performance and allocating resources, accompanied by information about revenue by geographic regions. The Company’s assets are primarily located in the United States of America and not allocated to any specific region and it does not measure the performance of its geographic regions based upon asset-based metrics. Therefore, geographic information is presented only for revenue. Revenue by geographic region is based on the ship to address on the customer order.

The following presents total revenue by geographic region:

Revenues:
United States	$	351,341	$	97,060
ROW	$	36,020	$	0
Total revenues	$	387,361	$	97,060

NOTE 15 – GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis and/or obtain financing as may be required.  As of December 31, 2009 and 2008, the Company has incurred net losses from operations and has stockholders’ deficits of $9,594,814 and $7,410,000 respectively.  The Company has a working capital deficit of $656,983 as of December 31, 2009 and a working capital deficit of $851,691 as of December 31, 2008. These factors raise doubt about the Company’s ability to continue as a going concern.

During the next 12 months, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with reviewing or investigating any potential business ventures.  The Company may experience a cash

F-61

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 15 – GOING CONCERN (CONTINUED)

shortfall and be required to raise additional capital. Historically, it has relied upon internally generated funds and funds from the sale of shares of stock and loans from its shareholders and private investors to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing.  The Company’s failure to do so could have a material and adverse affect upon it and its shareholders.

The Company has a series of plans to mitigate the going concern:

1.   Cash Burn: Cash burn was $1.8 million in 2007, $1.4 million in 2008 and approx. $680,000 in 2009. The Company has aggressively and successfully trimmed its expenses, and has worked to create implement a cost model that is as variable as possible.

2.   Management has a draw down provision in place – the JTR Senior Note, which allows the Company to draw down up to $750,000. The Company has approximately $210,000 available under this facility.

3.   The Company has recently concluded a $370,000 license and distribution agreement with a new distributor. Please refer to Note 16, “Subsequent Events”.

4.   The Company has commenced a bridge financing of up to $1 million, of which $100,000 was already raised.

5.   The Company is in the process of filing an S-1 registration statement with the Securities & Exchange Commission, and plans to raise $5 million in a Direct Public Offering.

6.   The Company’s sales during 2010 will be derived from existing markets (schools/districts, churches, commercial), government markets (government budgets for the 2010 fiscal year will be depleted by September 30, 2010 and the Company plans a significant effort on this market) and international markets.

7.   International: The Company has received ANVISA approval in Brazil in March 2010. The Company has appointed a distributor in Brazil who is contracted to purchase a minimum of 3,000 units per annum to maintain exclusivity. In addition, the Company has concluded a significant distribution agreement in South Africa (see Note 16), and other countries are pending. In addition, the Company has concluded a Memorandum of Understanding with an AED manufacturer in Europe for distribution in thirteen countries. Management expects that a portion of those sales will be realized in 2010.

8.   The Company plans to add delivery capacity through additional distributors – the Company has approx.  17 in the US and management expects that to grow to approximately 30 by the end of 2010. In addition, the Company has three international distributors and it plans to increase that to approximately six by the end of 2010.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 15 – GOING CONCERN (CONTINUED)

9.   The Company has migrated to selling solutions, thereby diversifying its revenue opportunities. The Company has added new products, and recently added higher priced items like AEDs.

10.   Rent Satisfaction Agreement: The Company has successfully partnered with its landlord to find a creative solution for past rent expenses. Further, the Company has successfully lowered its cash requirements for expenses for 2010 – the Company is currently only paying operating expenses and any differences deferred are expected to be converted to equity or a combination of debt/equity.

11.   The Company has successfully partnered with Vencore Solutions to defer its cash requirements for capital lease payments toward Vencore. Management expects that any amounts deferred will be satisfied in the future through a possible combination of cash, equity, and/or new debt obligations.

NOTE 16 - SUBSEQUENT EVENTS

The Company has evaluated events and transactions subsequent to December 31, 2009 through the date of issuance of the Financial Statements. During the period from January 1, 2010 to the date of issuance, the Company has the following material subsequent events:

On March 26, 2010 the Company entered into a licensing and distribution agreement with a new distributor in South Africa, called Afritex Medical Products (Pty) Ltd. (“Afritex”), of which the president of the Company is also a stockholder.  The following summarizes the terms of the agreement:

1.   Afritex is to pay the Company a one-time, upfront license fee in the amount of $225,000;

2.   Afritex is to make an initial purchase of $145,000 in products;

3.   Afritex is committed to purchasing an annual minimum of $480,000 in products;

4.   Afritex received exclusive distribution rights for the following countries: South Africa, Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, and Zimbabwe;

5.   The Company issued Afritex a convertible note in the amount of $270,000. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share, carries a 16% annual interest rate, and has a maturity of 270 days subsequent to issuance. The note is convertible into the common stock of the Company at any time on or before maturity, at the Company’s option; and

6.   The Company issued Afritex a warrant to purchase 270,000 shares of the Company’s common stock at an exercise price of $2.50 per share. The warrant is exercisable in whole or in part at any time on or before March 27, 2015.

F-63

OxySure® Systems, Inc.

9,240,565 Shares

$1.00 Per Share

STOCK

PROSPECTUS

July 15, 2010

Dealer Prospectus Delivery Obligation

Prior to the expiration of ninety days after the effective date of this registration statement or prior to the expiration of ninety days after the first date upon which the security was bona fide offered to the public after such effective date, whichever is later, all dealers that effect transactions in these securities, whether or not participating in this Offering, may be required to deliver a Prospectus.   This is in addition to the dealers' obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, if any, payable by the Registrant relating to the sale of common stock being registered.

SEC Registration Fee(1)	$	660.00
Transfer Agent Fees	$	4,500.00
Legal, Accounting, and Professional Fees And Expenses	$	100, 000.00
Miscellaneous	$	24,5 00.00
Total	$	129,660.00

(1) All amounts are estimates other than the Commission’s registration fee.

Item 14.  Indemnification of Directors and O fficers

Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).  Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders.  This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law.  In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law.  The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

Our bylaws provide for the indemnification of our directors to the fullest extent permitted by the Delaware General Corporation Law.  Our bylaws further provide that our Board of Directors has discretion to indemnify our officers and other employees.  We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the bylaws or otherwise.  We are not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably and promptly made by our Board of Directors by a majority vote of a quorum of disinterested Board members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to us or our stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable sections of our bylaws.

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We have been advised that in the opinion of the SEC , insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.  In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection.  As of the date of the Share Exchange, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future.  Such indemnification agreements may require us, among other things, to:

 indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;

 advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or

 obtain directors’ and officers’ insurance.

At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

Item 15.  Recent Sales of Unregistered Securities

During 2007 and 2006, we issued 5,728 and 24,979 shares, respectively, of Series A Preferred in lieu of cash payment for premiums on our capital leases.  These shares were valued at $17,554 and $60,924, respectively, using the fair value of the shares on the date of issuance.

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In July 2007, we issued 20,000 shares of Common Stock for services valued at $50,000 based on the fair value of the Common Stock on the date of issuance and 59,250 shares were issued for stock options exercised for proceeds of $27,193.

During 2007, we issued 187 ,300 options to purchase shares of common stock with an aggregate exercise price of $0.94 to employees under the 2004 Stock Option Plan.   These options were valued at $172,248 using the fair value of the underlying shares on the date of issuance.

During 2007, we issued 24,000 options to purchase shares of common stock with an aggregate exercise price of $2.00 to Advisory Board members.

During December 2007, we issued 35,000 options to purchase shares of common stock with an aggregate exercise price of $0.50 in exchange for professional services.   These options were valued at $32,788 using the fair value of the underlying shares on the date of issuance.

During October 2007, we issued 120,000 warrants to purchase shares of common stock with an aggregate exercise price of $0.01 in return for consulting services.   These warrants were valued at $299,027 using the fair value of the underlying shares on the date of issuance.

During August 2007, we issued 50,000 warrants to purchase shares of common stock with an aggregate exercise price of $2.00 in lieu of rent expense.   These warrants were valued at $57,434 using the fair value of the underlying shares on the date of issuance.

During 2008, we issued 7,500 warrants to purchase shares of common stock with an aggregate exercise price of $1.00 in lieu of rent expense.   These warrants were valued at $3,327 using the fair value of the underlying shares on the date of issuance.

Between January 1, 2008 and June 22, 2009, we issued 678 ,843 warrants to purchase shares of common stock with an exercise price of $0.01 in connection the First Note, Second Note, and Senior Note.   These warrants were valued at a total of $718,678 using the fair value of the underlying shares on the dates of issuance.

During 2008, we issued 25,000 warrants to purchase shares of common stock with an exercise price of $1.00 in respect of community grants to non-profit organizations.   These options were valued at $10,959 using the fair value of the underlying shares on the date of issuance.

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During 2008, we issued 20,259 options to purchase shares of common stock with an aggregate exercise price of $0.69 to employees under the 2004 Stock Option Plan.   These options were valued at $11,995 using the fair value of the underlying shares on the date of issuance.

During 2008, we issued 39 , 000 options to purchase shares of common stock with an aggregate exercise price of $1.62 to Advisory Board members.   These options were valued at $53,912 using the fair value of the underlying shares on the date of issuance.

During 2008, we issued 2,280 options to purchase shares of common stock with an aggregate exercise price of $2.50 in exchange for services.   These options were valued at $2,071 using the fair value of the underlying shares on the date of issuance.

During May 2008, we received 25,000 shares of the Series A Preferred (the “Returned Series A Preferred Shares”) as part of a legal settlement.

During July 2008, we re-issued 8,197 shares of the Returned Series A Preferred Shares at a price of $3.05 per share.

In September 2008, we commenced a private placement of common stock pursuant to which we sold an aggregate of 329,500 shares of Common Stock to 14 purchasers at an aggregate purchase price of $1.00 per share, for gross proceeds of $329,500.  This private placement ended in April 2009.

During June 2008, we issued 35,000 shares for stock options exercised for proceeds of $8,750.

During April 2008, we issued 120,000 shares for stock options exercised for proceeds of $1,200.

During May 2008, we issued 8,000 warrants to purchase shares of common stock with an aggregate exercise price of $0.01 in return for consulting services.  These options were valued at $19,931 using the fair value of the underlying shares on the date of issuance.

During November 2008, we issued 100 ,000 warrants to purchase shares of common stock with an aggregate exercise price of $0.01 in return for consulting services.   These options were valued at $99,098 using the fair value of the underlying shares on the date of issuance.

During the period January through April 2009, we issued 142,500 shares of Common Stock at a price of $1.00 per share.

During Q1 2009 and Q2 2009 , we issued 117,500 warrants to purchase shares of common stock with an aggregate exercise price of $0. 09 in return for consulting services.   These warrants were valued at $111,080 using the fair value of the underlying shares on the date of issuance.

During December 2009, we issued a net of 125,000 shares of common stock in return for services related to the IR Services, Inc. agreements .

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During 2009, we issued 283 ,003 options (net of forfeitures of 90,000 options) to purchase shares of common stock with an aggregate exercise price of $0. 43 to employees under the 2004 Stock Option Plan.

During December 2009, we issued 1,000 options to purchase shares of common stock with an exercise price of $1.00 to Board Members.   These options were valued at $301 using the fair value of the underlying shares on the date of issuance.

During 2009, we issued 15,000 options to purchase shares of common stock with an exercise price of $1.00 in exchange for services.   These options were valued at $6,728 using the fair value of the underlying shares on the date of issuance.

None of these transactions involved any underwriters or any public offerings.  Each of these transactions was exempt from registration under the Securities Act pursuant to Regulation D of the Securities Act.

The previous OxySure shares of common and preferred stock have been issued for investment purposes in “private transaction” and are “restricted” shares as defined in Rule 144 under the Securities Act, subject to certain limitations included in said Rule.

These shares were issued without solicitation to friends and relatives of our officers and directors who desired to assist in our development.  We had reasonable grounds to believe prior to making an offer to the above investors, and did in fact believe, when said investments were accepted, that such purchasers (1) were purchasing for investment and not with a view to distribution, and (2) had such knowledge and experience in financial and business matters that they were capable of evaluating the merits and risks of their investment and were able to bear those risks.  The purchasers had access to pertinent information enabling them to ask informed questions.  All such sales were affected without the aid of underwriters, and no sales commissions were paid.  An appropriate restrictive legend is imprinted upon each of the certificates representing such shares, in accordance with Rule 144.

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Item 16.  Exhibits

Exhibit No.	Description
3.1	Articles of Incorporation, dated January 14, 2004 *
3.2	Amendment to Articles of Incorporation, dated August 16, 2004 *
3.3	Amendment to Articles of Incorporation, dated April 7, 2009 *
3.4	Amendment to Articles of Incorporation, dated May 19, 2009 *
3.5	Amended and Restated Articles of Incorporation, dated July 7, 2009 *
3.6	Bylaws, dated January 15, 2004*
4.1	Form of Warrant, dated December 2008 *
4.2	Form of Subscription Agreement for Preferred Stock (March 2005) *
4. 5	Form of Voting Stock Agreement (February 1, 2004) *
5.1	Opinion of Oswald & Yap LLP1
10.1	Initial Employment Agreement with Julian T. Ross, dated January 15, 2004 (As Amended July 19, 2004) *
10.1.1	Amendment to Initial Employment Agreement with Julian T. Ross, dated August 30, 2008 *
10.1.2	Second Employment Agreement with Julian T. Ross, dated January 15, 2009 *
10.1.3	Amendment to Second Employment Agreement with Julian T. Ross, dated January 15, 2009 *
10.1.4	Second Amendment to Second Employment Agreement with Julian T. Ross, dated January 15, 2009 *
10.1.5	As amended Second Employment Agreement with Julian T. Ross, dated January 15, 2009*

__________________

1 To be filed by amendment.

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10.1.6	Third Amendment to Second Employment Agreement with Julian T. Ross, dated January 15, 2010
10.1.7	As amended Second Employment Agreement with Julian T. Ross, dated January 15, 2010
10.2	Freeman Base Employment Agreement with Scott Freeman, dated September 6, 2005 *
10.2.1	Freeman Base Employment Agreement First Amendment dated August 31, 2008 *
10.2.2	Freeman Base Employment Agreement Second Amendment dated January 15, 2009 *
10.2.3	As amended Freeman Base Employment Agreement dated January 15, 2009 *
10.3	Frisco Economic Development Corporation Performance Agreement, dated April 3, 2007 *
10.3.1	Frisco Economic Development Corporation Promissory Note, dated April 3, 2007 *
10.4	5-Year Lease Agreement with Sinacola Commercial Properties, Limited.  dated March 6, 2007 *
10.4.1	First Amendment to the 5-Year Lease Agreement with Sinacola Commercial Properties, Limited, dated August 24, 2007 *
10.4.2	Second Amendment to the 5-Year Lease Agreement with Sinacola Commercial Properties, Limited, dated November 24, 2008 *
10.5	First Note extended to Agave Resources, LLC, dated April 15, 2008. *
10.5.1	Amendment to First Note extended to Agave Resources, LLC, dated February 20, 2009 *
10.6	“Second Note” extended to JTR Investments, Limited, dated March 1, 2008 *
10.6.1	Amendment to “Second Note” extended to JTR Investments, Limited, dated February 20, 2009 *
10.7	“Senior Note” Board Approval, dated November 1, 2008 *

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10.7.1	“Senior Note” extended to JTR Investments, Limited, dated December 31, 2008 *
10.7.2	“Senior Note” extended to JTR Investments, Limited, dated June 30, 2009 *
10.8	Asset Purchase and Stock Transfer Agreement with JTR Investments, Limited, and affiliates, dated January 15, 2004 *
10.9	Amended Agreement with IR Services, dated June 22, 2009*
10.9.1	Original Agreement with IR Services, Inc., dated April 20, 2009
10.9.2	Cancellation Agreement and Mutual Release with IR Services, dated December 15, 2009
10.10	Voting Stock Option Plan, dated February 1, 2004 *
10.11	Form of Subcontractor Agreement and Assignment of Intellectual Property *
10.12	Form of Lock-up Agreement-Common Stock *
10.13	Form of Lock-up Agreement-Preferred Stock *
10.14	Department of Transportation Approval Letter, dated October 3, 2008 *
10.15	Master Lease Agreement with VenCore Solutions, LLC, dated October 26, 2006 *
10.16	North Texas Enterprise Center for Medical Technology License Agreement, dated April 8, 2004 *
10.16.1	Amendment of North Texas Enterprise Center for Medical Technology License Agreement, dated August 22, 2004 *
10.16.2	Amendment of North Texas Enterprise Center for Medical Technology License Agreement, dated May 26, 2005 *
10.17	CitiCapital Lease 1, dated September 13, 2007 *
10.18	CitiCapital Lease Agreement 2, dated September 13, 2007 *
10.19	CitiCapital Lease Agreement 3, dated September 21, 2007 *
10.19.1	Amendment to CitiCapital Lease Agreement 3, dated October 24, 2007 *

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10.20	Dell Lease 1 Agreement, dated June 5, 2008 *
10.21	Dell Lease 2 Agreement, dated June 5, 2008 *
10.22	Dell Lease 3 Agreement, dated December 1, 2008 *
10.23	Neville Financing Lease Agreement, dated October 17, 2007 *
10.24	NMHG- Yale Lease Agreement, dated December 14, 2007 *
10.25	Wachovia Lease Agreement, dated December 20, 2007 *
10.2 6	Cancellation Agreement and Mutual Release with RKH Capital , dated June 22, 2009
1 0.27	Sinacola Commercial Properties, Ltd. Letter Agreement, dated December 10, 2009
10.28	Note Agreement with Tony & Judy Alcedo Family Trust, dated December 10, 2009
10.29	Afritex License Agreement dated March 26, 2010
10.30	Afritex Distribution Agreement dated March 26, 2010
10.31	Afritex Note Purchase Ageement dated March 26, 2010
14.1	Code of Ethics*
23.1	Consent of Oswald & Yap LLP (included in its opinion set forth in Exhibit 5 hereto)
23. 2	Consent of Sam Kan & Company, LLC
23.3	Consent of Sam Kan & Company, LLC
99.1	Form of Subscription Agreement*

* Previously filed as an exhibit to our Form S-1/A filed with the SEC on August 12, 2009.

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Item 17.  Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any Prospectus required by section 10(a)(3) of the Securities Act;

(ii) To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate Offering Price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the Offering.

(4) That, for the purpose of determining liability under the Securities Act to any purchaser, the undersigned registrant undertakes that each Prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectus es filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.  Provided, however, that no statement made in a registration statement or Prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

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(5) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii) Any free writing Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this S-1 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Frisco, Texas as of July 15, 2010 .

OXYSURE SYSTEMS, INC.
By:	/s/ Julian T. Ross
	Julian T. Ross
	President, Secretary, Director, Chief Executive Officer, and Principal Accounting Officer

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated:

/s/ Julian T. Ross

Julian T. Ross

President, Secretary/Treasurer, Director, Chief Executive Officer,

Chief Financial Officer, and Principal Accounting Officer

Date: July 15, 2010

/s/ Donald Reed

Donald Reed

Director

Date: July 15, 2010

/s/ Vicki Jones

Vicki Jones

Director

Date: July 15, 2010

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EX-10.1.6

MODIFICATION OF AGREEMENT

(THIRD MODIFICATION)

WHEREAS, OxySure Systems, Inc. (“OxySure”) and Julian T. Ross (“Ross”) (OxySure and Ross jointly, the “Parties”) entered into that certain Employment Agreement (“Agreement”) dated January 15, 2009, as amended, for the second time on June 23, 2009; and

WHEREAS, The Parties have agreed that it is in their best interests to modify the terms of the Agreement.

NOW, WHEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

Section 3 – “TERM” of the as amended agreement shall be modified, and shall read as follows:

The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the Effective Date and end on the One Thousand One Hundred Eightieth (1,080th) day thereafter, unless sooner terminated as hereinafter provided.

All other provisions of the Agreement shall remain unchanged.

Agreed to and accepted:

By:	/s/ Don Reed	By:	/s/ Vicki Jones
Mr.	Don Reed, Director	Ms.	Vicki Jones, Director
For:	OxySure Systems, Inc.	For:	OxySure Systems, Inc.
Date:	6/23/2010	Date:	6/9/2010
By:	/s/ Julian T. Ross
Mr.	Julian Ross, Executive
Date:	6/9/2010

EX-10.1.7

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, as amended (hereinafter referred to as the "Agreement") is made and entered into as of the    15th       day of January, 2009 (“Effective Date”), by and between OXYSURE SYSTEMS, INC., a corporation duly organized and existing pursuant to the laws of the state of Delaware, (hereinafter referred to as "OSI" or the “Company”), and JULIAN T. ROSS (hereinafter referred to as the "Executive").

W I T N E S S E T H:

WHEREAS, the Company desires to have the benefit of the Executive's efforts and services;

WHEREAS, the Company recognizes that circumstances may arise which may cause uncertainty of continued employment of the Executive without regard to the Executive's competence or past contributions;

WHEREAS, such uncertainties may result in the loss of valuable services of the Executive to the detriment of the Company and its shareholders;

WHEREAS, the Executive will be in a better position to consider the best interests of the Company if the Executive is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which may result from situations now unknown, and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1.             DEFINITIONS.  Whenever used in this Agreement, the following terms shall have the meanings set forth below:

(a)  "Accrued Benefits" shall mean the amount payable not later than fifteen (15) days following an applicable Termination Date and which shall be equal to the sum of the following amounts:

(i)  All salary earned or accrued through the Termination Date;

(ii)Reimbursement for any and all moneys advanced in connection with the Executive's employment for pre-approved, reasonable and necessary expenses incurred by the Executive through the Termination Date;

(iii)Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect;

(iv) The full amount of any stated bonus payable to the Executive with respect to the year in which termination occurs provided that the events necessary to have earned said bonus have been achieved; and

(v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company.

(b)  "Act" shall mean the Securities Exchange Act of 1934;

(c)  "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act;

Employment Contract - Page 1

Oxysure/HR/Employment Agreement.doc

(d)  "Base Period Income" shall be an amount equal to the Executive's annualized compensation calculated pursuant to section 6 herein for the initial term of this agreement;

(e)  "Board" shall mean the Board of Directors of the Company;

(f)  "Cause" shall mean any of the following:

(i)   The engaging by the Executive in illegal or fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after the exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines has a significant adverse impact on the Company in the conduct of the Company’s business;

(ii)   A conviction of a felony, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after the exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines has a significant adverse impact on the Company in the conduct of the Company’s business;

(iii)   Willful or grossly negligent failure by Executive to perform his duties in a manner consistent with the Company’s best interests; or

(iv)   Willful violation by the Executive of the Company’s policies and procedures.

(g)  "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time;

(h)  “Consolidated Group” means and includes the Company, all of OSI’s current or future subsidiaries and any other corporations or divisions thereof, which are hereafter acquired by or consolidated with the OSI and which collectively carry on the business of OSI, the Company or any part thereof.;

(i)  "Notice of Termination" shall mean the notice described in Section 9 herein;

(j)  "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an Executive benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan;

(k)  "Termination Date" shall mean, except as otherwise provided in Section 10 herein,

(i)  The Executive's date of death;

(ii)  Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; and

(iii)  Sixty (60) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than Cause.

2              EMPLOYMENT.

The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

Employment Contract - Page 2

Oxysure/HR/Employment Agreement.doc

3.             TERM.

The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the Effective Date and end on the One Thousand One Hundred Eightieth (1,080th) day thereafter, unless sooner terminated as hereinafter provided.

4.             POSITIONS AND DUTIES.

The Executive shall hold the position of Chairman & CEO of the Company. The Executive shall also perform such duties as the Board shall direct and shall serve in such additional capacities as set forth in Section 7 herein.  In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board.  The Executive shall devote substantially all of the Executive's working time and efforts to the business and affairs of the Company.

5.             PLACE OF PERFORMANCE.

In connection with the Executive's employment by the Company, the Executive shall be based at the principal Executive offices of the Company in North Dallas, Texas, except for where travel is required, or where otherwise required by the operations of the Company.

6.             COMPENSATION AND RELATED MATTERS.

(a)  Commencing on the Effective Date hereof, and during the Period of Employment, the Company shall compensate the Executive in accordance with Exhibit A hereto. The Company will also issue to the Executive options as to the Common Stock of the Company as outlined in Exhibit A hereto.

(b)  During the term of the Executive's employment hereunder, the Executive shall be entitled to receive prompt reimbursement for all pre-approved, reasonable expenses incurred by the Executive in performing services hereunder, including all business travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures presently established by the Company and OSI or as may be changed from time to time.

(c)  The Executive shall also be entitled to all other benefits provided by the Company to its general Executives.

7.             OFFICES.

The Executive agrees to serve without additional compensation, if elected or appointed thereto, as a member of the Board of Directors of the Company, or any subsidiary; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise.

8.             (a) TERMINATION FOR CAUSE.

If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 9 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date.  The Executive shall not be entitled to the receipt of any Termination Payment.

Employment Contract - Page 3

Oxysure/HR/Employment Agreement.doc

(b) TERMINATION NOT FOR CAUSE.

If the Company terminates the Executive for any reason other than Cause, then the Executive shall be entitled to a Termination Payment equal to Twelve Months Base Salary. Base Salary refers to Base Salary as defined in Exhibit A hereto.

9.           TERMINATION NOTICE AND PROCEDURE.

Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, of such Notice of Termination is delivered by the Executive, all in accordance with the following procedures:

(a)  The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination.

10.           NONDISCLOSURE OF PROPRIETARY INFORMATION.

(a)  For the purposes of this Paragraph 11, including all subparagraphs, “the Company” shall mean the Company or OSI.  Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the obtainment and sale of products or performance of services, which involve experimental and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence  of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors.

(b)  The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company or otherwise as required by law, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling.

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(c)  All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him in trust solely for the benefit of the Company, and shall be delivered to the Company by him on the termination of his engagement or at any other time on the  request of the Company.

(d)  The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him prior to his being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information.

11.           ASSIGNMENT OF INVENTIONS.

(a)  For purposes of this Paragraph 12, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement.  All inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this paragraph 12 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an Executive or consultants;

(b)  The Executive shall maintain written notebooks in which he shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf.  The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his engagement or, upon request of the Company, at any time prior thereto.

(c)  The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire.

(d)  The Executive hereby assigns to the Company all of his rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions.

(e)  The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee.  The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions.

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(f)  The Executive represents that his performance of all the terms of this Agreement and as an Executive of or consultant to the Company does not and will not breach any trust prior to his employment by the Company.  The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he has not brought and will not bring with him to the Company or use in the performance of his responsibilities at the Company any materials or documents of a former  employer which are not generally available to the public, unless he has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company.

(g)  No provisions of this Paragraph shall be deemed to limit the restrictions applicable to the Executive under Paragraph 11.

12.           SHOP RIGHTS.

The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know how related thereto, which are not within the scope of Inventions as defined in Paragraph 12 but which are conceived or made by the Executive during the period he is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel.

13.           NON-COMPETE.

The Executive hereby agrees that during the term of this Agreement and for twelve months (12) months following a termination for any reason, unless otherwise specified in this agreement, shall not:

(a)  Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the engaged in catalytic oxygen generation.  For purposes of this paragraph, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with OSI, or any subsidiary thereof; or

(b)  Within any jurisdiction or marketing area in the United States in which the Consolidated Group or any member thereof is doing business, act as, or become employed as, an officer, director, Executive, consultant or agent of any business engaged in catalytic oxygen generation; or

(c)  Solicit any business that is the same as that of the Consolidated Group for, or sell any products involving catalytic oxygen to, any company in the United States, which is, as of the date hereof, a customer or client of the Consolidated Group or any of its members, or was such a customer or client thereof within two years prior to the date of this Agreement; or

(d)  Solicit the employment of, or hire any full time Executive employed by the Company or its subsidiaries as of the date of termination of this Agreement.

Restrictions Reasonable. Executive represents and agrees that the provisions hereof are reasonable in order to protect the business and proprietary interests of the Consolidated Group both as to the duration of time and any geographic limitation therein provided, based on the present business, plans and prospects of the Consolidated Group and the confidential and proprietary information to which Executive has had and will have access, and that compliance with the provisions hereof will not be unduly burdensome on him.  Executive represents that prior to executing and delivering this agreement, he has reviewed the provisions of this agreement with his attorney.

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14.           REMEDIES AND INJUNCTIVE RELIEF

The Executive hereby acknowledges and agrees that a breach or threatened breach by him or the non-performance of certain of the covenants or promises contained herein by him may cause serious and irreparable harm to the Consolidated Group and that any remedy at law, including any award of money damages, may be inadequate.  Accordingly, Executive agrees and accepts that a threatened breach, a breach or a violation of the provisions of this agreement by him shall entitle the Company, as a matter of right, to an injunction issued by any court of competent jurisdiction, restraining any further or continued breach or violation of the provisions of this agreement.  Such right to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to which the Company may be entitled. The Executive specifically acknowledges that the requirement of the Consolidated Group or any member thereof to post a bond for the issuance of a temporary restraining order or temporary injunction should be waived.

15.           ATTORNEY’S FEES.

In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum.

16.           SUCCESSORS.

This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the  Executive's surviving spouse, or the Executive's estate if the Executive  dies without a surviving spouse.  This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale.

17.           ENFORCEMENT.

The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

18.           AMENDMENT OR TERMINATION.

This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance; provided, however, that the terms of any renewal or extension shall not more adverse to Executive than the terms provided for herein, as described in Exhibit A hereto. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.  Nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

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19.           SEVERABILITY.

The provisions of paragraphs 11, 12, 13 and 14 shall survive termination of this Agreement.

20.           ENTIRE AGREEMENT.

This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto.  Each party to this Agreement acknowledges that no representations, inducements, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and no other agreement, statement or promise not contained in this Agreement shall be valid or binding.  The parties hereto have had an opportunity to consult with their respective attorneys concerning the meaning and the import of this Agreement and each has read this Agreement, as signified by his/their signatures below, and are executing the same for the purposes and consideration herein expressed.

21.           GOVERNING LAW.

This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made and to be performed entirely within such State without giving effect to the provisions, principles, or policies thereof relating to choice or conflict laws, except to the extent that Federal law may apply.

22.           NOTICE.

Any notice or other communication required or permitted hereunder shall be deemed given if in writing and delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid.  Any such notice shall be deemed given when so delivered personally or sent by overnight air courier or facsimile transmission or, if mailed, two days after the date of deposit in the United States mails, as follows:

if to OSI:

Board of Directors

OxySure® Systems, Inc.

10880 John W. Elliott Road

Suite 600

Frisco, TX  75034

if to the Executive:

Mr. Julian T. Ross

6912 Stony Hill Road

McKinney, TX 75070

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Any party may be given notice in accordance with this Section to the other parties designate another address or person for receipt of notices by such party hereunder.

23.           BINDING EFFECT: NO ASSIGNMENT.

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal representatives.  This Agreement and any rights hereunder are not assignable except by operation of law or by OSI to any of its subsidiaries or affiliates.  Any other purported assignment shall be null and void.

24.           VARIATIONS IN PRONOUNS.

Wherever the context shall so require, all words herein in the male gender shall be deemed to include the female or neuter gender and vice versa, all singular words shall include the plural, and all plural words shall include the singular.  All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

25.           REPRESENTATION BY COUNSEL

Each party acknowledges that it has had the opportunity to be represented by separate independent counsel in the negotiation of this Agreement, that any such respective attorneys were of its own choosing, that each authorized representative has read this Agreement and that he understands its meaning and legal consequences to each party.  The Parties warrant and represent that they have consulted with their attorney of choice concerning the execution, the meaning and the import of this Agreement, and each has read this Agreement and fully understands the terms hereof as signified by their signatures below, and are executing the same of their own free will for the purposes and consideration herein expressed.  The Parties warrant and represent that they have had sufficient time to consider whether to enter into this Agreement and that they are relying solely on their own judgment and the advice of their own counsel in deciding to execute this Agreement.  The Parties warrant and represent that they have read this Agreement in its entirety and have consulted with their attorney concerning the execution of this Agreement. If any or all Parties have chosen not to seek alternative counsel, said party or parties hereby acknowledge that he or they refrained from seeking alternative counsel entirely of his or their own volition and with full knowledge of the consequences of such a decision.

26.           PRESUMPTION AGAINST SCRIVENER

Each party waives the presumption that this Agreement is presumed to be in favor of the party which did not prepare it, in case of a dispute as to interpretation.

27.           CAPACITY

Each party represents and warrants that he has the authority to enter into this Agreement either on his own behalf or in an official capacity on behalf of a corporate party.

28.           OTHER INSTRUMENTS

The Parties hereto covenant and agree that they will execute such other and further instruments and documents as are or may become necessary or convenient to effectuate and carry out the business obligations and duties created by this Agreement.

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29.           NO WAIVER.

No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.

30.           HEADINGS.

The headings used in this Agreement are for administrative purposes only and do not constitute substantive matter to be considered in construing the terms and shall not affect the interpretation of this Agreement.

31.           COUNTERPARTS.

This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.  Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto.

IN WITNESS WHEREOF, the Company, has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written.

OXYSURE SYSTEMS, INC.

__________________________________

By:           Mr. Don Reed

Director

EXECUTIVE

_________________________________

Julian Ross

Executive

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Exhibit A

To the Employment Agreement by and between OxySure Systems, Inc. and

Julian T. Ross

Dated and Amended January 15, 2009,

and as Amended (Second) on June 23, 2009,

and further Amended (Third) on January 15, 2010

(1) Stock Options

Subject to SEC regulations and the provisions of (1) (a)-(b) herein, the Executive shall be issued with Options (the “Option”) as to the Common Stock of OxySure Systems, Inc. (“OSI” or the “Company”) pursuant to the Company’s Voting Stock Option Plan, which Options shall become vested and exercisable in accordance with the following table.

Issue Condition	#Options		Strike Price
Completion of every calendar month of service during the Term of the Employment Agreement		15,000	$	.25
“Total options available for Term”		180,000

Where applicable, option grants will be prorated for partial periods.

(a) Acceleration Upon Change of Control: The Executive shall enjoy full acceleration of the Option hereunder if terminated by the acquirer upon a Change of Control event (as described in the Company’s Voting Stock Option Plan). However, an IPO or a dilution of all the shareholders of OSI through a public offering does not constitute a Change of Control event for the purposes of this provision.

(b) Dilution: There shall be no upward adjustments made to Options granted hereunder upon future stock issuances or option issuances by the Company.

If any of these terms outlined in this §1 conflict with any terms in any other agreements, then the terms outlined in this Exhibit A shall prevail.

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(2) Salary, Bonus and Benefits

(a) Base Salary: For a period commencing on the date of signature of this amendment, and continuing until Ross, in his sole discretion shall determine, Base Salary shall be zero. In exchange, OxySure is to issue Ross or his nominee(s) a Senior Note in the amount of $15,000 for every month of salary exchanged, plus 7,000 penny warrants for every month of salary exchanged.

(b) Annual Bonus: Sales Bonus: The company will pay a Sales Bonus (the “Sales Bonus”) at the end of the Term if the company achieves certain Target Net Revenues (“TNR”) during the 2009 Fiscal Year (January 1, 2009 through December 31, 2009), in accordance with the following: (i) If TNR is < $1.0 million, then the Sales Bonus is zero; (ii) If TNR is between $1.0 million and $2.0 million, then the Sales Bonus is $75,000; (iv) If TNR is between $2.0 million and $3.0 million, then the Sales Bonus is $100,000; or (v) If TNR is greater than $3.0 million, then the Sales Bonus is $125,000 plus 1% of TNR in excess of $3.0 million. Stock Performance Bonus: The company will pay a Stock Performance Bonus (the “Stock Performance Bonus”), which shall be paid in unrestricted shares of Common Stock of the Company or in Cash, at the Executive’s sole discretion, in accordance with the following: If the Company’s stock price maintains a 6-month average during any period in the Term of $1.50 or higher, then the Stock Performance Bonus shall be $100,000.

(c) Executive Benefits:

Participation in OSI benefits established for senior management from time to time, such as for example, 401(k), health insurance, key man insurance, etc. PTO shall be 4 weeks per annum.

(d) Travel: All pre-approved travel expenses reasonably incurred are reimbursed.

(e) Severance Provisions: If the Executive is terminated subsequent to the Effective Date by the Company for anything other than cause, then the Executive shall receive a severance (“Severance”) as follows:

(i) An amount equal to 12 months’ Base Salary, PROVIDED THAT

If the Executive is terminated by the Acquirer for anything other than cause in a Change of Control event, then the Executive shall receive a severance equal to three times (3X) the Severance defined in §2(e) herein. For the purposes of this §2(e) of the Exhibit A, an IPO or a dilution of all the shareholders of OSI through a public offering does not constitute a Change of Control event.

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EX-10.9.1

AGREEMENT

This Agreement (“Agreement”) is made and entered into on April 20, 2009 by and between OxySure Systems, Inc., a Delaware Corporation (“OxySure”) and IR Services, Inc., a Nevada Corporation (“IR Services”) (jointly, the “Parties”). This Agreement supersedes all prior agreements between the Parties and among the Parties and Donson Brooks.

WITNESSETH

NOW, THEREFORE, for good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged by the parties to this Agreement, said parties agree as follows:

(a) OxySure agrees to engage the services of IR Services, Inc. to provide the following:

Ÿ   Prepare and submit an S-1 filing to the SEC; OR provide a fully reporting Form 10 company, fully compliant with SEC (the “Form 10 Company”) for OxySure to merge with.

Ÿ   Prepare and submit an 8K filing to the SEC

Ÿ   Prepare and submit responses to SEC comment letters

Ÿ   Prepare and submit a 15c211 filing to a Brokerage firm for a filing to FINRA

Ÿ   Prepare and submit responses to FINRA comment letters

Ÿ   Retain the services of an acceptable Market Maker, Broker Dealer, and Escrow Agent

Ÿ   Provide such other services and activities as necessary to obtain a ticker symbol and become traded on the Over-the-Counter Bulletin Board (OTCBB)

(b) OxySure will require updated audited financial statements for SEC compliance. OxySure agrees to cover up to $2,000 of the cost of obtaining such updated audited financial statements for SEC compliance. If the cost of obtaining the updated audited financial statements exceeds $2,000 then IR-Services will pay the difference between the actual cost and $2,000., only upon engaging the CPA services of the Blackwing Group, LLC.,a PCOAB member.

(c) If OxySure becomes traded on OTCBB, IR Services or an acceptable assignee will provide OxySure with Investor Relations Services, which shall include, without limitation, press releases, investor awareness campaigns (online and mail), and blog and message board monitoring. These Investor Relations Services will be provided for a period of 9 months commencing on the date that OxySure first becomes publicly traded.

(e) OxySure Systems, Inc., agrees to pay IR Services, Inc. $50,000 in cash and to sell IR Services, Inc. 968,419 warrants (the “Warrants”), subject to (f) below.

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(f) The $50,000 in cash will paid to IR Services, Inc. and the 968,419 Warrants will be sold to IR Services in accordance with the following:

(i)   $25,000 in Cash to be paid prior to commencing the project;

(ii)   $12,500 due on or before February 15, 2009 (“Second Cash Payment”);

(iii)   $12,500 due on or before April 29, 2009;

(iv)   250,000 Warrants at a strike price of $.01 per share to be provided upon the S-1 being filed with the SEC;

(v)   250,000 Warrants at a strike price of $.01 per share to be provided upon the S-1 filing going effective with the SEC;

(vi)   300,000 Warrants at a strike price of $.01 per share to be provided upon acceptance by FINRA of the 15c211;

(vii)   68,419 Warrants at a strike price of $.01 per share to be provided within 3 days of OxySure starting to trade on OTCBB;

(viii)   50,000 Warrants at a strike price of $.01 per share to be provided 3 months subsequent of OxySure starting to trade on OTCBB;

(ix)   25,000 Warrants at a strike price of $.01 per share to be provided 6 months subsequent of OxySure starting to trade on OTCBB; and

(x)   25,000 Warrants at a strike price of $.01 per share to be provided 9 months subsequent of OxySure starting to trade on OTCBB.

The form of all the Warrants are annexed hereto as Exhibit A.

(f) IR Services will secure a Market Maker at its sole expense, which Market Maker shall be reasonably acceptable to OxySure.

(g) OxySure will provide all the information exhibits and financial statements required by IR Services, Inc., in a timely manner no later than 60 days subsequent to the Effective Date of the Agreement.

1.   Representations and Warranties.  The parties to this Agreement, and their agents represent and warrant they are entering into this Agreement and the performance by them, and their agents hereunder will not conflict with, violate or constitute a breach of, or require any consent or approval under any agreement, license, arrangement or understanding, or any law, judgment, decree, order, rule or regulation to which they and their agents are a party or by which it is bound. The signatories and parties to this agreement warrant that they are authorized to enter into this agreement and is binding upon the parties hereto.  All entities which are parties to this agreement warrant that they are in good standing and current with their states or locations of domicile and that their entering into this agreement will not violate or breach any other binding agreement of the parties.

2. Severability.  If any provision of this Agreement is invalid and unenforceable in any jurisdiction, then to the fullest extent permitted by law: (1) the other provisions hereof shall remain in full force and effect in such jurisdiction; and (2) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or unenforceability of such provision in any other jurisdiction.

3. Entire Agreement.  This Agreement contains the entire understanding and agreement between theparties with respect to thesubject matter hereof and cannot be amended, modified or supplemented in any respect except by a subsequent written agreement entered into by the parties.

4. Successors.  This Agreement may not be assigned.  Subject to the foregoing, in every respect, this Agreement shall inure to the benefit of and be binding upon the parties and their successors.

5. Effect of Waiver.  The waiver by either party of a breach of any provision of this Agreement shall not operate, to as or be construed as a waiver of any subsequent breach.

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6. Notices.  Any notice, request, demand or other communication in connection with this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested or sent by facsimile, (iii) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt or, in the case of a facsimile, upon receipt thereof and (iv) addressed as follows:

IR Services, Inc.   8586 Warren Pkwy   Suite 827  Frisco, Texas 75034  (469) 499-4495  OxySure Systems, Inc. 10880 John W. Elliot Drive Suite 600 Frisco, Texas 75034 (972) 294-6501

or to any such other or additional persons and addresses as the parties may from time to time designate in writing delivered in accordance with this Section.

7. Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

8. Applicable Law.  This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. In the event any action be instituted by a party to enforce any of the terms and provisions contained herein, the prevailing party in such action shall entitled to such reasonable attorneys' fees, costsand expenses as may be fixed by the Court.

IN WITNESS WHEREOF, the parties have executed this Agreement as the day and year first stated above.

OxySure Systems, Inc.
By:	/s/ Julian T. Ross
	Julian T. Ross,
	President

IR Services, Inc.
By:	/s/ Donson Brooks
	Donson Brooks,
	President

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EXHIBIT A

STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR ANY SECURITIES ON EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND APPLICABLE LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT LEGALLY REQUIRED.

STOCK PURCHASE WARRANT

This Stock Purchase Warrant (this “Warrant”), dated  ___________________________, is issued to ___________(the “Holder”), by OxySure Systems, Inc., a Delaware corporation (the “Company”).

1.Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company _______ fully paid and non-assessable shares of Common Stock, par value $_0.0001____ per share (the “Common Stock”), of the Company (as adjusted pursuant to Section 7 hereof, the “Shares”) for the purchase price specified in Section 2 below.

2.Purchase Price.  The purchase price for the Shares is $  _________________________ per share.  Such price shall be subject to adjustment pursuant to Section 7 hereof (such price, as adjusted from time to time, is herein referred to as the “Warrant Price”).

3.Exercise Period.  This Warrant is exercisable in whole or in part at any time from the date hereof through.

4.Transfer of Warrant.  Transfer of this Warrant to a third party shall be effected by execution and delivery of the Notice of Assignment attached hereto as Exhibit AA and surrender of this Warrant for registration of transfer of this Warrant at the primary executive office of the Company, together with funds sufficient to pay any applicable transfer tax.  Upon receipt of the duly executed Notice of Assignment and the necessary transfer tax funds, if any, the Company, at its expense, shall execute and deliver, in the name of the designated transferee or transferees, one or more new Warrants representing the right to purchase a like aggregate number of shares of Common Stock.

5.Method of Exercise.  While this Warrant remains outstanding and exercisable in accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

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(a)    surrender of this Warrant, together with a duly executed copy of the form of Exercise Notice attached hereto, to the Secretary of the Company at its principal offices, and the payment to the Company of an amount equal to the aggregate purchase price for the number of Shares being purchased, which shall be a whole number of shares; or

(b)    if the Common Stock is publicly traded as of such date, the instruction to retain that whole number of Shares having a value equal to the aggregate exercise price of the Shares as to which this Warrant is being exercised and to issue to the Holder the remainder of such Shares computed using the following formula:

X =             Y(A-B)

 A

Where:

X =   Y=   A=   B=   A =    B = the number of shares of Common Stock to be issued to the Holder. the number of shares of Common Stock as to which this Warrant is being exercised. the fair market value of one share of Common Stock.    the Warrant Price.  

As used herein, the “fair market value of one share of Common Stock” shall mean:

(1)      Except in the circumstances described in clause (2) hereof, the price per share of the Common Stock determined in good faith by the Board of Directors of the Company; or

(2)      If such exercise is in conjunction with a merger, acquisition or other consolidation pursuant to which the Company is not the surviving entity, the value received by the holders of the Common Stock pursuant to such transaction for each share.

6.Certificates for Shares; Partial Exercise of Warrants.

(a)Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the Exercise Notice.

(b)     If this Warrant is surrendered for partial exercise, the Company shall execute and deliver to the Holder of the Warrant, without charge to the Holder, a new Warrant exercisable for an aggregate number of shares of Common Stock equal to the unexercised portion of the surrendered Warrant.

5

7.Reservation of Shares.  The Company covenants that it will at all times keep available such number of authorized shares of its Common Stock, free from all preemptive rights with respect thereto, which will be sufficient to permit the exercise of this Warrant for the full number of Shares specified herein.  The Company further covenants that such Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

8.Adjustment of Warrant Price and Number of Shares.  The number and kind of securities purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as follows:

(a)Stock Dividends, Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by stock split or otherwise, combine its Common Stock or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend and proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or as of the record date of such dividend, or, in the event that no record date is fixed, upon the making of such dividend.

(b)Reclassification, Reorganization, Merger, Sale or Consolidation.  In the event of any reclassification, capital reorganization or other change in the Common Stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 7(a) above) or in the event of a consolidation or merger of the Company with or into, or the sale of all or substantially all of the properties and assets of the Company, to any person, and in connection therewith consideration is payable to holders of Common Stock in cash, securities or other property, then as a condition of such reclassification, reorganization or change, consolidation, merger or sale, lawful provision shall be made, and duly executed documents evidencing the same shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant immediately prior to such event, the kind and amount of cash, securities or other property receivable in connection with such reclassification, reorganization or change, consolidation, merger or sale, by a holder of the same number of shares of Common Stock as were exercisable by the Holder immediately prior to such reclassification, reorganization or change, consolidation, merger or sale.  In any such case, appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any cash, securities or property deliverable upon exercise hereof.  Notwithstanding the foregoing, (i) if the Company merges or consolidates with, or sells all or substantially all of its property and assets to, any other person, and consideration is payable to holders of Common Stock in exchange for their Common Stock in connection with such merger, consolidation or sale which consists solely of cash, or (ii) in the event of the dissolution, liquidation or winding up of the Company, then the Holder shall be entitled to receive distributions on the date of such event on an equal basis with holders of Common Stock as if this Warrant had been exercised immediately prior to such event, less the Warrant Price.  Upon receipt of such payment, if any, the rights of the Holder shall terminate and cease, and this Warrant shall expire.  In case of any such merger, consolidation or sale of assets, the surviving or acquiring person and, in the event of any dissolution, liquidation or winding up of the Company, the Company shall promptly, after receipt of this surrendered Warrant, make payment by delivering a check in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such person as it may be directed in writing by the Holder surrendering this Warrant.

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9.      Pre-Exercise Rights.  Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a shareholder with respect to the Shares, including without limitation, the right to vote such Shares, receive preemptive rights or be notified of shareholder meetings, and the Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company.

10.    Certification of Investment Purpose.  Unless a current registration statement under the Securities Act of 1933, as amended, shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the Holder hereof, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, the Holder will deliver to the Company a written certification that the securities acquired by the Holder are acquired for investments purposes only and that such securities are not acquired with a view to, or for sale in connection with, any distribution thereof.

11.    Successors and Assigns.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and assigns.

12.    Governing Law.  This Warrant shall be governed by the laws of the State of Texas, excluding the conflicts of laws provisions thereof.

IN WITNESS WHEREOF, the undersigned hereby agrees to the terms hereof effective as of ____________________________________________

COMPANY: OXYSURE SYSTEMS, INC.

By: _______________________________                                                               

Name: _____________________________                                                             

Title: ______________________________

7

EXERCISE NOTICE

 Dated:  _______________, ____

The undersigned hereby irrevocably elects to exercise the Stock Purchase Warrant, dated ____________________, , issued by _______________________________________, a _______________ corporation (the “Company”), to the undersigned to the extent of purchasing ___________ shares of Common Stock and hereby makes payment of $_________ in payment of the aggregate Warrant Price of such Shares.

COMPANY:

___________________________________

By: _______________________________

Name: _____________________________

Title: ______________________________

8

Exhibit AA

ASSIGNMENT FORM

(To be executed only upon the assignment of the within Warrant)

FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant hereby sells, assigns and transfers unto _____________________, whose address is

_________________________________________________all of the rights of the undersigned under the within Warrant, with respect to shares of Common Stock (as defined within the Warrant) of OxySure Systems, Inc., and, if such shares of Common Stock shall not include all the shares of Common Stock issuable as provided in the within Warrant, that a new Warrant of like tenor for the number of shares of Common Stock not being transferred hereunder be issued in the name of and delivered to the undersigned, and does hereby irrevocably constitute and appoint _______________________________ attorney to register such transfer on the books of OxySure Systems, Inc. maintained for that purpose, with full power of substitution in the premises.

Dated:_____________                                           

Signature Guaranteed

                            By:_______________________________________

                                 (Signature of Registered Holder)

                            Title:  __________________________________

NOTICE:         The signature to this Notice of Assignment must correspond with the name upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatever.

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EX-10.9.2

CANCELLATION AGREEMENT & MUTUAL RELEASE

WHEREAS, OxySure Systems, Inc. (“OxySure”) and IR Services, Inc. (“IRSVS”) (jointly, the “Parties”) entered into that certain agreement dated June 22, 2009 (“IRSVS Agreement”);

WHEREAS, IRSVS has provided some, but not all of the services pursuant to the IRSVS Agreement; and

WHEREAS, OxySure will procure the remainder of the services contemplated by the IRSVS Agreement from different sources.

NOW THEREFORE, in consideration of the foregoing and the mutual promises contained in this Agreement, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

(1)   That the IRSVS Agreement between the parties be and is hereby cancelled and the parties hereby release all of their right, title, and interest in and to said Agreement.

(2)   OxySure shall not be entitled to reclaim from IRSVS the $50,000 paid by OxySure to IRSVS, as provided for in the IRSVS Agreement;

(3)   IRSVS shall not be entitled to reclaim from OxySure any expenses or disbursements incurred in connection with the IRSVS Agreement, prior to and including December 11, 2009;

(4)   Notwithstanding anything to the contrary, IRSVS shall be entitled to the issuance and exercise of only 125,000 penny warrants in connection with the completed services. OxySure shall issue only 125,000 shares of Common Stock of OxySure to IRSVS upon exercise of said 125,000 warrants, which shares shall be subject to the same terms and conditions as other selling shareholders.

(5)   Any and all other warrants or shares are hereby cancelled.

Signed and accepted on this 15th day of December 2009:

OxySure Systems, Inc.	IR Services, Inc.
By:     /s/ Julian T. Ross	By:      /s/ DonsonBrooks
Julian T. Ross, CEO	Donson Brooks, President

EX-10.26

CANCELLATION AGREEMENT & MUTUAL RELEASE

THE UNDERSIGNED parties hereby agree that that certain warrant purchase agreement (“Agreement”) dated April 20, 2009 between the parties be cancelled and the parties hereby release all of their right, title, and interest in and to said Agreement.

Signed and accepted on this 22nd day of June 2009:

OxySure Systems, Inc.	RKH Capital Group
By: /s/ Julian T. Ross	By: /s/ Casey Jensen
Julian T. Ross, CEO	Casey Jensen, President

EX-10.27

December 10, 2009

Julian T. Ross

Chairman & CEO

OxySure Systems, Inc.

10880 John W. Elliott Road

Suite 600

Frisco, TX 75034

Re: Letter Agreement (this "Agreement") between SINACOLA COMMERCIAL PROPERTIES, LTD., a Texas limited partnership ("Landlord"), and OXYSURE SYSTEMS, INC., a Delaware corporation ("Tenant")

Dear Julian:

Landlord and Tenant have agreed to exchange certain consideration for certain amounts of Rent and expenses related to the calendar year 2009 under that certain Office Lease Agreement dated March 6, 2007 for the lease of property located in Frisco County, Texas (as amended, the "Lease").  Landlord and Tenant agree that Tenant shall pay such Rent and expenses for a mutually agreed period of time or until such time as Tenant is successful in raising additional equity, if such event occurs earlier, subject to the terms and conditions contained herein. For the purpose of this Agreement, the capitalized terms used herein but not defined shall be given the meaning assigned to them in the Lease.

Now, for valuable consideration to Landlord by Tenant, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree to the following terms and conditions:

Rent Satisfaction

The parties agree that all Tenant’s outstanding lease payment obligations under the Lease up to and including December 31, 2009, including, but not limited to, Base Rent, Deferred Rent (as provided for in the Second Amendment) and Tenant’s Share of Operating Costs, will be deemed satisfied in full, subject to the terms and conditions set forth in this Agreement. Tenant shall have no further lease payment obligations to Landlord under the Lease until after December 31, 2009 unless Tenant is in Default, hereinafter defined.

Promissory Notes

Tenant shall issue Landlord two (2) Promissory Notes (the “Promissory Notes”). The first note (the “First Landlord Note”), in the form attached hereto as Exhibit A, shall be a subordinated convertible note in the principal amount of $125,000. The First Landlord Note shall carry no interest, shall mature on or before December 31, 2011, and shall be convertible, at any time at the Landlord’s option, into the common stock of the Tenant at a strike price of $1.00 per common share. The second note (the “Second Landlord Note”), in the form attached hereto as Exhibit B, shall be a subordinated convertible note in the principal amount of $126,407. The Second Landlord Note shall carry no interest, shall mature on or before December 31, 2011, and shall be convertible, at any time at the Landlord's option, into the common stock of the Tenant at a strike price of $1.50 per common share. However, if Tenant’s common stock has traded at $1.50 or above for 4 consecutive weeks on a nationally recognized market (based on daily closing prices), then the Second Landlord Note shall be convertible at Tenant’s option. In the event Tenant pays a portion of a principal amount prior to December 31, 2011, any such prepayment or partial payment shall be applied equally to reduce the principal amount of First Landlord Note and the principal amount of the Second Landlord Note.

New Warrants	Tenant shall issue Landlord 163,415 penny warrants (the “New Warrants”). The New Warrants are convertible into 163,415 fully paid and non-assessable shares of the common stock of Tenant at a purchase price of $0.01 per share, and are exercisable in whole or in part at any time at the Landlord's option on or before December 31, 2014. Such New Warrants shall not be included or subject to the Lockup Agreement (as defined below) and may be transferred by Landlord at any time without the consent of Tenant.  The New Warrants shall be further evidenced by a Stock Purchase Warrant in the form of Exhibit C attached hereto.
Lockup Agreement	Tenant acknowledges and agrees that the Lockup Agreement between Landlord and Tenant dated April 15, 2009 (the “Lockup Agreement”) shall only apply to warrants issued to Tenant by Landlord prior to the date of this Agreement (including the First Landlord Warrant), and shall not and will not apply to the New Warrants issued pursuant to this Agreement.  If necessary, Tenant will amend or modify the Lockup Agreement to ensure the New Warrants will not be included or governed by the Lockup Agreement.
Prior Warrant Modification	Tenant has issued Landlord that certain warrant dated August 23, 2007 (the “First Landlord Warrant”), entitling Landlord to purchase up to 50,000 shares of common stock of Tenant at a purchase price of $2.00 per share. The Parties hereby agree that Section 2 of the First Landlord Warrant is modified as follows: “2. Purchase Price. The purchase price for the Shares is $1.00 per share.” Tenant shall formally amend the First Landlord Warrant to reflect such change or reissue a new warrant to reflect such terms.  Such changes to be issued concurrently with the execution of this Agreement.

Most Favored Nations Treatment: For the purposes of this Agreement, the Promissory Notes, the New Warrant, and the First Landlord Warrant shall collectively be referred to as the “Tenant Value Instruments”. The Parties agree that, for a period of 12 months (the 12-month period being the “MFN Period”), commencing on the date hereof, Landlord shall enjoy Most Favorite Nations Treatment (“MFN Treatment”) in respect of the value effect of the consideration represented by the Tenant Value Instruments. Therefore, if Tenant issues similar instruments or combinations of instruments to a third party during the MFN Period, and the (i) ratio of penny warrants issued relative to each dollar loaned or provided to Tenant as equity, is greater than .65 (.65 shares for each dollar) or (ii) the interest payable on any note is greater than 0%, or (iii) the maturity date on any note is less than 24 months (except in the case of an equity event as defined in a note), or (iv) the conversion price in any convertible note is less than the price in the Promissory Notes, or (v) if the combined value of the Tenant Value Instruments is deemed by both Landlord and Tenant to be less favorable than the combined value effect of the consideration represented by such third party issuance, then Tenant shall adjust the provisions for any one or more of the Tenant Value Instruments such that the value effect of above of the consideration represented by the Tenant Value Instruments is pari passu with or better than that of the third party issuance for each item (i) – (v) above.  

Ratification

Landlord and Tenant hereby ratify and confirm their obligations under the Lease.  Additionally, both the Landlord and the Tenant confirm and ratify that, as of the date hereof, the Lease is and remains in good standing and in full force and effect. Further, Landlord ratifies and confirms that (a) to Landlord's actual knowledge, there is no existing default by Tenant under the Lease, and (b) Landlord knows of no event which, with notice or the passage of time or both, would constitute a default under the Lease. Further, Tenant ratifies and confirms that (a) to the Tenant's actual knowledge, there is no existing default by Landlord under the Lease, and (b) Tenant knows of no event which, with notice or the passage of time or both, would constitute a default under the Lease.

Default

If Tenant shall default on any of the obligations contained in this Agreement (including, without limitation, the valid issuance of the Promissory Notes and the New Warrants and the specified modification of the First Landlord Warrant) and such default remains uncured after fourteen (14) days of written notice to Tenant (a “Default”), then this Agreement may be terminated immediately by Landlord and such termination shall render this Agreement null and void and all past-due Rent and expenses otherwise satisfied pursuant to this Agreement shall be immediately due and payable and subject to all terms under the Lease.

Assignment This Agreement, and the rights and obligations hereunder, may be assigned by Landlord at any time to any affiliated entity without the consent of Tenant.

Binding Effect; Governing Law	As of the date of this Agreement, the Lease shall remain in full effect and this Agreement shall be binding upon Landlord and Tenant and their respective successors and assigns.  This Agreement shall be interpreted under the laws of the State of Texas, excluding its choice of law provisions, and any disputes arising under this Agreement shall be heard only in the courts located in Dallas County, Texas.
Entire Agreement	This Agreement constitutes the entire agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes all previous agreements and understandings, written or oral, between them with respect to the subject matter hereof.
Attorneys Fees	Landlord shall be entitled to recover all of its reasonable attorneys' fees, costs and expenses incurred as a result of any uncured breach of this Agreement by Tenant or incurred by Landlord in enforcing this Agreement.

[SIGNATURES TO FOLLOW ON NEXT PAGE]

If you are in agreement with the foregoing, please sign and return one copy of this Agreement, which thereupon will constitute our binding agreement with respect to its subject matter.

Sincerely,

SINACOLA COMMERCIAL PROPERTIES, LTD., a Texas limited partnership
By:	FRISCO INDUSTRIAL, INC.,
	a Texas corporation, its general partner
	By:	/s/ Michael Sinacola
		Michael A. Sinacola
		President

ACKNOWLEDGED AND AGREED,

EFFECTIVE AS OF DECEMBER 10, 2009

OXYSURE SYSTEMS, INC.,
a Delaware corporation
By:	/s/ Julian T. Ross
	Julian T. Ross
	CEO

EXHIBIT A

FIRST LANDLORD NOTE

$125,000 December 31, 2009

OxySure Systems, Inc., a company organized under the laws of the state of Delaware ("Obligor", which term, as used herein, shall include any successor thereto), for value received, hereby executes and delivers this Promissory Note (“Note”) in favor of Sinacola Commercial Properties, Ltd. ("Holder"), an entity duly organized under the laws of the state of Texas, and hereby promises to pay to Holder, his designees or his successors and permitted assigns, the principal sum of One Hundred Twenty Five Thousand Dollars ($125,000.00) (the "Principal Amount") on the Maturity Date (as defined below).

1.Maturity Date.  The then outstanding Principal Amount shall become due and payable on the earlier to occur of: (i) December 31, 2011; or (ii) the closing of the next equity financing round (the “Equity Event”) completed by the Obligor (in each case, the "Maturity Date"); provided that; (a) if the Equity Event is in an amount exceeding $1,000,000 but less than $1,500,000, then only 20% of the Principal Amount shall be due and payable; (b) if the Equity Event is in an amount exceeding $1,500,000 but less than $2,000,000, then only 40% of the Principal Amount shall be due and payable; (c) if the Equity Event is in an amount exceeding $2,000,000 but less than $3,000,000, then only 60% of the Principal Amount shall be due and payable; (d) if the Equity Event is in an amount exceeding $3,000,000 but less than $4,000,000, then only 80% of the Principal Amount shall be due and payable; (e) if the Equity Event is in an amount exceeding $4,000,000, then 100% of the Principal Amount shall be due and payable. For any partial Principal Amount paid under this Section 1(ii)(a) -1(ii)(d), the balance of the outstanding Principal Amount would continue to be due and payable on the earlier to occur of this Section 1(i) or 1(ii)(a-e) above.  In the event of a partial payment, any subsequent payment resulting from an Equity Event shall be based on the percentage of the original Principal Amount and not a percentage of the outstanding Principal Amount after a partial payment under this Section 1.

2.Interest Rate.  The interest rate on the Note shall be 0% (zero percent).

3.Acceleration.  Notwithstanding any provision hereof to the contrary, the obligations of Obligor hereunder shall forthwith mature and immediately accelerate and shall be immediately due and payable on the Default Date (as hereinafter defined) in the event that (i) the business of Obligor is discontinued, sold, liquidated or otherwise disposed of, whether by liquidation or dissolution, or (ii) Obligor shall take, or intends to take, or, as far as Obligor is aware, any other person shall receive a judgment, order or decree from a court of competent jurisdiction, in each case, for the Obligor's winding up, liquidation, dissolution, merger or consolidation that is not pursuant to an agreement between Obligor and Holder, or for the appointment of a receiver in relation to any or all of Obligor's assets, or Obligor shall admit in writing its inability to pay its debts as they become due or shall commit any other act of insolvency (each a "Default Event"). The date on which any Default Event occurs is referred to herein as the "Default Date."

4.Prepayments.  Obligor may prepay any of the Principal Amount or any interest accrued on this Note at any time prior to the Maturity Date.

5.            Method of Payment.  Obligor shall pay all amounts payable under this Note in cash by wire transfer of immediately available funds to an account designated by Holder or, if no account has been designated, by certified check delivered to Holder at such place as Holder shall designate to Obligor in writing.

6.            Presentment Waived and Partial Payments.  Obligor hereby expressly waives presentment for payment, demand, notice of dishonor, protest and notice of protest.  Acceptance by Holder of any payment that is less than the full amount then due and owing hereunder shall not constitute a waiver of Holder's right to receive payment in full at such time or at any prior or subsequent time.

7.Subordination.  Prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note, all indebtedness evidenced by this Note (the "Subordinated Indebtedness") shall be subordinated to all other indebtedness of Obligor, whether existing as of the Issue Date or incurred at any time after the Issue Date (the "Senior Indebtedness"), and in that connection, prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note:

(a) the payment of the Subordinated Indebtedness shall be subordinated to all and any rights, claims and actions which any other person may now or hereafter have against Obligor in respect of the Senior Indebtedness;

(b) the Subordinated Indebtedness shall not become capable of being subject to any right of set-off or counterclaim; and

(c) except upon the Maturity Date, upon the acceleration pursuant to Section 3, or upon the conversion of the Principal Amount in accordance with the terms of this Note, Holder shall not claim, request, demand, sue for, take or receive (whether by way of set-off or in any other manner and whether from Obligor or any other person) any money or other property in respect of the Subordinated Indebtedness or any part thereof.

8.Conversion Rights.  At any time prior to the Maturity Date, at the sole option of the Holder, all but not less than all of the then outstanding Principal Amount of this Note may be converted (an "Optional Conversion") into a number of shares of Obligor’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount to be converted divided by the Conversion Price (herein so called) which shall be $1.00 (one dollar) per Optional Conversion Share.

In order to exercise the right of Optional Conversion, Holder shall surrender this Note at the principal office of Obligor and shall give written notice of such exercise (the "Optional Conversion Notice"), to Obligor at such office. Such Optional Conversion shall be deemed to have been effected at the close of business on the date on which such Optional Conversion Notice, duly completed and executed, shall have been given as aforesaid, and, subject to the last sentence of this Section 8, at such time the Principal Amount subject to such Optional Conversion shall be applied by Obligor in full payment of the Optional Conversion Shares to be issued in consequence of the Conversion and that application shall discharge Obligor from all liability in respect of the Principal Amount converted, and Holder shall be deemed for all purposes to have become the holder of the Optional Conversion Shares.

As promptly as practicable, but in no event later than twenty (20) Business Days, after an Optional Conversion, Obligor, at its expense, shall cause Holder's name to be entered in the register of the shareholders of Obligor in respect of the Optional Conversion Shares and shall issue Holder certificates evidencing same. "Business Day" means any day other than a Saturday, Sunday or other day on which banks in the City of Dallas, State of Texas, United States of America are required or authorized to be closed. Notwithstanding any provision of this Note to the contrary, no Optional Conversion shall be deemed to have occurred unless and until Obligor shall have complied with the obligations set forth in the immediately preceding sentence, whereupon such Optional Conversion shall be deemed to have been effective as of the date the Optional Conversion Notice is given to Obligor; provided, however, that no failure by Obligor to so comply with such obligations shall prohibit Holder from exercising his rights as the holder of the Optional Conversion Shares.

9.Treatment of Note.  Obligor will treat, account and report this Note as debt and not equity for accounting and tax (with respect to any returns filed with federal, state, local or foreign tax authorities) purposes.

10.    Miscellaneous.

(a)Specific Performance.  Obligor and Holder acknowledge and agree that in the event of any breach of this Note, the non-breaching party would be irreparably harmed and could not be made whole solely by monetary damages. Obligor and Holder hereby agree that in addition to any other remedy to which any party may be entitled at law or in equity, to the extent permitted by applicable law, Obligor and Holder shall be entitled to obtain an injunction or compel specific performance of this Note in any action instituted in any Court.

(b)Interpretation.  The headings and captions in this Note are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof.

(c)Notices.  All notices and other communications required or permitted to be given hereunder shall be in writing and shall be (i) delivered by hand, (ii) delivered by a reputable commercial overnight delivery service, or (iii) transmitted by facsimile, in each case, sent to the address or telecopier number set below. Such notices shall be effective: (i) in the case of hand deliveries, when received; (ii) in the case of an overnight delivery service, when received; and (iii) in the case of facsimile transmission, when electronic confirmation of receipt is received by the sender. Any party may change its address and telecopy number by written notice to another party in accordance with this provision, provided that such notice shall be effective only upon receipt.

If to Obligor, to:

OxySure Systems, Inc.

10880 John W. Elliott Dr., Suite 600

Frisco, TX 75034

                                Telecopy: 972-294-6501

Attention: Chief Executive Officer

If to Holder, to:

Sinacola Commercial Properties, LLC.

Att: Mr. Michael Sinacola

10950 Research Road

Frisco, TX 75034

Telecopy: 214-387-3950

(d)Governing Law; Forum; Service of Process.  This Note shall be governed by and construed in accordance with the laws of the State of Texas as to all matters, including validity, construction, effect, performance and remedies of and under this Note. Venue in any and all suits, actions and proceedings between the parties hereto and relating to the subject matter of this Note shall be in the courts located in and for Dallas County, Texas (the "Courts"), which shall have exclusive jurisdiction for such purpose, and Holder and Obligor hereby irrevocably submit to the exclusive jurisdiction of such Courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Holder and Obligor each hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Note or the transactions contemplated hereby.

(e)Severability.  The invalidity, illegality or unenforceability of one or more of the clauses or provisions of this Note in any jurisdiction shall not affect the validity, legality or enforceability of this Note in such jurisdiction or the validity, legality or enforceability of this Note, including any such clause or provision in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(f)           Successors; Assigns; Third-Party Beneficiaries.  The provisions of this Note shall be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Neither this Note nor the rights or obligations of Obligor may be assigned by Obligor without the prior written consent of Holder. Holder may freely assign his rights or obligations hereunder. Any attempted assignment in contravention of this Note shall be null and void and of no effect. This Note is for the sole benefit of the parties hereto and their respective heirs, successors and permitted assigns and no provision hereof, whether express or implied, is intended, or shall be construed, to give any other Person any rights or remedies, whether legal or equitable, hereunder.

(g)           Amendments.  This Note may not be amended, modified or supplemented except in a writing signed by Obligor and Holder.

(h)           Waiver. Any waiver (whether express or implied) of any default or breach of or by any party to this Note shallnot be effective unless evidenced by a writing signed by the party against which such waiver is sought to be enforced. No such waiver for any purpose shall constitute a waiver of any other or subsequent default or breach, or for any other purpose.

IN WITNESS WHEREOF, Obligor has caused this Note to be duly executed and delivered as of the date first set forth above.

OBLIGOR:
OXYSURE SYSTEMS, INC.
	Julian Ross
	CEO
	Date:_____________________________________________________

HOLDER:
SINACOLA COMMERCIAL PROPERTIES, LTD.,
A Texas Limited Partnership
	Michael Sinacola
	President,
	FRISCO INDUSTRIAL, INC., General Partner
	Date:_____________________________________________________

EXHIBIT B

SECOND LANDLORD NOTE

$126,407 December 31, 2009

            OxySure Systems, Inc., a company organized under the laws of the state of Delaware ("Obligor", which term, as used herein, shall include any successor thereto), for value received, hereby executes and delivers this Promissory Note (“Note”) in favor of Sinacola Commercial Properties, LLC. ("Holder"), an entity duly organized under the laws of the state of Texas, and hereby promises to pay to Holder, his designees or his successors and permitted assigns, the principal sum of One Hundred Twenty Five Thousand Dollars ($126,407.00) (the "Principal Amount") on the Maturity Date (as defined below).

1. Maturity Date.  The then outstanding Principal Amount shall become due and payable on the earlier to occur of: (i) December 31, 2011; or (ii) the closing of the next equity financing round (the “Equity Event”) completed by the Obligor (in each case, the "Maturity Date"); provided that; (a) if the Equity Event is in an amount exceeding $1,000,000 but less than $1,500,000, then only 20% of the Principal Amount shall be due and payable; (b) if the Equity Event is in an amount exceeding $1,500,000 but less than $2,000,000, then only 40% of the Principal Amount shall be due and payable; (c) if the Equity Event is in an amount exceeding $2,000,000 but less than $3,000,000, then only 60% of the Principal Amount shall be due and payable; (d) if the Equity Event is in an amount exceeding $3,000,000 but less than $4,000,000, then only 80% of the Principal Amount shall be due and payable; (e) if the Equity Event is in an amount exceeding $4,000,000, then 100% of the Principal Amount shall be due and payable. For any partial Principal Amount paid under this Section 1(ii)(a) -1(ii)(d), the balance of the outstanding Principal Amount would continue to be due and payable on the earlier to occur of this Section 1(i) or 1(ii)(a-e) above.  In the event of a partial payment, any subsequent payment resulting from an Equity Event shall be based on the percentage of the original Principal Amount and not a percentage of the outstanding Principal Amount after a partial payment under this Section 1.

2. Interest Rate.  The interest rate on the Note shall be 0% (zero percent).

3. Acceleration.  Notwithstanding any provision hereof to the contrary, the obligations of Obligor hereunder shall forthwith mature and immediately accelerate and shall be immediately due and payable on the Default Date (as hereinafter defined) in the event that (i) the business of Obligor is discontinued, sold, liquidated or otherwise disposed of, whether by liquidation or dissolution, or (ii) Obligor shall take, or intends to take, or, as far as Obligor is aware, any other person shall receive a judgment, order or decree from a court of competent jurisdiction, in each case, for the Obligor's winding up, liquidation, dissolution, merger or consolidation that is not pursuant to an agreement between Obligor and Holder, or for the appointment of a receiver in relation to any or all of Obligor's assets, or Obligor shall admit in writing its inability to pay its debts as they become due or shall commit any other act of insolvency (each a "Default Event"). The date on which any Default Event occurs is referred to herein as the "Default Date."

4. Prepayments.  Obligor may prepay any of the Principal Amount or any interest accrued on this Note at any time prior to the Maturity Date.

5. Method of Payment.  Obligor shall pay all amounts payable under this Note in cash by wire transfer of immediately available funds to an account designated by Holder or, if no account has been designated, by certified check delivered to Holder at such place as Holder shall designate to Obligor in writing.

6. Presentment Waived and Partial Payments.  Obligor hereby expressly waives presentment for payment, demand, notice of dishonor, protest and notice of protest.  Acceptance by Holder of any payment that is less than the full amount then due and owing hereunder shall not constitute a waiver of Holder's right to receive payment in full at such time or at any prior or subsequent time.

7.           Subordination.  Prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note, all indebtedness evidenced by this Note (the "Subordinated Indebtedness") shall be subordinated to all other indebtedness of Obligor, whether existing as of the Issue Date or incurred at any time after the Issue Date (the "Senior Indebtedness"), and in that connection, prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note:

(a) the payment of the Subordinated Indebtedness shall be subordinated to all and any rights, claims and actions which any other person may now or hereafter have against Obligor in respect of the Senior Indebtedness;

(b) the Subordinated Indebtedness shall not become capable of being subject to any right of set-off or counterclaim; and

(c) except upon the Maturity Date, upon the acceleration pursuant to Section 3, or upon the conversion of the Principal Amount in accordance with the terms of this Note, Holder shall not claim, request, demand, sue for, take or receive (whether by way of set-off or in any other manner and whether from Obligor or any other person) any money or other property in respect of the Subordinated Indebtedness or any part thereof.

8.Conversion Rights.  At any time prior to the Maturity Date, at the sole option of the Holder except in the event of the closing price threshold noted below, all but not less than all, of the then outstanding Principal Amount of this Note may be converted (an "Optional Conversion") into a number of shares of Obligor’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount to be converted divided by the Conversion Price (herein so called) which price shall be $1.50 (one dollar and fifty cents) per Optional Conversion Share. If the Obligor’s common stock has traded at $1.50 or above for 4 consecutive weeks on a nationally recognized market (based on daily closing prices), then any Optional Conversion under this Section 8 may also occur at the option of the Obligor.

In order to exercise the right of Optional Conversion, Holder shall surrender this Note at the principal office of Obligor and shall give written notice of such exercise (the "Optional Conversion Notice"), to Obligor at such office. Such Optional Conversion shall be deemed to have been effected at the close of business on the date on which such Optional Conversion Notice, duly completed and executed, shall have been given as aforesaid, and, subject to the last sentence of this Section 8, at such time the Principal Amount subject to such Optional Conversion shall be applied by Obligor in full payment of the Optional Conversion Shares to be issued in consequence of the Conversion and that application shall discharge Obligor from all liability in respect of the Principal Amount converted, and Holder shall be deemed for all purposes to have become the holder of the Optional Conversion Shares.

As promptly as practicable, but in no event later than twenty (20) Business Days, after an Optional Conversion, Obligor, at its expense, shall cause Holder's name to be entered in the register of the shareholders of Obligor in respect of the Optional Conversion Shares and shall issue Holder certificates evidencing same. "Business Day" means any day other than a Saturday, Sunday or other day on which banks in the City of Dallas, State of Texas, United States of America are required or authorized to be closed. Notwithstanding any provision of this Note to the contrary, no Optional Conversion shall be deemed to have occurred unless and until Obligor shall have complied with the obligations set forth in the immediately preceding sentence, whereupon such Optional Conversion shall be deemed to have been effective as of the date the Optional Conversion Notice is given to Obligor; provided, however, that no failure by Obligor to so comply with such obligations shall prohibit Holder from exercising his rights as the holder of the Optional Conversion Shares.

9.Treatment of Note.  Obligor will treat, account and report this Note as debt and not equity for accounting and tax (with respect to any returns filed with federal, state, local or foreign tax authorities) purposes.

10.          Miscellaneous.

(a)Specific Performance. Obligor and Holder acknowledge and agree that in the event of any breach of this Note, the non-breaching party would be irreparably harmed and could not be made whole solely by monetary damages. Obligor and Holder hereby agree that in addition to any other remedy to which any party may be entitled at law or in equity, to the extent permitted by applicable law, Obligor and Holder shall be entitled to obtain an injunction or compel specific performance of this Note in any action instituted in any Court.

(b)Interpretation.  The headings and captions in this Note are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof.

(c)Notices.  All notices and other communications required or permitted to be given hereunder shall be in writing and shall be (i) delivered by hand, (ii) delivered by a reputable commercial overnight delivery service, or (iii) transmitted by facsimile, in each case, sent to the address or telecopier number set below. Such notices shall be effective: (i) in the case of hand deliveries, when received; (ii) in the case of an overnight delivery service, when received; and (iii) in the case of facsimile transmission, when electronic confirmation of receipt is received by the sender. Any party may change its address and telecopy number by written notice to another party in accordance with this provision, provided that such notice shall be effective only upon receipt.

If to Obligor, to:

OxySure Systems, Inc.

10880 John W. Elliott Dr., Suite 600

Frisco, TX 75034

                                Telecopy: 972-294-6501

Attention: Chief Executive Officer

If to Holder, to:

Sinacola Commercial Properties, LLC.

Att: Mr. Michael Sinacola

10950 Research Road

Frisco, TX 75034

Telecopy: 214-387-3950

(d)Governing Law; Forum; Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Texas as to all matters, including validity, construction, effect, performance and remedies of and under this Note. Venue in any and all suits, actions and proceedings between the parties hereto and relating to the subject matter of this Note shall be in the courts located in and for Dallas County, Texas (the "Courts"), which shall have exclusive jurisdiction for such purpose, and Holder and Obligor hereby irrevocably submit to the exclusive jurisdiction of such Courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Holder and Obligor each hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Note or the transactions contemplated hereby.

(e)Severability. The invalidity, illegality or unenforceability of one or more of the clauses or provisions of this Note in any jurisdiction shall not affect the validity, legality or enforceability of this Note in such jurisdiction or the validity, legality or enforceability of this Note, including any such clause or provision in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(f)Successors; Assigns; Third-Party Beneficiaries. The provisions of this Note shall be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Neither this Note nor the rights or obligations of Obligor may be assigned by Obligor without the prior written consent of Holder. Holder may freely assign his rights or obligations hereunder. Any attempted assignment in contravention of this Note shall be null and void and of no effect. This Note is for the sole benefit of the parties hereto and their respective heirs, successors and permitted assigns and no provision hereof, whether express or implied, is intended, or shall be construed, to give any other Person any rights or remedies, whether legal or equitable, hereunder.

(g)Amendments.  This Note may not be amended, modified or supplemented except in a writing signed by Obligor and Holder.

(h)    Waiver. Any waiver (whether express or implied) of any default or breach of or by any party to this Note shall not be effective unless evidenced by a writing signed by the party against which such waiver is sought to be enforced. No such waiver for any purpose shall constitute a waiver of any other or subsequent default or breach, or for any other purpose.

            IN WITNESS WHEREOF, Obligor has caused this Note to be duly executed and delivered as of the date first set forth above.

OBLIGOR:
OXYSURE SYSTEMS, INC.
	Julian Ross
	CEO
	Date:_____________________________________________________

HOLDER:
SINACOLA COMMERCIAL PROPERTIES, LTD.,
A Texas Limited Partnership
	Michael Sinacola
	President,
	FRISCO INDUSTRIAL, INC., General Partner
	Date:_____________________________________________________

EXHIBIT C

STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR ANY SECURITIES ON EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND APPLICABLE LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT LEGALLY REQUIRED.

1.STOCK PURCHASE WARRANT

This Stock Purchase Warrant (this “Warrant”), dated December 31, 2009, is issued to Sinacola Commercial Properties, Ltd, a Texas limited partnership (together with its assigns, the “Holder”), by OxySure Systems, Inc., a Delaware corporation (the “Company”).

1.Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company up to 163,415 fully paid and non-assessable shares of Common Stock, par value $0.0004 per share (the “Common Stock”), of the Company (as adjusted pursuant to Section 7 hereof, the “Shares”) for the purchase price specified in Section 2 below.

2.Purchase Price.  The purchase price for the Shares is $0.01 per share.  Such price shall be subject to adjustment pursuant to Section 7 hereof (such price, as adjusted from time to time, is herein referred to as the “Warrant Price”).

3.Exercise Period.  This Warrant is exercisable in whole or in part at any time from the date hereof through December 31, 2014.

4.Transfer of Warrant.  Transfer of this Warrant to a third party shall be effected by execution and delivery of the Notice of Assignment annexed hereto and surrender of this Warrant for registration of transfer of this Warrant at the primary executive office of the Company, together with funds sufficient to pay any applicable transfer tax.  Upon receipt of the duly executed Notice of Assignment and the necessary transfer tax funds, if any, the Company, at its expense, shall execute and deliver, in the name of the designated transferee or transferees, one or more new Warrants representing the right to purchase a like aggregate number of shares of Common Stock.

5.Method of Exercise.  While this Warrant remains outstanding and exercisable in accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

(a) the surrender of this Warrant, together with a duly executed copy of the form of Exercise Notice attached hereto, to the Secretary of the Company at its principal offices; and

(b) at the Holder's option:

(i) the Holder's payment to the Company of an amount equal to the aggregate purchase price for the number of Shares being purchased, which shall be a whole number of shares; or

(ii) If the Common Stock is publicly traded as of such date, the Holder's instruction to the Company to retain that whole number of Shares having a value equal to the aggregate exercise price of the Shares as to which this Warrant is being exercised and to issue to the Holder the remainder of such Shares computed using the following formula:

X =     Y(A-B)

                A

Where:

X =     the number of shares of Common Stock to be issued to the Holder.

Y=      the number of shares of Common Stock as to which this Warrant is being exercised.

A =     the fair market value of one share of Common Stock.

B =      the Warrant Price.

As used herein, the “fair market value of one share of Common Stock” shall mean:

(1) Except in the circumstances described in clause (2) hereof, the price per share of the Common Stock determined in good faith by the Board of Directors of the Company; or

(2) If such exercise is in conjunction with a merger, acquisition or other consolidation pursuant to which the Company is not the surviving entity, the value received by the holders of the Common Stock pursuant to such transaction for each share.

6.Certificates for Shares; Partial Exercise of Warrants.

(a)Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the Exercise Notice.

(b)If this Warrant is surrendered for partial exercise, the Company shall execute and deliver to the Holder of the Warrant, without charge to the Holder, a new Warrant exercisable for an aggregate number of shares of Common Stock equal to the unexercised portion of the surrendered Warrant.

7.Reservation of Shares.  The Company covenants that it will at all times keep available such number of authorized shares of its Common Stock, free from all preemptive rights with respect thereto, which will be sufficient to permit the exercise of this Warrant for the full number of Shares specified herein.  The Company further covenants that such Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

8.Adjustment of Warrant Price and Number of Shares.  The number and kind of securities purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as follows:

(a)Stock Dividends, Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by stock split or otherwise, combine its Common Stock or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend and proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 8(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or as of the record date of such dividend, or, in the event that no record date is fixed, upon the making of such dividend.

(b)Reclassification, Reorganization, Merger, Sale or Consolidation.  In the event of any reclassification, capital reorganization or other change in the Common Stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 8(a) above) or in the event of a consolidation or merger of the Company with or into, or the sale of all or substantially all of the properties and assets of the Company, to any person, and in connection therewith consideration is payable to holders of Common Stock in cash, securities or other property, then as a condition of such reclassification, reorganization or change, consolidation, merger or sale, lawful provision shall be made, and duly executed documents evidencing the same shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant immediately prior to such event, the kind and amount of cash, securities or other property receivable in connection with such reclassification, reorganization or change, consolidation, merger or sale, by a holder of the same number of shares of Common Stock as were exercisable by the Holder immediately prior to such reclassification, reorganization or change, consolidation, merger or sale.  In any such case, appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any cash, securities or property deliverable upon exercise hereof.  Notwithstanding the foregoing, (i) if the Company merges or consolidates with, or sells all or substantially all of its property and assets to, any other person, and consideration is payable to holders of Common Stock in exchange for their Common Stock in connection with such merger, consolidation or sale which consists solely of cash, or (ii) in the event of the dissolution, liquidation or winding up of the Company, then the Holder shall be entitled to receive distributions on the date of such event on an equal basis with holders of Common Stock as if this Warrant had been exercised immediately prior to such event, less the Warrant Price.  Upon receipt of such payment, if any, the rights of the Holder shall terminate and cease, and this Warrant shall expire.  In case of any such merger, consolidation or sale of assets, the surviving or acquiring person and, in the event of any dissolution, liquidation or winding up of the Company, the Company shall promptly, after receipt of this surrendered Warrant, make payment by delivering a check in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such person as it may be directed in writing by the Holder surrendering this Warrant.

(c)No Dilution or Impairment.  So long as this Warrant is outstanding, the Company will not avoid or seek to avoid the observance or performance of any of the terms of this Warrant but will at all times in good faith assist in the carrying out of all such terms and of the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment.

9.Pre-Exercise Rights.  Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a shareholder with respect to the Shares, including without limitation, the right to vote such Shares, receive preemptive rights or be notified of shareholder meetings, and the Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company.

10.Restricted Securities.  The Holder understands that this Warrant and the Shares purchasable hereunder constitute “restricted securities” under the federal securities laws inasmuch as they are being, or will be, acquired from the Company in transactions not involving a public offering and accordingly may not, under such laws and applicable regulations, be resold or transferred without registration under the Securities Act of 1933, as amended, or an applicable exemption from registration.  The Holder further acknowledges that the Shares and any other securities issued upon exercise of this Warrant shall bear a legend substantially in the form of the legend appearing on the face hereof.

11.Certification of Investment Purpose. Unless a current registration statement under the Securities Act of 1933, as amended, shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the Holder hereof, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, the Holder will deliver to the Company a written certification that the securities acquired by the Holder are acquired for investments purposes only and that such securities are not acquired with a view to, or for sale in connection with, any distribution thereof.

12.Successors and Assigns.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and assigns.

13.Governing Law.  This Warrant shall be governed by the laws of the State of Texas, excluding the conflicts of laws provisions thereof.

14.Replacement.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any new Warrant(s) issued to Holder under Section 6(b) hereof and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or in the case of any such mutilation, upon surrender and cancellation of such Warrant(s), the Company will execute and deliver, in lieu thereof, a new Warrant of like date and tenor.

15.Registration Rights.  If the Company effects an underwritten public offering, the Shares shall be included, at the option of the Holder, in the shares registered for sale pro rata, as if the Holder were a party beneficiary of the Company's registration rights agreement (if any).

16.Certain Expenses.  The Company shall pay all expenses incurred in connection with, and all taxes (other than stock transfer taxes) and other governmental charges that may be imposed in respect of, the issuance, sale and delivery of the Warrant or the Shares, including, without limitation, any registration costs incurred under Section 15 hereof.

IN WITNESS WHEREOF, the undersigned hereby agrees to the terms hereof effective as of December 31, 2009.

OXYSURE SYSTEMS, INC.
By:	/s/
	Julian T. Ross
	Chairman & CEO

HOLDER:
Sinacola Commercial Properties, Ltd,
a Texas limited partnership
By:	/s/
	Michael Sinacola
	President,
	FRISCO INDUSTRIAL, INC., General Partner

EXERCISE NOTICE

Dated: _______________, ____

The undersigned hereby irrevocably elects to exercise the Stock Purchase Warrant, dated December 31, 2009, issued by OxySure Systems, Inc., a Delaware corporation (the “Company”), to the undersigned to the extent of purchasing _____ Shares of the Company's Common Stock and hereby makes payment of $__________ in payment of the aggregate Warrant Price of such Shares, as provided in Section 5 of such Stock Purchase Warrant..

OXYSURE SYSTEMS, INC.
By:
	Name
	Title

ASSIGNMENT FORM

(To be executed only upon the assignment of the within Warrant)

FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant hereby sells, assigns and transfers unto _____________________, whose address is

___________________                                                                                      all of the rights of the undersigned under the within Warrant, with respect to shares of Common Stock (as defined within the Warrant) of OxySure Systems, Inc., and, if such shares of Common Stock shall not include all the shares of Common Stock issuable as provided in the within Warrant, that a new Warrant of like tenor for the number of shares of Common Stock not being transferred hereunder be issued in the name of and delivered to the undersigned, and does hereby irrevocably constitute and appoint _________________ attorney to register such transfer on the books of OxySure Systems, Inc. maintained for that purpose, with full power of substitution in the premises.

Dated:_____________                                           

Signature Guaranteed

By:	_______________________________________
	(Signature of Registered Holder)
Title:	_______________________________________

NOTICE:The signature to this Notice of Assignment must correspond with the name upon the face of the within Warrant in every particular, ithout alteration or enlargement or any change whatever.

EX-10.28

NOTE PURCHASE AGREEMENT

This Agreement is made and entered into this 10th day of December, 2010 by and between OxySure Systems, Inc., a Delaware Corporation (“OxySure” or the “Company”) and Tony & Judy Alcedo Family Trust (“Investor”).

WITNESSETH:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties to this Agreement, said parties agree as follows:

(a)   OxySure agrees to sell to Investor the note(s) issued by the Company with terms as summarized in Exhibit A with a face value in the amount of $100,000 (the “Securities”).

(b)   Investor agrees to purchase the Securities from OxySure.

(c)   OxySure shall issue Investor 100,000 warrants with a strike price of $2.50 and in the form shown in Exhibit B. The warrants shall expire 5 years subsequent to issuance.

(1) Representations and Warranties. The parties to this Agreement, and their agents represent and warrant they are entering into this Agreement and the performance by them, and their agents hereunder will not conflict with, violate or constitute a breach of, or require any consent or approval under any agreement, license, arrangement or understanding, or any law, judgment, decree, order, rule or regulation to which they and their agents are a party or by which it is bound.

The signatories and parties to this agreement warrant that they are authorized to enter into this agreement and is binding upon the parties hereto.  All entities which are parties to this agreement warrant that they are in good standing and current with their states or locations of domicile and that their entering into this agreement will not violate or breach any other binding agreement of the parties.

(2) Severability.  If any provision of this Agreement is invalid and unenforceable in any jurisdiction, then to the fullest extent permitted by law: (1) the other provisions hereof shall remain in full force and effect in such jurisdiction; and (2) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or unenforceability of such provision in any other jurisdiction.

(3) Entire Agreement.  This Agreement contains the entire understanding and agreement between the parties with respect to the subject matter hereof and cannot be amended, modified or supplemented in any respect except by a subsequent written agreement entered into by the parties.

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(4) Successors.  This Agreement may not be assigned.  Subject to the foregoing, in every respect, this Agreement shall inure to the benefit of and be binding upon the parties and their successors.

(5) Effect of Waiver. The waiver by either party of a breach of any provision of this Agreement shall not operate, to as or be construed as a waiver of any subsequent breach.

(6) Notices.  Any notice, request, demand or other communication in connection with this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested or sent by facsimile, (iii) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt or, in the case of a facsimile, upon receipt thereof and (iv) addressed as follows:

INVESTOR:	COMPANY:
Investor Name: Tony & Judy Alcedo Family Trust	OxySure Systems, Inc.
Address1: 778 Windemere Way	10880 John W. Elliot Drive
Address2:	Suite 600
City, State Zip: Keller, TX 76248	Frisco, Texas 75034
Tel:           (817)347-3439	(972) 294-6450

or to any such other or additional persons and addresses as the parties may from time to time designate in writing delivered in accordance with this Section.

(7) Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(8) Applicable Law.  This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. In the event any action be instituted by a party to enforce any of the terms and provisions contained herein, the prevailing party in such action shall entitled to such reasonable attorneys' fees, costs and expenses as may be fixed by the Court.

IN WITNESS WHEREOF, the parties have executed this Agreement as the day and year first stated above.

OxySure Systems, Inc.	Investor:_______________________________________
By:  /s/ Julian T. Ross	By:  /s/ Anthony M. Alcedo
Julian T. Ross, CEO	Name,  Title:     Trustee

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EXHIBIT A

SUBORDINATED CONVERTIBLE NOTE

$100,000 December 10, 2009

OxySure Systems, Inc., a company organized under the laws of the state of Delaware ("Obligor", which term, as used herein, shall include any successor thereto), for value received, hereby executes and delivers this Subordinate Convertible Note (“Note”) in favor of Tony & Judy Alcedo Family Trust ("Holder"), a resident of the state of Texas, and hereby promises to pay to Holder, his designees or his successors and permitted assigns, the principal sum of One Hundred Thousand Dollars ($100,000.00) (the "Principal Amount") on the Maturity Date (as defined below), together with accrued and unpaid interest through and including such date as herein provided at a rate per annum of sixteen percent (16%). Interest shall be computed on the basis of a 360-day year consisting of twelve (12) 30-day months for the actual number of days elapsed.

1.           Maturity Date.  The then outstanding Principal Amount, together with accrued and unpaid interest thereon as set forth above, or the Optional Conversion Shares (as provided for herein) as the case may be, shall become due on the 270th Day subsequent to the Issue Date (the "Maturity Date"). "Issue Date" means the date of first issuance of this Note as first set forth above.

2.           Acceleration.  Notwithstanding any provision hereof to the contrary, the obligations of Obligor hereunder shall forthwith mature and immediately accelerate and shall be immediately due and payable on the Default Date (as hereinafter defined) in the event that (i) the business of Obligor is discontinued, sold, liquidated or otherwise disposed of, whether by liquidation or dissolution, or (ii) Obligor shall take, or intends to take, or, as far as Obligor is aware, a judgment, order or decree from a court of competent jurisdiction, in each case, for the Obligor's winding up, liquidation, dissolution, merger or consolidation that is not pursuant to an agreement between Obligor and Holder, or for the appointment of a receiver in relation to any or all of Obligor's assets (each a "Default Event"). The date on which any Default Event occurs is referred to herein as the "Default Date."

3.           Prepayments.  Obligor may prepay any of the Principal Amount or any interest accrued on this Note at any time prior to the Maturity Date.

4.           Method of Payment.  Obligor shall pay all amounts payable under this Convertible Note in cash by wire transfer of immediately available funds to an account designated by Holder or, if no account has been designated, by certified check delivered to Holder at such place as Holder shall designate to Obligor in writing; provided however, that if Obligor exercises its Conversion Rights as provided for in Section 7 herein, Obligor shall deliver the Optional Conversion Shares to Holder in accordance with the provisions of Section 7.

5.           Presentment Waived.  Obligor hereby expressly waives presentment for payment, demand, notice of dishonor, protest and notice of protest. Acceptance by Holder of any payment that is less than the full amount then due and owing hereunder shall not constitute a waiver of Holder's right to receive payment in full at such time or at any prior or subsequent time.

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6.           Subordination.  Prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note, all indebtedness evidenced by this Note (the "Subordinated Indebtedness") shall be subordinated to all other indebtedness of Obligor, whether existing as of the Issue Date or incurred at any time after the Issue Date (the "Senior Indebtedness"), and in that connection, prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount and accrued but unpaid interest in accordance with the terms of this Note:

(a) the payment of the Subordinated Indebtedness shall be subordinated to all and any rights, claims and actions which any other person may now or hereafter have against Obligor in respect of the Senior Indebtedness;

(b) the Subordinated Indebtedness shall not become capable of being subject to any right of set-off or counterclaim; and

(c) except upon the Maturity Date, upon the acceleration pursuant to Section 2, or upon the conversion of the Principal Amount in accordance with the terms of this Note, Holder shall not claim, request, demand, sue for, take or receive (whether by way of set-off or in any other manner and whether from Obligor or any other person) any money or other property in respect of the Subordinated Indebtedness or any part thereof.

7.           Conversion Rights.  At any time on or prior to the Maturity Date, at the option of Obligor in its sole discretion, all or any portion of the then outstanding Principal Amount and accrued but unpaid interest of this Note may be converted (the "Optional Conversion") into a number of shares of Obligor’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount plus the then accrued but unpaid interest to be converted, divided by the Conversion Price (herein so called) which shall be $1.00 per Optional Conversion Share.

In order to exercise the right of Optional Conversion, Obligor and shall give written notice to Holder of such exercise, substantially in the form of Exhibit A attached hereto (the "Optional Conversion Notice") and Holder shall surrender this Note within 5 business days of the date of the Optional Conversion Notice at the principal office of Obligor. Such Optional Conversion shall be deemed to have been effected at the close of business on the date on which such Optional Conversion Notice, duly completed and executed, shall have been given as aforesaid, and, subject to the last sentence of this Section 7, at which time such portion of the Principal Amount and accrued but unpaid interest as is subject to such Optional Conversion shall be applied by Obligor in full payment of the Optional Conversion Shares to be issued in consequence of the Conversion and that application shall discharge Obligor from all liability in respect of such portion of the Principal Amount and accrued but unpaid interest converted, and Holder shall be deemed for all purposes to have become the holder of the Optional Conversion Shares.

As promptly as practicable, but in no event later than twenty (20) Business Days after an Optional Conversion, Obligor, at its expense, shall cause Holder's name to be entered in the register of the shareholders of Obligor in respect of the Optional Conversion Shares and shall issue Holder certificates evidencing same. "Business Day" means any day other than a Saturday, Sunday or other day on which banks in the City of Dallas, State of Texas, United States of America are required or authorized to be closed. Notwithstanding any provision of this Note to the contrary, no Optional Conversion shall be deemed to have occurred unless and until Obligor shall have complied with the obligations set forth in the immediately preceding sentence, whereupon such Optional Conversion shall be deemed to have been effective as of the date the Optional Conversion Notice is given to Obligor; provided, however, that no failure by Obligor to so comply with such obligations shall prohibit Holder from exercising his rights as the holder of the Optional Conversion Shares.

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8.           Treatment of Note.  Obligor will treat, account and report this Note as debt and not equity for accounting and tax (with respect to any returns filed with federal, state, local or foreign tax authorities) purposes.

9.           Miscellaneous.

(a)           Specific Performance. Obligor and Holder acknowledge and agree that in the event of any breach of this Note, the non-breaching party would be irreparably harmed and could not be made whole solely by monetary damages. Obligor and Holder hereby agree that in addition to any other remedy to which any party may be entitled at law or in equity, to the extent permitted by applicable law, Obligor and Holder shall be entitled to obtain an injunction or compel specific performance of this Note in any action instituted in any Court.

(b)           Interpretation. The headings and captions in this Note are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof.

(c)           Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be (i) delivered by hand, (ii) delivered by a reputable commercial overnight delivery service, or (iii) transmitted by facsimile, in each case, sent to the address or telecopier number set below. Such notices shall be effective: (i) in the case of hand deliveries, when received; (ii) in the case of an overnight delivery service, when received; and (iii) in the case of facsimile transmission, when electronic confirmation of receipt is received by the sender. Any party may change its address and telecopy number by written notice to another party in accordance with this provision, provided that such notice shall be effective only upon receipt.

            If to Obligor, to:

OxySure Systems, Inc.

10880 John W. Elliott Dr., Suite 600

Frisco, TX 75034

                                Telecopy: 972-294-6501

Attention: Chief Executive Officer

            If to Holder, to:

__________________________

__________________________

U_________________________

Email:_____________________

(d)           Governing Law; Forum; Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Texas as to all matters, including validity, construction, effect, performance and remedies of and under this Note. Venue in any and all suits, actions and proceedings between the parties hereto and relating to the subject matter of this Note shall be in the courts located in and for Dallas County, Texas (the "Courts"), which shall have exclusive jurisdiction for such purpose, and Holder and Obligor hereby irrevocably submit to the exclusive jurisdiction of such Courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Holder and Obligor each hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Convertible Note or the transactions contemplated hereby.

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(e)           Severability. The invalidity, illegality or unenforceability of one or more of the clauses or provisions of this Note in any jurisdiction shall not affect the validity, legality or enforceability of this Note in such jurisdiction or the validity, legality or enforceability of this Note, including any such clause or provision in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(f)           Successors; Assigns; Third-Party Beneficiaries. The provisions of this Note shall be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Neither this Note nor the rights or obligations of Obligor may be assigned by Obligor without the prior written consent of Holder. Holder may freely assign his rights or obligations hereunder. Any attempted assignment in contravention of this Note shall be null and void and of no effect. This Note is for the sole benefit of the parties hereto and their respective heirs, successors and permitted assigns and no provision hereof, whether express or implied, is intended, or shall be construed, to give any other Person any rights or remedies, whether legal or equitable, hereunder.

(g)           Amendments.  This Note may not be amended, modified or supplemented except in a writing signed by Obligor and Holder.

(h)           Waiver. Any waiver (whether express or implied) of any default or breach of or by any party to this Convertible Note shall be effective unless evidenced by a writing signed by the party against which such waiver is sought to be enforced. No such waiver for any purpose shall constitute a waiver of any other or subsequent default or breach, or for any other purpose.

IN WITNESS WHEREOF, Obligor has caused this Convertible Note to be duly executed and delivered as of the date first set forth above.

OBLIGOR:

OXYSURE SYSTEMS, INC.

______________________________________

Name:_________________________________

Title: _________________________________

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EXHIBIT A

OPTIONAL CONVERSION NOTICE

To:   Tony & Judy Alcedo Family Trust

The undersigned, OxySure Systems, Inc. ("Obligor") issuer of that certain Subordinated Convertible Note dated December 10, 2009 in favor of Tony & Judy Alcedo Family Trust (“Note”) hereby irrevocably exercises the option to convert $_________ of the Principal Amount and accrued but unpaid interest outstanding under the Note into the Conversion Shares in accordance with the terms of the Note. Certificates representing the Conversion Shares issuable and deliverable upon this conversion will be issued and delivered to the registered Holder of the Note unless a different name is provided by the Holder to Obligor in writing. Capitalized terms used in this Conversion Notice and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Note.

Signed:_________________________________

Title:___________________________________

Date:___________________________________

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EXHIBIT B

STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR ANY SECURITIES ON EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND APPLICABLE LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT LEGALLY REQUIRED.

STOCK PURCHASE WARRANT

This Stock Purchase Warrant (this “Warrant”), dated___________________________________, is issued to____________________________ (the “Holder”), by OxySure Systems, Inc., a Delaware corporation (the “Company”).

1.Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company _100,000______ fully paid and non-assessable shares of Common Stock, par value $_0.0004____ per share (the “Common Stock”), of the Company (as adjusted pursuant to Section 7 hereof, the “Shares”) for the purchase price specified in Section 2 below.

2.Purchase Price.  The purchase price for the Shares is $ 2.50 per share.  Such price shall be subject to adjustment pursuant to Section 7 hereof (such price, as adjusted from time to time, is herein referred to as the “Warrant Price”).

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3.Exercise Period.  This Warrant is exercisable in whole or in part at any time from the date hereof through December 10, 2014.

4.Transfer of Warrant.  Transfer of this Warrant to a third party shall be effected by execution and delivery of the Notice of Assignment attached hereto as Exhibit BC and surrender of this Warrant for registration of transfer of this Warrant at the primary executive office of the Company, together with funds sufficient to pay any applicable transfer tax.  Upon receipt of the duly executed Notice of Assignment and the necessary transfer tax funds, if any, the Company, at its expense, shall execute and deliver, in the name of the designated transferee or transferees, one or more new Warrants representing the right to purchase a like aggregate number of shares of Common Stock.

5.Method of Exercise.  While this Warrant remains outstanding and exercisable in accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

(a)surrender of this Warrant, together with a duly executed copy of the form of Exercise Notice attached hereto, to the Secretary of the Company at its principal offices, and the payment to the Company of an amount equal to the aggregate purchase price for the number of Shares being purchased, which shall be a whole number of shares; or

(b)if the Common Stock is publicly traded as of such date, the instruction to retain that whole number of Shares having a value equal to the aggregate exercise price of the Shares as to which this Warrant is being exercised and to issue to the Holder the remainder of such Shares computed using the following formula:

X =           Y(A-B)

    A

Where:

X =the number of shares of Common Stock to be issued to the Holder.

Y= the number of shares of Common Stock as to which this Warrant is being exercised.

A =           the fair market value of one share of Common Stock.

B =            the Warrant Price.

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As used herein, the “fair market value of one share of Common Stock” shall mean:

(1)           Except in the circumstances described in clause (2) hereof, the price per share of the Common Stock determined in good faith by the Board of Directors of the Company; or

(2)           If such exercise is in conjunction with a merger, acquisition or other consolidation pursuant to which the Company is not the surviving entity, the value received by the holders of the Common Stock pursuant to such transaction for each share.

6.Certificates for Shares; Partial Exercise of Warrants.

(a)    Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the Exercise Notice.

(b)    If this Warrant is surrendered for partial exercise, the Company shall execute and deliver to the Holder of the Warrant, without charge to the Holder, a new Warrant exercisable for an aggregate number of shares of Common Stock equal to the unexercised portion of the surrendered Warrant.

7.Reservation of Shares.  The Company covenants that it will at all times keep available such number of authorized shares of its Common Stock, free from all preemptive rights with respect thereto, which will be sufficient to permit the exercise of this Warrant for the full number of Shares specified herein.  The Company further covenants that such Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

8.Adjustment of Warrant Price and Number of Shares.  The number and kind of securities purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as follows:

(a)Stock Dividends, Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by stock split or otherwise, combine its Common Stock or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend and proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or as of the record date of such dividend, or, in the event that no record date is fixed, upon the making of such dividend.

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(b)Reclassification, Reorganization, Merger, Sale or Consolidation.  In the event of any reclassification, capital reorganization or other change in the Common Stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 7(a) above) or in the event of a consolidation or merger of the Company with or into, or the sale of all or substantially all of the properties and assets of the Company, to any person, and in connection therewith consideration is payable to holders of Common Stock in cash, securities or other property, then as a condition of such reclassification, reorganization or change, consolidation, merger or sale, lawful provision shall be made, and duly executed documents evidencing the same shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant immediately prior to such event, the kind and amount of cash, securities or other property receivable in connection with such reclassification, reorganization or change, consolidation, merger or sale, by a holder of the same number of shares of Common Stock as were exercisable by the Holder immediately prior to such reclassification, reorganization or change, consolidation, merger or sale.  In any such case, appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any cash, securities or property deliverable upon exercise hereof.  Notwithstanding the foregoing, (i) if the Company merges or consolidates with, or sells all or substantially all of its property and assets to, any other person, and consideration is payable to holders of Common Stock in exchange for their Common Stock in connection with such merger, consolidation or sale which consists solely of cash, or (ii) in the event of the dissolution, liquidation or winding up of the Company, then the Holder shall be entitled to receive distributions on the date of such event on an equal basis with holders of Common Stock as if this Warrant had been exercised immediately prior to such event, less the Warrant Price.  Upon receipt of such payment, if any, the rights of the Holder shall terminate and cease, and this Warrant shall expire.  In case of any such merger, consolidation or sale of assets, the surviving or acquiring person and, in the event of any dissolution, liquidation or winding up of the Company, the Company shall promptly, after receipt of this surrendered Warrant, make payment by delivering a check in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such person as it may be directed in writing by the Holder surrendering this Warrant.

9.Pre-Exercise Rights.  Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a shareholder with respect to the Shares, including without limitation, the right to vote such Shares, receive preemptive rights or be notified of shareholder meetings, and the Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company.

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10.Restricted Securities.  The Holder understands that this Warrant and the Shares purchasable hereunder constitute “restricted securities” under the federal securities laws inasmuch as they are being, or will be, acquired from the Company in transactions not involving a public offering and accordingly may not, under such laws and applicable regulations, be resold or transferred without registration under the Securities Act of 1933, as amended, or an applicable exemption from registration.  The Holder further acknowledges that the Shares and any other securities issued upon exercise of this Warrant shall bear a legend substantially in the form of the legend appearing on the face hereof.

11.Certification of Investment Purpose.  Unless a current registration statement under the Securities Act of 1933, as amended, shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the Holder hereof, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, the Holder will deliver to the Company a written certification that the securities acquired by the Holder are acquired for investments purposes only and that such securities are not acquired with a view to, or for sale in connection with, any distribution thereof.

12.Successors and Assigns.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and assigns.

13.Governing Law.  This Warrant shall be governed by the laws of the State of Texas, excluding the conflicts of laws provisions thereof.

IN WITNESS WHEREOF, the undersigned hereby agrees to the terms hereof effective as of .

	COMPANY: OXYSURE SYSTEMS, INC.
Date	By:	_________________________________
	Name:	JULIAN ROSS
	Title:	CEO

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Exhibit BB

EXERCISE NOTICE

Dated:  _______________, ____

The undersigned hereby irrevocably elects to exercise the Stock Purchase Warrant, dated ____________________, , issued by _______________________________________, a _______________ corporation (the “Company”), to the undersigned to the extent of purchasing ___________ shares of Common Stock and hereby makes payment of $_________ in payment of the aggregate Warrant Price of such Shares.

	COMPANY:
	________________________________________
____________________________________________________________________
	By:      _____________________________________
____________________________________________________________________
	Name:______________________________________
	Title: ______________________________________

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Exhibit BC

ASSIGNMENT FORM

(To be executed only upon the assignment of the within Warrant)

FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant hereby sells, assigns and transfers unto _________________________________________________, whose address is__________________________________all of the rights of the undersigned under the within Warrant, with respect to shares of Common Stock (as defined within the Warrant) of OxySure Systems, Inc., and, if such shares of Common Stock shall not include all the shares of Common Stock issuable as provided in the within Warrant, that a new Warrant of like tenor for the number of shares of Common Stock not being transferred hereunder be issued in the name of and delivered to the undersigned, and does hereby irrevocably constitute and appoint _________________ attorney to register such transfer on the books of OxySure Systems, Inc. maintained for that purpose, with full power of substitution in the premises.

Dated:_____________                                           

Signature Guaranteed

                            By:_______________________________________

                                 (Signature of Registered Holder)

                            Title:  __________________________________

NOTICE:     The signature to this Notice of Assignment must correspond with

                      the name upon the face of the within Warrant in every particular,

                      without alteration or enlargement or any change whatever.

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EX-10.29

LICENSE AGREEMENT

This License Agreement ("Agreement") is established between Afritex Medical Products (Pty) Ltd., a company incorporated under the laws of the Republic of South Africa, with registered corporate address at c/o Nolands, Noland House, Liesbeeck Parkway, Mowbray, 7700 South Africa, ("Afritex") and OxySure Systems, Inc., a Delaware corporation, with offices at 10880 John W. Elliott Drive, Suite 600, Frisco, Texas 75034 ("Company") (Afritex and Company jointly, the “Parties”).

Recitals

WHEREAS, Afritex is in the business of manufacturing and distribution of medical devices and health care products, and

WHEREAS, Company is in the business of manufacturing and distributing certain oxygen and related products; and

WHEREAS, Afritex desires from Company a license to manufacture and distribute certain new derivative products for Afritex markets, utilizing Company’s intellectual property, and Company desires to grant such a license to Afritex; and

WHEREAS, Afritex further desires to enter into an exclusive distribution agreement (the “Exclusive Distribution Agreement”) with Company for certain existing products sold by the Company, and any new products developed and sold by the Company in the future; and

WHEREAS, Afritex desires to enter into the Agreement and the Exclusive Distribution Agreement with the Company, and Afritex further desires to balance its investment risk in the said agreements by entering into a certain note purchase agreement with the Company.

Agreement

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the parties hereto agree as follows:

1. Definitions

(a) "Confidential Information" means confidential or proprietary data or information of either party which is disclosed in oral, written, graphic, machine recognizable, sample or any other form, by one party to the other party and which is clearly designated or marked as confidential or proprietary. In order for information disclosed orally to be considered Confidential Information, it must be identified as confidential at the time of disclosure and shall be confirmed in writing by the disclosing party within thirty (30) days after such disclosure.

(b) "Derivative Afritex Products" means any new products developed by Afritex which incorporates the OxySure IP.

(c) “OxySure Products” means all existing and new products currently sold by the Company.

(d) "Customer(s)" means, individually or collectively, as applicable, all entities, their successors and assigns, in the chain of distribution, sale and use of Derivative Afritex Products, including without limitation, Afritex affiliates, Afritex subsidiaries, Afritex joint ventures, third party licensees, resellers, agents, representatives, distributors, system operators and end-users.

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(e) "Documentation" means all product technical, and user documentation and any succeeding changes thereto, including, without limitation, all specifications as set forth in Company's product instructions for use, user manuals; and other relevant documents or information provided by Company related to the OxySure Products.

(f) "License Fees" means the license fees payable by Afritex to the Company for the the OxySure IP, in accordance with the following: (i) a one-time, upfront license fee of USD 225,000; plus: (ii) a royalty on all Afritex Derivative Products sold, calculated as 8% of gross sales of Afritex Derivative Products sold (net of applicable sales, use, excise or similar taxes.)

(i) "OxySure IP" means all patents, patent applications, trademarks, copyrights, trade names, manufacturing processes not treated as trade secrets, trade dress, trade secrets and other proprietary Information owned or controlled by the Company, existing as if the effective date of the Agreement, and generated thereafter by both Parties.  Patents include, but are not limited to: (1) US Patent# 7,407,632 entitled “Apparatus and delivery of medically pure oxygen”; (2) US Patent# 7,381,377 entitled “Method for controlled production of a gas”; (3) US Patent# 7,465,428 entitled “Method and apparatus for controlled production of a gas”; (4) US Patent# D549,341 entitled “Breathing device utilizing a catalytic oxygen generation method”; (5) US Patent# D549,342 entitled “Breathing device utilizing a catalytic oxygen generation method”; (6) US Patent# D/320,358 entitled “Chemical reaction activation plunger”; and (6) South African Patent # 2006/5051 entitled “Method and apparatus for generating oxygen”.

2. Invoicing, Payment and Note Purchase Agreement

(a) License Payment. Upon execution of this Agreement, Company will invoice Afritex for the upfront license fee of $225,000 as defined in 1(f)(i) herein, as well as any OxySure Products ordered by Afritex pursuant to the Exclusive Distribution Agreement.  Payment of  the upfront license fee and all purchase orders for OxySure Products shall be in advance. Payments of ongoing royalties on Afritex Derivative Products, if any, shall be within forty-five (45) days of the date of invoice. Afritex agrees to pay all invoices in full per the terms of the invoice.

(b) Development of Derivative Afritex Products. The Parties will work jointly on the development of any Derivative Afritex Products on a best efforts basis. All intellectual property developed by the parties during the development of the Derivative Afritex Products, if any, shall inure to and shall be owned by the Company.

(c) Reports. Afritex shall, within thirty (30) days of the end of each calendar quarter, deliver to Company a report detailing all sales activity relating to the Derivative Afritex Products, including, but not limited to, the product name/type, number of units made and the number of such units distributed by Afritex during the previous calendar quarter, and setting forth the aggregate royalties due and owing to Company thereon. A check for the amount of aggregate royalties owed shall accompany the report. All payments hereunder will be in U.S. Dollars, without deductions of any kind. Payments made by Afritex under this Agreement will be non-refundable to Afritex. This reporting obligation shall only commence upon the first sale by Afritex of any Derivative Afritex Product.

(d) Upon execution of this Agreement, or as soon as practicable thereafter, the Parties shall enter into the Exclusive Distribution Agreement for the distribution of OxySure Products. Without limitation, the Exclusive Distribution Agreement shall provide for the following: (1) Upon execution of the Exclusive Distribution Agreement, or as soon as practicable thereafter, an upfront purchase of a minimum of $145,000 of OxySure Products; (2) a minimum annual purchase commitment of no less than $480,000 of OxySure Products; and (3) Exclusivity to Afritex for the sale of OxySure Products for the following countries: South Africa, Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, and Zimbabwe (collectively, the “SADC Countries”).

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(e) Upon execution of this Agreement, or as soon as practicable thereafter, for value received, the sufficiency of which is acknowledged by the Parties, the Parties shall enter into a note purchase agreement. Without limitation, the note purchase agreement shall provide for the following: (1) Upon execution of the note purchase agreement, or as soon as practicable thereafter, the Company shall issue Afritex a convertible promissory note with a face value of $270,000 with a conversion price of $1.00 per share; and (2) the Company shall issue Afritex a warrant for the purchase of 270,000 shares of the common stock of the Company with an exercise price of $2.50 per share.

3. Warranties

Company warrants that it is the true and lawful owner or licensee of the OxySure IP licensed hereunder and that it has clear title to said OxySure IP. Company further warrants that it has full power and authority to license the OxySure IP licensed to Afritex hereunder and to convey all other rights and licenses granted to Afritex under this Agreement, including any third party intellectual property rights relating to the OxySure IP.

4. Intellectual Property Rights

(a) All patents, patent applications, copyrights, design rights, trade secrets and other proprietary rights in the OxySure IP and Company's Confidential Information are and shall remain the exclusive property of Company.

(b) All patents, patent applications, copyrights, design rights, trade secrets and other proprietary rights in Afritex's Confidential Information are and shall remain the exclusive property of Afritex or its licensors.

(c) Any intellectual property rights resulting from activities related to this Agreement shall be the exclusive property of Company.

5. License Grants

(a) Company grants Afritex under this license, the non-exclusive right to use, distribute, market, sell or sublicense, in the SADC countries, the OxySure IP, which are embedded in the Derivative Afritex Products, during the term of the Agreement (per Section 10 herein), as set forth herein.

(b) Company grants Afritex under this license, a non-exclusive right to grant to others the perpetual, non-exclusive sublicenses use, distribute, market, or sell, in the SADC countries, the OxySure IP, which are embedded in the Derivative Afritex Products, during the term of the Agreement ((per Section 10 herein), as set forth herein, provided that: (1) Company agrees to such sublicense in writing, which agreement shall not be unreasonable withheld; and (2) such sublicense(s) agree to be bound by terms and conditions no less restrictive than those contained herein.

6. Confidentiality

(a) From time to time during the performance of this Agreement, the parties may deem it necessary to provide each other with Confidential Information. The parties agree:

 (i) To maintain the confidentiality of such Confidential Information and not disclose same to any third party, except as authorized by the original disclosing party in writing.

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 (ii) To restrict disclosure of Confidential Information to employees and contractors who have a "need to know," provided that a party's employees and contractors are bound by terms of nondisclosure no less restrictive than those contained herein. Such Confidential Information shall be handled with the same degree of care which the receiving party applies to its own confidential information but in no event less than reasonable care.

 (iii) To take precautions necessary and appropriate to guard the confidentiality of Confidential Information, including informing its employees and contractors who handle such Confidential Information that it is confidential and not to be disclosed to others.

 (iv) That Confidential Information is and shall at all times remain the property of the disclosing party. No use of any Confidential Information is permitted except as otherwise expressly provided herein and no grant under any proprietary rights is hereby given or intended, including any license implied or otherwise.

 (b) Notwithstanding anything other provisions of this Agreement, Confidential Information shall not include any information that:

(i) Is or becomes publicly known through no wrongful act of the receiving party; or

(ii) Is, at the time of disclosure under this Agreement, already known to the receiving party without restriction or disclosure; or

(iii) Is, or subsequently becomes, rightfully and without breach of this Agreement, in the receiving party's possession without any obligation restricting disclosure; or

(iv) Is independently developed by the receiving party without breach of this Agreement; or

(v) Is explicitly approved for release by written authorization of the disclosing party; or

(vi) Is required to be disclosed pursuant to court order or order of governmental authority, provided that the receiving party shall use reasonable efforts to provide the disclosing party advance notice of any such disclosure and to permit the disclosing party to intervene in any relevant proceedings to protect the disclosing party's interests.

(c) The receiving party acknowledges that Confidential Information may contain information that is proprietary and valuable to the disclosing party and that unauthorized dissemination or use of the Confidential Information may cause irreparable harm to the disclosing party. Therefore, the receiving party shall take appropriate action, by instruction, agreement or otherwise, with any employee or contractor permitted access to the Confidential Information so as to enable it to hold the Confidential Information in confidence or otherwise satisfy its obligations under this Agreement.

(d) Each party's obligations under this Agreement to keep confidential and restrict use of the other party's Confidential Information shall survive the expiration or termination of this Agreement for a period of three (3) years.

(e) Except as may be required by applicable law, neither party shall disclose to any third party the contents of this Agreement or any amendments hereto without the prior written consent of the other party.

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7. Limitation of Liability and General Indemnity

(a) IN NO EVENT SHALL EITHER AFRITEX OR COMPANY, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, HAVE ANY LIABILITY TO EACH OTHER OR ANY THIRD PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

(b) Company and Afritex agree to indemnify and hold harmless the other from any and all claims, damages, expenses, suits, losses or liability for any death, injury, damage caused by, or arising from or connected with this Agreement due to or occasioned by the other party, its officers, employees, agents or representatives.

8. Termination

(a) Right to Terminate. Afritex may terminate this Agreement upon written notice to the Company if:

(i) The Company breaches a material obligation under this Agreement and such breach continues uncured for a period of thirty (30) days after notice or, if the breach is not one which is capable of being cured within thirty (30) days and the Company has commenced to cure the breach within such time and continues to do so diligently and in good faith, then the Company shall be granted an extension for a reasonable period of time at the discretion of Afritex.

(ii) The direct or indirect ownership or control of the Company that exists on the date of this Agreement changes in any material manner that adversely affects the rights of Afritex, including the acquisition of ownership or control by a competitor of the Company or Afritex. In such event, the Company shall cooperate with Afritex to conduct an orderly termination of the Agreement.

(iii) The Company ceases to conduct business in the normal course, becomes insolvent, enters into suspension of payments, moratorium, reorganization or bankruptcy, makes a general assignment for the benefit of creditors, admits in writing its inability to pay debts as they mature, suffers or permits the appointment of a receiver for its business or assets, or avails itself of or becomes subject to any other judicial or administrative proceeding that relates to insolvency or protection of creditors' rights.

(b) Rights and Obligations at Termination. Upon expiration or termination of this Agreement for any reason:

(ii) Each party will promptly cease using and destroy or return to the other party all items that contain any Confidential Information (as defined herein) of the other party, except Afritex may retain one copy of Confidential Information for the sole and express purpose of supporting then-existing Customers.

(ii) Unless otherwise provided for herein, Afritex and Customers shall continue to have the right to use the OxySure IP in form associated with the OxySure IP sold hereunder.

(iii) Company shall invoice Afritex for any outstanding sums which may be owing from any purchase order, unless Afritex terminates for material breach as set forth herein in which event Afritex shall have the right to offset any damages against any sums owing to Company.

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9. Cumulative Remedies

Except as otherwise provided herein, if either company breaches this Agreement, the non-breaching party shall have the right to assert all legal and equitable remedies available. Each party agrees that the non-breaching party shall be entitled to equitable relief, including temporary and permanent injunctive relief without the proving of damage by non-breaching party to protect any of the non-breaching party's interests and rights.

10. Term and Renewal

This Agreement shall commence as of the Agreement date and shall be for an initial term of seven (7) years, and may be renewed by the parties for successive terms of two-years each, provided that each party executes a written consent as to each two year renewal period sixty (60) days in advance of the expiration date of the previous term.

11. Export Controls

Afritex shall obtain all export licenses and other government authorizations necessary for the shipment of any Products with such assistance from Company as Afritex may reasonably request. Afritex shall at its sole cost and expense obtain all export licenses and other government authorizations necessary with the reasonable assistance of Company.

12. Notices

All notices required to be given by one party to the other under this Agreement shall be deemed properly given if reduced to writing and personally delivered, transmitted by registered or certified post to the address shown below with return receipt requested and postage prepaid, or by telex or facsimile with correct answerback received. All notices shall be effective upon receipt or at such time as delivery is refused by addressee upon presentation.

Afritex shall send notices as follows:

Attention: Chief Executive Officer

OxySure Systems, Inc.

10880 John W. Elliott Drive, Suite 600

Frisco, TX 75034

USA

Company shall send notices as follows:

Afritex Medical Products (Pty) Ltd.

c/o Nolands, Noland House

Liesbeeck Parkway, Mowbray, 7700

South Africa

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13. Force Majeure

Neither Party shall be liable for delays in delivery or performance when caused by any of the following which are beyond the actual control of the delayed Party: (i) acts of God, (ii) acts of the public enemy, (iii) acts or failure to act by the other Party, (iv) acts of civil or military authority, (v) governmental priorities, strikes or other labor disturbances, (vi) hurricanes, (vii) earthquakes, (viii) fires, (ix) floods, (x) epidemics, (xi) embargoes, (xii) war, and (xiii) riots. In the event of any such delay, the date of delivery or performance shall be extended for a period equal to the effect of time lost by reason of the delay.

14. Amendment or Waiver

No provision of this Agreement shall be deemed waived, amended, or modified by either Party unless such waiver, amendment or modification is in writing and signed by the Party against whom it is sought to be enforced.

15. Severability

In the event any one or more of the provisions of this Agreement is held to be unenforceable under applicable law, (i) such unenforceability shall not affect any other provision of this Agreement; (ii) this Agreement shall be construed as if said unenforceable provision had not been contained herein; and (iii) the parties shall negotiate in good faith to replace the unenforceable provision by such as has the effect nearest to that of the provision being replaced.

16. Assignment

Neither this Agreement nor any right hereunder may be transferred, assigned or delegated by Company without the prior written consent of Afritex. Any attempted assignment, delegation or transfer shall be void.

17. Publicity

Neither Party shall issue a press release or make any similar public announcement regarding the transactions contemplated by this Agreement without the other party's prior written consent to the specific language and intended distribution of such press release or announcement.

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18. Waiver

Failure or delay on the part of Afritex to exercise any right, power or privilege hereunder shall not operate as a waiver thereof.

19. Survival of Provisions

The Parties agree that where the context of any provision indicates an intent that it shall survive the term or termination of this Agreement, then it shall so survive.

20. Entire Agreement

This Agreement and Exhibits hereto constitute the entire understanding between the parties concerning the subject matter hereof and supersede all prior discussions, agreements and representations, whether oral or written and whether or not executed by Afritex and Company, including any terms and conditions contained on any purchase orders or other documents which Afritex may use when purchasing the Software or any other Company products or services. No modification, amendment or other changes may be made to this Agreement or any part thereof unless reduced to writing and executed by authorized representatives of both parties.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of March 26, 2010 ("Agreement Date").

AFRITEX MEDICAL PRODUCTS (PTY) LTD	COMPANY
/s/ P.M. Nyewe	/s/ Julian T. Ross
(Signature)	(Signature)
Name: P. Mphathi Nyewe	Name: Julian T. Ross
Title: Director	Title: Chairman & CEO

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EX-10.30

DISTRIBUTION AGREEMENT

This Distribution Agreement (together with its related exhibits, the “Agreement”) is made and executed this 26th Day of March 2010 the “Effective Date”) by and between OXYSURE® SYSTEMS, INC. (“OxySure” or “OxySure®”), a Delaware corporation with its primary place of business located at 10880 John W. Elliott Drive, Suite 600, Frisco, Texas, 75034 USA and Afritex Medical products Pty) Limited (the “Distributor”), with registered business address at c/o Nolands, Noland House, Liesbeeck Parkway, Mowbray 7700 Cape Town, South Africa.

OxySure® and Distributor intend to establish Distributor as a distributor of those products (the “Products”) identified in Exhibit A within the territory (the “Territory”) and channel (the “Channel”) identified in Exhibit B.  Accordingly, OxySure® and Distributor agree as follows:

1. Appointment and Term

1.1 For the term of this Agreement, OxySure® appoints Distributor as an exclusive distributor, subject to the limited reservation of Section 1.3, for the Products in the Territory and Channel.  Distributor’s appointment is for a term of one (1) year from the Effective Date (the “Initial Term”).  This Agreement shall automatically renew for additional consecutive one (1) year terms (each a “Renewal Term”), unless sooner terminated pursuant to the terms hereof.

1.2 The appointment of Distributor is personal to Distributor and accordingly (a) the rights, duties and privileges of Distributor under this Agreement are not assignable in any way whatsoever without the prior written consent of OxySure®. This provision notwithstanding, Distributor may appoint any other party to act as sub-distributor(s) or reseller(s) of Products in the Territory, provided that such sub-distributors) or reseller(s) are substantially bound by the terms and conditions in this agreement.

2. Distributor Responsibilities

2.1 Both parties acknowledge that open communications and the sharing of information are important to fully develop the market, gain insight into the market’s needs and develop appropriate market strategies.  It is a further desire of OxySure® to facilitate an open and direct communication between the end-user customer (“Customer”) and OxySure®.  To this end, the parties agree to cooperate and openly communicate with each other in furtherance of these objectives, and Distributor further agrees to use its best efforts to facilitate such communication and contact between Customers and OxySure®.

2.2 Distributor will use its best efforts to develop the Territory and Channel market and promote the sales of Products within the Territory and Channel.  Distributor will not, without OxySure’s prior written consent, which consent shall not be unreasonably withheld, (a) either advertise the Products for sale or sell the Products outside the Territory or Channel, or (b) advertise the Products for sale inside the Territory or Channel if the Products are ultimately destined for delivery outside the Territory or Channel or to someone whom Distributor has reason to believe will use the Products or resell them outside the Territory or Channel.

2.3 Distributor will maintain sufficient inventory of Products to enable the prompt delivery of Products to its Customers.  In addition, Distributor must comply, at a minimum, with the Minimum Net Purchases requirement set forth in Section 4.

2.4 Distributor will maintain an adequately trained sales organization and/or a network of sub-distributors and resellers, which will include at least one OxySure® Product specialist, to enable Distributor to fulfill its obligations under Section 2.2 of this Agreement.  Distributor will further maintain an organized and well stocked collection of technical and marketing information and materials for distribution to prospective Customers.  Distributor shall cover the Territory and Channel with diligent, adequate and reasonable sales activities, including advertising, distribution of technical and sales materials, exhibitions, demonstrations and other methods of promoting sales of the Products.  Distributor will bear all expenses incurred in connection with these activities.

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2.5 Distributor will employ and maintain sufficiently trained personnel to provide technical support for the Products, such support including, but not being limited to, the use and limited maintenance of the Products.  Distributor and OxySure® will cooperate to ensure such personnel become and remain adequately trained and qualified pursuant to Section 3.2.

2.6 Distributor will maintain a reasonable number of demonstration Products for demonstration to prospective and existing Customers.  Distributors will obtain prior approval by OxySure® before any demonstration Product is sold or transferred to a Customer.

2.7 OxySure® does not authorize Distributor to make, and will not Distributor make, any guaranty or warranty with respect to any Product.  OxySure® will provide all Product warranties, if any, directly and in writing to the Customer.  Distributor will make no representations as to Product quality, performance, capabilities and the like except as OxySure expressly authorizes in writing, such as through published, product specifications.

2.8 Distributor agrees to avoid all activities that might place Distributor in a position of adverse interest or divided loyalty with OxySure® or Distributor’s obligations as defined herein.

2.9 In addition to Section 8, Distributor will provide to OxySure® upon discovery by Distributor and, on OxySure’s request, any information regarding:

(a)  the infringement, perceived infringement, unauthorized manufacture, use or marketing or misuse of OxySure’s intellectual property, Proprietary Information (as defined in Section 10 below), and/or Products;

(b) activities within the Territory or Channel marketplace that affect the sales of the Products;

(c) any inquiries or orders for any of the Products to be delivered outside the Territory or Channel or for delivery in the Territory or Channel for ultimate use outside the Territory or Channel;

(d) any observations concerning recurrent issues with the Products;

(e) any changes in the management or ownership of Distributor; and

(f) in the event Distributor learns of information relating to an alleged malfunction of or an infliction of an injury by a Product, Distributor shall promptly notify OxySure® and provide all known information as well as assist OxySure® in any reasonable investigation concerning such allegations. Distributor will abide by all Distributor-specific governmental reporting requirements as imposed by the United States Food and Drug Administration or any other relevant local, state or federal governmental body.

2.10 Distributor will maintain information regarding the sale of each Product, including, but not limited to:  Customer names and addresses, product identification information (including but not limited to lot numbers, batch numbers, SKU numbers, and expiration dates) and a description of the products provided.  Distributor will also maintain all books of accounts, documents, correspondence, records, or the like, relating to any transaction involving the Products.  In the event OxySure® desires to communicate regulatory or other information to Customers, or otherwise notify Customers for any reason, Distributor will use the Customer information that it maintains to send such notice or communication on behalf of OxySure® in a timely manner.  Further, Distributor will make such Customer information available to OxySure® to the extent necessary for OxySure® to comply with relevant laws, rules, regulations, and judicial or administrative orders.

2.11 Distributor shall furnish to OxySure® copies of all proposed advertising, technical, sales, and other materials relating to the Products and refrain from using and/or discontinue the use of any such materials which in the sole opinion of OxySure® are false or misleading or may subject OxySure® to liability.

2.12 Distributor agrees to carry out all of its obligations to OxySure® promptly and in good faith. Time is of the essence in this Agreement.

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2.13 Distributor shall not take any action that may result in denigrating, tarnishing or otherwise adversely affecting the reputation or goodwill of OxySure®. Without limiting the foregoing, Distributor agrees that it shall not (a) explicitly or implicitly misrepresent any feature or function of the Product, (b) make unauthorized claims or statements related to the Products, or (c) make any false statements related to the Product or OxySure®.

2.14 In performing its obligations hereunder, Distributor shall comply with any and all relevant laws, rules, regulations, and restrictions, including, but not limited to, any that may be specifically applicable to the Products and the sale thereof.

2.15 Distributor may not market, promote, distribute, advertise, offer, sell or otherwise provide any Product through a Web site, email communications, or other electronic method or medium unless each of the parties have executed the “Internet Distribution Attachment” attached to this Agreement.  Notwithstanding the foregoing, Distributor may provide Product materials, pricing and invoices via email to a Customer, provided that such email communications are in response to direct Customer inquiries and are not part of a marketing or other promotional campaign or effort.

3.         OxySure’s Responsibilities

3.1 OxySure® will provide such technical and marketing information as OxySure® deems appropriate, or upon Distributor’s request.  Any applicable costs for printed materials shall be borne by Distributor, unless otherwise agreed by the parties.

3.2 OxySure® will provide training in the use, limited maintenance and technical aspects of the Products, including supplemental training relating to new products as such are introduced, at OxySure’s place of business identified hereinabove or as otherwise agreed by the parties.  The cost of transportation, meals, and lodging during the training shall be borne by the Distributor.

3.3 OxySure® will be under no obligation to Distributor to manufacture, sell or supply, or to continue to manufacture, sell or supply any of the Products, or to continue or modify any model or type of any of the Products.

3.4 OxySure® agrees to carry out all its obligations to the Distributor promptly and in good faith, and shall use commercially reasonable efforts to support Distributor’s authorized sales efforts in the Territory and Channel.

4.         Minimum Net Purchases

Distributor shall purchase, in the specified period, no less than the amount of the Minimum Net Purchases (herein so called) set forth in Exhibit C.  To qualify as a distributor, an Initial Purchase Order shall accompany a signed Agreement, with payment for said initial purchase order, and the size of such initial purchase order is set out in Exhibit C. Exhibit C will be amended at the beginning of each year, subject to continuation of this Agreement as provided herein, to reflect the agreed upon Minimum Net Purchases for the succeeding year.  In the event the parties are unable to agree on the Minimum Net Purchases for any Renewal Term no less than thirty (30) days prior to the commencement of such Renewal Term, OxySure® shall have the right to establish the Minimum Net Purchases for such Renewal Term. In the event Distributor does not purchase the agreed upon Minimum Net Purchases in the Initial Term or any Renewal Term, Distributor shall be in default under this Agreement for cause.

5.         Products, Pricing, Packaging, Title

5.1 OxySure® may, in its sole discretion, effect any change with respect to a Product or amend the Products offerings set forth on Exhibit A, provided, that with respect to any material change (e.g., amending the Product offerings set forth on Exhibit A, OxySure® shall provide Distributor with ninety (90) days prior written notice.  OxySure® will continue to honor orders for any Products removed from Exhibit A for three (3) months after the removal date provided (a) the orders are submitted to fill quotes outstanding on or before the date of removal of such Product(s), and (b) the removed Products have not been discontinued and are no longer available.

5.2 Prices for Products will be as set forth on Exhibit G, as amended from time to time by OxySure’s official price list (“Product Price List”).

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5.3 Any suggested resale prices shown in the Product Price List are to be construed as a guideline only.  The Distributor is free to determine its own resale prices of the Products. Notwithstanding the immediately preceding sentence, Distributor may not publish or display a price lower than the manufacturer suggested resale prices (MSRP) shown on the Product Price Lists on (a) any Internet site, unless the parties have executed the Internet Distribution Attachment set forth on Exhibit H, (b) any email advertisement, or (c) any newspaper, newsletter, magazine or other published source provided to more than 25 people.  Further, Distributor will clearly state whether pricing is based on bulk or bundled purchases.  Distributor shall avoid any pricing policies that would adversely affect the image of the Products.

5.4 Distributor will abide by those terms for payment as set forth in Exhibit D.

5.5 Any credits issued by OxySure® will be handled as a separate financial transaction from the original invoice, and payments under the invoice may not be withheld or delayed because of any credit.  Distributor shall not reduce any payment to OxySure® to account for an anticipated, disputed or unauthorized credit.  For credit, Distributor will submit a written credit request within thirty (30) days from the date of Distributor’s invoice for the related transaction.  Any credit request will be based on the price shown on the then current Product Price List, or the actual net price paid by Distributor, whichever is lower.  Upon notification by OxySure® of a discrepancy in a credit request, Distributor has thirty (30) days to resolve such discrepancy and pay any amount due to OxySure®.

5.6 All Products shall be delivered to Distributor F.O.B. OxySure’s principal place of business.

6.         Returns

Distributor may return Products in accordance with (a) any applicable limited warranty, if effective (see Section 7.1), or (b) the return policy set forth in Exhibit E.  OxySure® may amend or change its return policy upon thirty (30) days written notice to Distributor.

7.         Limited Warranty and Warranty Service

7.1 OxySure® provides a Customer limited warranty for the Products.  The terms of the Customer limited warranty are set forth in the documentation provided with the Products, a copy of such being provided in Exhibit F.  Upon any amendment of or addition to the end user limited warranty, OxySure® shall provide Distributor with written notice of such change.  Distributor shall strictly comply with the terms and provisions of Section 2.7 relating to the issuance of warranties, guaranties or representations.  OXYSURE MAKES NO OTHER WARRANTIES OF ANY KIND WHATSOEVER WITH REGARD TO THE PRODUCTS, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.2 Distributor shall not repair, attempt to repair, modify, attempt to modify, or the like, any Products.  Distributor shall return any defective or allegedly defective Product to OxySure® for assessment and repair (if applicable).

7.3 For the purpose of technical support, OxySure® hereby grants Distributor a license to use any OxySure-provided Proprietary Information supplied to carry out its obligations under this Agreement.  Such Proprietary Information, or any copies or versions in any form or language, shall in all cases remain the property of OxySure.  The confidentiality of such Proprietary Information is governed by Section 10.

8.         Reports and Audits

8.1 Intentionally omitted.

8.2 Distributor shall provide OxySure® with an annual market survey and other written reports from time to time upon OxySure’s reasonable request and specification.  Such reports shall address account strategies, account conditions, Customer feedback and evaluations, or other like information.   

8.3 Intentionally omitted.

9.        Distributor’s Financial Condition

9.1 Intentionally omitted.

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9.2 If Distributor is placed on credit hold, OxySure® may ship direct to Customers.  OxySure® will provide Products to Customers at OxySure’s suggested resale price (unless OxySure® is otherwise notified of a differing Distributor resale price) (the “Customer Price”).  The Customer will be billed directly by OxySure®.  For shipments made to fulfill Customer orders submitted through Distributor, the difference between the Customer Price and the price OxySure® sells to Distributor, from the then-current Product Price List, will be applied against any Distributor arrearages (“Withholding”).  No amounts will be applied to arrearages if a Customer orders directly from OxySure® or another distributor, even if Distributor typically services that Customer’s account.  Neither Withholdings nor shipments to existing Customers under the limited scope of this provision will be construed as a breach of this Agreement.  Direct shipments to Customers under this provision shall not relieve Distributor of any obligations to further develop the Territory, Channel or the accounts therein, or support those Customers to which the direct shipments are made.

9.3 In the even OxySure® elects to establish a credit account for the Distributor, Distributor will provide OxySure® with credit data sufficient to establish Distributor’s credit-worthiness.  The decision to offer such a credit account or to decline to establish such an account upon review of Distributor’s credit data is in the sole discretion of OxySure®.  OxySure® may periodically review Distributor’s credit worthiness and may withdraw any credit approval at any time, at OxySure’s sole discretion.

9.4 Distributor agrees to execute a UCC-1 financing statement, or similar instrument, for the purposes of indicating OxySure’s financial interest in any outstanding account.  OxySure® shall have the sole responsibility of filing such financing statement or similar instrument. 

10.       Confidentiality/Non-Competition

10.1 During the term of this Agreement, Distributor and its employees may have access to OxySure’s Proprietary Information, such information, whether written or oral, being of a nature that OxySure desires to protect against unauthorized use or disclosure.  The term “Proprietary Information” shall include, but is not limited to, information relating to research, marketing, developments, inventions, product lines, design, purchasing, finances and financial affairs, accounting, merchandising, selling, engineering, employees, Customers, consultants, trade secrets, business practices, merchandise resources, supply resources, service resources, system designs, procedure manuals, or pricing relating to the Products.  The term Proprietary Information does not include any information which is:  (a) in the public domain or that enters the public domain without a breach of this Agreement; (b) known by the receiving party prior to the disclosure; or (c) disclosed by a third party unrelated to or not in breach of this Agreement, or subject to some other confidentiality agreement.

10.2 Distributor will treat all Proprietary Information as proprietary and confidential.  Distributor shall not disclose any Proprietary Information to anyone other than its own employees, directors, and consultants.  Distributor shall further use reasonable efforts to prevent any unauthorized use or disclosure, including, but not limited to, restricting access to the Information within its organization to those having a need to know and ensuring that everyone to whom it makes a disclosure complies with this Agreement by entering into an agreement that imposes a like obligation with each person to which a disclosure is made.  Distributor will not disclose any information to any party not enumerated above without obtaining prior written consent from OxySure®.

10.3 Without the prior written authorization of OxySure®, Distributor agrees that during the term of this Agreement and for a period of one (1) year thereafter, without regard to the party terminating this Agreement or the reason for termination, if any, Distributor (which includes its employees, directors, officers, and consultants) will not in the United States or in any foreign country in which OxySure® is then marketing its products or services, directly or indirectly represent any manufacturer, market or sell, control an interest in or act as an officer, director, or employee of, or consultant or adviser to, any firm, corporation, institution or entity, directly or indirectly involved in the manufacturing or distribution of any products related to the catalytic generation of oxygen, as reasonably determined by OxySure® in its discretion.

10.4 Without limiting the obligation in Section 2.14, Distributor shall comply with all privacy and security laws relevant to the sale and distribution of Products and shall ensure that each employee, director, officer, and consultant of Distributor complies with such privacy laws at all times.

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10.5 Within twenty (20) days from the written request from OxySure®, Distributor will provide copies of any or all written agreements between Distributor and its employees, directors, officers, consultants, and parties to which Proprietary Information has been disclosed by the Distributor made pursuant to the objectives of Sections 10.2,  10.3, and 10.4.

10.6 Distributor, upon termination of this Agreement, shall surrender to OxySure® all Proprietary Information, (including:  training manuals, marketing updates, product literature, price lists, and product samples), whether originals, copies, English or non-English translations.

10.7 Distributor acknowledges that the OxySure® may suffer irreparable damage in the event of a breach or threatened breach of any provision of this Section 10, and that therefore, OxySure® may seek injunctive relief to prevent such breach, as well as any and all other applicable remedies at law or equity, including the recovery of damages.  This Section 10.7 controls over any conflict between this Section 10.7 and Section 18.9.

11. OxySure Trademarks, Service Marks, and Trade Names; Intellectual Property

11.1 OxySure® grants to Distributor a non-exclusive license to use OxySure’s trademarks, trade names, and service marks only in connection with the Products and in the performance of Distributor’s obligations under this Agreement.  All such uses are subject to OxySure’s prior review and consent, which will not be unreasonably withheld or delayed, and such license may be withdrawn or revoked at any time by OxySure® at its sole discretion, either with or without cause.

11.2 All use of OxySure’s trademarks, trade names, and service marks will be in proper form, giving appropriate attribution to OxySure® as the owner of such marks.  Distributor will not undertake any use of a mark that may jeopardize OxySure’s rights to use or register such mark, or OxySure’s rights to prevent unauthorized use.

11.3 All use of OxySure® trademarks, service marks, and trade names by Distributor will inure to the benefit of OxySure®.  At no time during or after the term of this Agreement shall Distributor attempt to register any trademarks, service marks, or trade names confusingly similar to any OxySure® trademark, service mark, or trade name.  Distributor will cooperate, at OxySure’s expense, to assist OxySure® in the registration or securing of rights in such marks.  Distributor will cooperate, at OxySure’s expense, in initiating and prosecuting any legal action against any infringer of any OxySure® trademark, service mark, or trade name.

11.4 Distributor shall not, by reason of this Agreement or its provisions, acquire any interest in or right to any patent, trademark, service mark, trade names, copyright, Proprietary Information or any other form of OxySure® intellectual property, whether relating to the Products or otherwise.

11.5 Any intellectual property, and any applications or methods related to any intellectual property, developed or discovered by either party, jointly or individually, under this Agreement or relating to the Products (including, but not limited to, patentable and/or copyrighted materials) are owned by OxySure®, and Distributor hereby assigns and conveys all rights, title and interest in such intellectual property to OxySure.  At OxySure’s request, Distributor shall execute any instruments and documents necessary to confirm OxySure’s ownership of the intellectual property.

12. Relationship Between the Parties

12.1 Distributor and OxySure® intend to act and perform as independent contractors, and the provisions hereof are not intended to create any partnership, joint venture, agency or employment relationship between the parties. Each party shall be solely responsible for and shall comply with all state and federal laws pertaining to employment taxes, income withholding, unemployment compensation contributions and other employment related statutes applicable to that party.

12.2 Neither party has any authority to act for and/or to bind the other party in any way, or to represent that either is in any way responsible for the acts of the other.

13. No Conflicts by Distributor

Distributor warrants and represents that Distributor is not subject to any contractual obligation or restraint which will interfere with Distributor’s right and ability to perform pursuant to the terms of this Agreement.

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14. Defaults; Remedies; and Termination

14.1 Either party may terminate this Agreement immediately by sending written notice if the other party becomes insolvent, or becomes the subject of any proceeding seeking relief, reorganization, or rearrangement under any laws relating to bankruptcy or insolvency, or upon any assignment for the benefit of creditors, or upon the appointment of a receiver, liquidator, or trustee of any of its property or assets, or upon the liquidation, dissolution, or winding up of its business.

14.2 OxySure® may terminate this Agreement immediately by sending written notice upon the assumption of control of Distributor by a governmental authority or other third party; the sale or transfer of the majority or all of its assets; or if there is a change of control, ownership, or management of the Distributor.

14.3 This Agreement may be terminated by the mutual agreement of OxySure® and the Distributor.

14.4 If either party breaches any commitment contained in or arising from this Agreement (excepting Sections 14.1 and 14.2) and fails to remedy the breach within thirty (30) days from the date of written demand to cure (provided, however, in the event of Distributor’s default in its obligations under Article 4, there shall be no such demand required or cure available), the breaching party shall be deemed to be in default hereunder.

(a)   On Distributor’s default, OxySure® may do any of the following, as determined in OxySure’s sole       discretion:  (i) declare any unpaid sums under this Agreement immediately due and payable; (ii) suspend further performance by OxySure®; (iii) terminate this Agreement; (iv) cancel the Distributor’s distribution rights; (v) reduce the extent of the Territory and/or Channel; and/or (vi) commence a legal proceeding, in accordance with Section 18.9, for damages and/or specific performance and/or pursue any and all other available remedies at law or in equity, all of such remedies being cumulative of each other.

  (b)   In reviewing the Distributor’s performance in accordance with the Distributor’s obligations under Article 4, the parties agree that OxySure® shall not be limited to semi-annual determinations but may make a determinative evaluation of semi-annual performance based upon a two month pro rata analysis based on at least two consecutive months.

(c)   In reviewing the Distributor’s performance in accordance with the Distributor’s obligations under Sections 2.2 and 2.4 and/or Article 4, the parties agree that OxySure® shall not be limited to assessing the Distributor’s performance within the Territory and Channel as a whole.  Accordingly, OxySure® can evaluate the Distributor’s performance based on the Territory or Channel as a whole or on any definable sub-territory or sub-channel (e.g., state boundaries, county boundaries, municipal boundaries, Customer, etc.).

(d)   In reviewing Distributor’s financial condition under Section 9, the parties agree that OxySure® may monitor Distributor’s credit through a variety of sources and means, including commercial credit companies.  Accordingly, a determination of credit worthiness may be based on third-party sources instead of and/or in addition to Distributor’s accounts and payment history with OxySure®.

14.5 Intentionally omitted.

14.6 Concerning the buy back of inventory from Distributor by OxySure upon a termination:

  (a)   If this Agreement is terminated for any reason, OxySure® shall have the sole option, but not the obligation, to purchase any or all inventory of OxySure’s Products then held by Distributor.

(b)    For Section 14.6(a), the price of the Product being bought back will be the net price paid by the Distributor, less a reasonable discount equal to 1/12th of the net price of the Product for each month during which such Product has been held by Distributor.

(c)   Section 14.6(b) does not encompass those Products which are discontinued or demonstration Products nor those Products determined, in OxySure’s sole discretion (including, at OxySure’s option and expense, an on-site inspection), to be damaged, non-sterile, expired, used or not in good condition.  Such Products may be repurchased by OxySure® (in its sole discretion) for a discounted price mutually agreed upon by the parties.

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14.7 Termination of this Agreement terminates all further rights and obligations of OxySure® and Distributor hereunder other than the following obligations and sectional provisions, all of which shall survive any termination of this Agreement:

(a)   Neither OxySure® nor Distributor shall be relieved of their respective obligations to pay any money due the other party; and

(b)   Sections:  7 (Limited Warranty), 8 (Reports and Audits), 10 (Confidentiality/Non-Competition), 14 (Defaults; Remedies; and Termination); 15 (Indemnity and Insurance), 16 (Limitation of Liability), 17 (Intellectual Property Indemnification), 18.7 (Governing Law), and 18.9 (Negotiation, Mediation and Arbitration).

14.8 On termination of this Agreement for whatever cause, Distributor will immediately (a) cease to engage in marketing and distribution activities as an OxySure® distributor, and (b) cease representing in any manner that it is a distributor of OxySure® Products, including the immediate termination of all use of OxySure® trademarks, service marks, or trade names.  Notwithstanding Distributor agrees that if OxySure® so requests after the termination of this Agreement, Distributor shall pay for and distribute orders for Products which OxySure® received and accepted during the term of this Agreement.

15. Indemnity and Insurance

15.1 Distributor agrees to indemnify and hold OxySure® harmless from any and all claims, demands, costs, liabilities and responsibilities, regardless of the claimant or his place of filing a claim, to the extent such result from or are associated with Distributor’s alleged negligent or intentional acts or omissions, any default by Distributor under this Agreement, or the provision of any warranty or guarantee of the Products given by the Distributor.

15.2 Distributor will maintain product liability insurance or the like for those claims enumerated in Section 15.1.

15.3 Distributor shall maintain sufficient insurance coverage to enable it to meet its obligations created by this Agreement and by law.

15.4 OxySure® agrees to indemnify and hold Distributor harmless from any and all third party claims and demands to the extent they result from defective Products provided by OxySure® to Distributor or the provision of any express warranty or guarantee of the Products prepared and provided by OxySure® to a Customer.  Distributor shall promptly notify OxySure® of any such claim and demand, shall provide reasonable assistance to OxySure in the defense of such claims and demands, and shall give OxySure® full authority to defend, settle or resolve the claims or demands on behalf of Distributor.

16. Limitation of Liability

In no event shall OxySure® be liable to Distributor for any indirect, punitive, consequential, special, incidental or loss of profit damages.

17. Intellectual Property Indemnification

17.1 Distributor agrees that OxySure® has the right to, and OxySure® agrees that it will, at its sole cost and expense, defend or at its option, settle any claim, suit, proceeding, or other action brought against Distributor or its Customers for infringement of any United States copyright, trademark, or other United States intellectual property right related to the Products or their use, subject to the limitations set forth in Sections 17.2 and 17.3.  OxySure® shall have sole control of any such proceeding or settlement negotiations in order to be held liable.  OxySure® will not be liable for any costs, settlements or expenses incurred without its prior written authorization.  OxySure® will pay any final judgment entered against Distributor or its Customers based on such infringement provided OxySure® had sole and complete control of the proceeding.

17.2 OxySure® will be relieved of its obligations under Section 17.1 unless Distributor or its Customers notify OxySure®, in writing, of such action, within three (3) days of its receipt of notice of same and gives OxySure® full information and assistance to settle and/or defend any such action.  If relieved of its obligation under Section 17.1, OxySure® may assume such obligation upon written notice to the Distributor.

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17.3 OxySure® assumes no liability for, and Distributor agrees to indemnify and hold OxySure® harmless to the same extent as that indemnification identified in Section 17.1, for:

(a)   any infringements covering completed equipment or any assembly, combination, or method in which any of the Products may be used, but not covering such Products standing alone; or

(b)   any trademark infringement involving any marketing or branding not applied by OxySure® or involving any marking or branding applied at the request of Distributor; or

(c)    any modification of the Products unless such modification was made by OxySure®.

18. General Provisions

18.1 Entire Agreement.  This Agreement, which includes the Exhibits, sets forth the entire agreement and understanding of the parties relating to the subject matter herein and supersedes all prior discussions between them whether written or oral.  The following Exhibits are attached hereto and made a part hereof for all purposes:

Exhibit Letter	Name of Exhibit
A B C D E F G H	Description of Products Description of Territory and Channel Minimum Net Sales Payment Terms Return Goods Policy Limited Product Warranty Pricing & Discount Schedule Internet Distribution Attachment

18.2 Assignment.  Distributor may not assign or transfer its right under this Agreement without the prior written consent of OxySure®.

18.3 Modifications and Waiver.  This Agreement may be modified only in writing, signed within the authority granted by each party, and shall not be modified, varied, superseded or construed in a particular manner due to any course of conduct, trade usage, custom or dealing or any statute or common law.  It is expressly agreed and understood that the waiver by a party of its rights, or any portion of its rights, under this Agreement in any particular instance or instances, whether intentional or otherwise, shall not be construed as a continuing waiver which would prevent the subsequent enforcement of such rights, or as a waiver of any other rights hereunder.

18.4 Headings.  The headings of this Agreement are for convenience of reference only, and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

18.5 Notices.  All notices under this Agreement shall be deemed sufficient if sent by certified or registered mail (postage prepaid) with return receipt requested, overnight or air courier, facsimile, telex, or cable to the party, at the addresses identified herein, to whom such notice is required or permitted to be given.  Any such notice shall be deemed to have been received on the next business day after transmission by facsimile, telex, cable or overnight or air courier, and on the third business day after transmission by certified or registered U.S. mail, return receipt requested.

18.6 Severability.  Whenever possible, each provision of the Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of the Agreement should be prohibited or invalid, in whole or in part, under applicable law, such provisions shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

18.7 Governing Law.  This Agreement is governed by the substantive laws of the State of Texas, U.S.A.  Any actions related to this Agreement must be brought in the courts located in Dallas County, State of Texas.

18.8 Language Construction. The language in all parts of this Agreement shall be construed, in all cases, according to its fair meaning, and not for or against either party hereto. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement

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18.9 Negotiation, Mediation, and Arbitration.  The parties will attempt in good faith to resolve any controversy or dispute arising out of or relating to this Agreement promptly by negotiations between or among the parties. If any party reaches the conclusion that the controversy or dispute cannot be resolved by unassisted negotiations, such party may notify the American Arbitration Association (“AAA”), 140 West 51st Street, New York, New York 10020 [telephone (212) 484-3266; fax (212) 307-4387]. AAA will promptly designate a mediator who is independent and impartial, and AAA’s decision about the identity of the mediator will be final and binding. The parties agree to conduct mediated negotiations in Dallas, Texas, within thirty (30) days after the notice of mediation is sent. If the dispute is not resolved by negotiation or mediation within thirty (30) days after the first notice to AAA is sent, then, upon notice by any party to the other affected parties and to AAA, the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, selected in accordance with the rules of the AAA, for binding arbitration in Dallas, Texas, in accordance with AAA’s Commercial Arbitration Rules.  The arbitration shall be governed by the United States Arbitration Act, 9U.S.C. Sections 1-16 (or by the same principles enunciated by such Act in the event it may not be technically applicable).   The parties agree that they will faithfully observe this Agreement and will abide by and perform any award rendered by the arbitrator. The award or judgment of the arbitrator shall be final and binding on all parties. No litigation or other proceeding may be instituted in any court for the purpose of adjudicating, interpreting or enforcing any of the rights or obligations relating to the subject matter hereof, whether or not covered by the express terms of this Agreement, or for the purpose of adjudicating a breach or determination of the validity of this Agreement, or for the purpose of appealing any decision of an arbitrator, except a proceeding instituted for the sole purpose of having the award or judgment of an arbitrator entered and enforced or for the sole purpose of seeking a temporary restraining order or temporary or permanent injunction (provided, that any damages or costs issues shall not be decided by any court hearing such petition but shall be adjudicated in accordance with the mediation and arbitration procedures set forth herein).  If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political subdivision thereof, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory mediation and arbitration provisions and shall be resolved in accordance therewith.   The Agreements contained herein have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts.  Section 10.7 controls over any conflict between Section 10.7 and this Section 18.9.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized representatives or officers, effective as of the day and year indicated above.

DISTRIBUTOR:	OxySure® Systems, Inc.:
Name: Mr. P. M. Nyewe	OxySure® Systems, Inc..
Company: Afritex Medical Products (Pty) Ltd.	10880 John W. Elliott Drive, Suite 600
Address c/o Nolands, Noland House, Liesbeeck	Frisco, Texas, 75034 USA
Parkway, Mowbray 7700 South Africa	PH:           972-294-6450
PH:           (01127) 082-552-5874	FAX:           972-294-6501
FAX:           (01186) 504-2171	EMAIL: info@oxysure.com
EMAIL: Mphathi@iafrica.com
By:          /s/ PM Nyewe	By:           /s/ Julian T. Ross
Title:                   Director	Title: CEO
Date:            March 26, 2010	Date:                      March 26, 2010

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EXHIBIT A

Products

The Products shall be defined as all OxySure® products and accessories for such products, including (but not limited to)

Part Number	Description
615-00	Model 615 Portable Emergency Oxygen Unit, complete system
615-01	Model 615 Replaceable Cartridge w/Mask
615-02	Replacement Adult Mask
615-03	Replacement Pediatric Mask
615-04	Display Cabinet with Alarm and Emergency Oxygen marking
615-05	Custom (Emergency Oxygen) Wall-mounted Display Cabinet w/Alarm
615-07	OxySure Wall Sign
615-09	OxySure Thermal Bag
615-10	Resuscitator Bag, Adult
615-11	Resuscitator Bag, Pediatric
615-12	Pulse Oximeter – Standard
615-13	Pulse Oximeter – Premium

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EXHIBIT B

Territory and Channel

1.   The Territory is defined as (check all that apply):

o The following areas within the United States:

__________________________________________

________________________________________

________________________________________

ox The following countries (requires Attachment B-1, International Terms, to be attached):

_________All members of the Southern African Development Community:_________________    

_________________South Africa, Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, Zimbabwe______________________________

If the Territory includes any country other than the United States, Distributor hereby consents to and is bound by the terms of Attachment B-1, International Terms.

2.    The Channel is defined as:

All non-retail and retail channels.

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ATTACHMENT B-1

International Terms

If the Territory includes any country other than the United States, then this Attachment B-1 will be incorporated into and made part of the Distribution Agreement between OxySure® and Distributor.  All capitalized terms not defined in this Attachment have the definitions set forth in the Distribution Agreement

1.           Distributor shall be responsible for translating at its expense all marketing and promotional materials provided by OxySure®, including any manuals, into the language or languages used in the Territory.  Distributor shall promptly deliver to OxySure® a copy of such translation in the formats reasonably requested by OxySure®.  Such translations will be deemed a “work for hire” as such term is used in United States copyright law, and OxySure® will be considered the author and owner of all rights in and to such translation.  To the extent the translation is not a work for hire, Distributor hereby assigns to OxySure®, and agrees that OxySure® will have, all ownership rights in the manuals and translations created or provided by Distributor.  Distributor shall provide all documentation (including written assignments) reasonably requested by OxySure® to confirm its ownership of the manuals and translations.  Distributor shall make such changes to the marketing and promotional materials as are required to comply with the law of the countries, or political subdivisions in the Territory, but only with the prior approval of OxySure®.  Ownership of all marketing and promotional materials remain with OxySure®.

2.           OxySure® shall use commercially reasonable efforts to ship Products sold hereunder within the period and by a carrier designated in each accepted purchase order, and FOB the relevant OxySure® facility determined by OxySure®.  Distributor shall be responsible for obtaining all licenses required to import Products into the Territory.  OxySure® shall be responsible for obtaining all licenses required to export products from the United States.  All freight, transportation, rigging, crating, packing, drayage, insurance, and handling charges, as well as any other expenses that are not specifically allocated to OxySure® in this Attachment B-1, will be paid by Distributor.  Title, possession and risk of loss shall pass to Distributor upon delivery of the Products by OxySure to the designated carrier or freight forwarder.

3.           OxySure® and Distributor agree that if it is required by applicable law, this Agreement shall be approved by and/or registered with the appropriate governmental authorities.  The rights and obligations of OxySure® and Distributor under this Agreement are subject to any such government approval, registration or recordation, including import and export certificates (“Approvals”).  Distributor is responsible and shall bear the cost for promptly obtaining and maintaining any such Approvals from requisite government agencies in the Territory for Distributor and OxySure® to advertise, market, sell, distribute, license, and support the Products in the Territory.  To the extent additional Approvals are required for new or existing OxySure® Products, or to the extent countries other than those set forth in the Territory are now or hereafter included in the Territory, then Distributor shall bear the sole cost and responsibility for promptly obtaining such Approvals, including compliance with all local content requirements, effective as of the date of this Agreement, or as such requirements may subsequently be modified.  All costs of compliance, and whatever actions may be required (whether legal, manufacturing, assembly or otherwise) shall be the sole financial responsibility and obligation of Distributor.  To the extent any governmental approval would require OxySure® to change or modify its Products, OxySure® shall have no obligation to do so, and may at its discretion terminate this Agreement with Distributor with no further obligation hereunder, in order to avoid the threat of non-compliance with governmental regulations.  Distributor agrees that it shall not submit any information to governmental authorities with respect to this Agreement without the prior written approval of OxySure®; provided however, that the foregoing shall not apply in the event that formal or informal proceedings are instituted against Distributor or in the event that a dispute between OxySure and Distributor is submitted to any tribunal having jurisdiction over such matters.

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4.           Distributor shall provide OxySure® with evidence of all government permits, certificates or approvals.  Distributor shall provide to OxySure promptly upon its request such evidence as OxySure® shall require, including, but not limited to, an opinion of counsel of the Territory (which counsel must be approved by OxySure® in its sole discretion although the costs of such opinion shall be borne by Distributor), of compliance by Distributor with the applicable import regulations of jurisdictions within the Territory or any other applicable jurisdiction, including those governing the filing of proper import documentation and the payment of all duties and fees of any nature whatsoever required for such import.

5.           Distributor shall comply with, and Distributor shall require its Customers to comply with, the United States Export Administration Act, the United States Anti-Boycott provisions and the United States Foreign Corrupt Practices Act (“FCPA”), as well as all applicable statutes, rules and regulations in the United States and the Territory, as the same may be amended from time to time.  Distributor represents and warrants to OxySure® that it is familiar with the terms and provisions of the FCPA and the purposes of the FCPA.  Distributor further represents and warrants that (a) except as otherwise disclosed in writing to OxySure® prior to execution of this Agreement, neither it nor any of its owners, staff members or Affiliates are officials, officers or representatives of any government or candidate for political office, and (b) that no part of the proceeds from sales of the Products will be used by it for any purpose or to take any action which will constitute a violation of any law of any government in the Territory or any part thereof or the United States, including the FCPA.

6.           This Agreement is an international transaction for the sale of goods in which the specification of United States Dollars and payment in Frisco, Texas is of the essence and United States Dollars shall be the currency of account in all events.   The payment obligations of distributor shall not be discharged by an amount paid by Distributor in another currency or at another place, whether pursuant to a judgment or otherwise, to the extent that the amount so paid on prompt conversion  to United States Dollars and transferred to Frisco, Texas under normal banking procedures does not yield the amount of United States Dollars in Frisco, Texas due hereunder.  If any payment by Distributor, whether pursuant to a judgment or otherwise, upon conversion and transfer does not result in payment of such amount of United States Dollars due hereunder in Frisco, Texas, Distributor shall compensate OxySure for the additional amount necessary to yield the amount due and owing to OxySure®.

7.           Distributor agrees specifically that it will not directly or indirectly export or re-export the Products or any technical data or service that is the direct product of the Products to any country outside the Territory without the written permission of OxySure®.

8.           The parties expressly agree that the International Convention for the Sale of Goods will not apply to this Agreement.

9.           The parties agree to mutually cooperate, one with the other, in notifying the other parties of any laws or of any changes in their respective domestic laws or laws of the Territory which might impact on any purchase orders, this Agreement or its exhibits, including but not limited to export/import controls, currency restrictions, competition requirements, and technology/licensing transfers.

10.          This Agreement (including any exhibits or attachments hereto) shall be executed in English only.  If any dispute or question of interpretation concerning this Agreement or any other materials related to this Agreement arises, the provisions of the English language version shall control.

DISTRIBUTOR:	OxySure® Systems, Inc.:
By:         /s/ P.M. Nyewe	By:            /s/ Julian T. Ross
Title:           Director	Tetle: CEO
Date:           March 26, 2010	Date:                      March 26, 2010

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EXHIBIT C

Minimum Net Purchases

Distributor shall purchase a minimum of 3 000 (three thousand) units of Model 615 (SKU 615-00) OR an equivalent of USD 480 000 in Products per annum (Quota).

Initial Purchase Order: Distributor shall submit the Initial Purchase Order (as defined in Section 4 herein) for at least 600 Units of Model 615 (SKU 615-00) OR the equivalent of USD 145,000 in Products.

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EXHIBIT D

Payment Terms

Cash in Advance.

16

EXHIBIT E

THE FOLLOWING POLICY AND PROCEDURE ARE APPLICABLE TO THOSE PRODUCTS TO WHICH A LIMITED WARRANTY DOES NOT APPLY, THE PROVISIONS HEREINBELOW ARE TO BE CONSTRUED IN A MANNER CONSISTENT WITH THE TERMS AND CONDITIONS OF THE AGREEMENT AND DO NOT REPRESENT ADDITIONAL WARRANTIES, GUARANTIES OR REPRESENTATIONS:

1. Before any product may be returned, a Return Materials Authorization number (RMA#) must be secured.  RMA#’s can only be issued by OxySure’s Customer Service.

To assist in the return process, the Customer/Distributor is required to provide Customer Service the following information:

(a)  OxySure Product Code and Lot Number

(b)  Quantity Customer/Distributor Wishes to Return

(c)  Order Number Associated with the Products

(d)  OxySure’s Original Invoice Number

(e)  Reasons for Return

2. All Products returned shall be shipped to OxySure, freight prepaid, unless the return is due to OxySure® error.  On all international returns, OxySure® will specify the method of shipment.

3. Items eligible for full credit:

(a)  Products shipped in error.

(b)  Products ordered in error, if authorized for return within thirty (30) days of receipt.

(c)  Defective Products due to OxySure® workmanship.

4. Items not eligible for return:

(a) Custom products or products sold on a “No-return” basis.

(b) Goods held over ninety (90) days from the original Invoice Date.

(c) Partial cases or quantities less than minimum order quantity.

(d) Products unsalable due to re-design, preprocessing, revision, or obsolescence.

(e) Demonstration products.

(f) Products no longer in their original packaging, used, or damaged through no fault of OxySure®.

5. A 20% Restocking Fee will be assessed on all returns authorized over (thirty (30) days after the original Invoice Date.

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EXHIBIT F

Limited Product Warranty

Refer to the Product literature packaged with each Product, such being incorporated by reference herein, for any applicable Customer limited warranty.

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EXHIBIT G

Pricing & Discount Schedule

MSRP	Volume Range Min	Volume Range Max	Unit Price, Authorized
	#Units	#Units	Distributors Only

Model 615, Base Systems (SKU 615-00)1:
	$349.00	1	+	$160.00
Model 615, Cartridges (SKU 615-01)1:
	$149.00	1	+	$72.00

Model 615, Mask/Tray (SKU 615-03):
	$25.00	1	499	$10.00
Model 615, Pediatric Mask/Tray (SKU 615-04):
	$27.50	1	499	$10.50
Custom (Emergency Oxygen) Wall-mounted Display Cabinet (SKU 615-05):
	$349.00	1	50	$139.40
OxySure Wall Sign (SKU 615-07):
	$18.95	1	+	$8.00
OxySure Thermal Bag (SKU 615-09):
	$89.00	1	+	$42.00
Resuscitator Bag, Adult (SKU 615-10):
	$36.00	1	+	$15.00
Resuscitator Bag, Pediatric (SKU 615-11):
	$38.00	1	+	$15.00
Pulse Oximeter – Standard (SKU 615-12):
	$99.00	Min order qty=12	+	$50.00
Pulse Oximeter – Premium (SKU 615-13):
	$129.00	Min order qty=12	+	$55.00
Notes: (1) Cartridges come with standard Adult masks.

Volume refers to purchase order volume. All Prices are FOB Frisco.

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EXHIBIT H

Internet Distribution Attachment

To be effective, this Internet Distribution Attachment must be signed by both OXYSURE® SYSTEMS, INC. (“OxySure” or “OxySure®”), and (the “Distributor”).  Once effective, this Exhibit H will be incorporated into and made part of the Distribution Agreement between OxySure® and Distributor.  All capitalized terms not defined in this Attachment have the definitions set forth in the Distribution Agreement.

1.           Effective Date.  This Internet Distribution Attachment is effective as of _____________________________.

2.           Internet Promotion and Distribution.  This Internet Distribution Attachment governs all promotion, sale, advertising, marketing and other offers made via electronic means, including via the Internet.  Internet promotions includes the following: (a) offering or displaying the Product through any online channel, including but not limited to via the Web (HTTP), RSS, FTP, or other method, (b) email offers to multiple individuals or companies, (c) promotions and advertising embedded or appearing in software products, (d) promotions and advertising embedded in or associated with streaming or downloadable media, including audio and video media, and (e) any other methods or means similar or related to those currently available via the Internet.

3.           Distributor’s Promotion.  Distributor intends to promote, sell, advertise, market and otherwise offer the Products through the following websites and methods:

Distributor and OxySure® may add additional websites and methods by mutual written agreement. Distributor shall be solely responsible for all costs and charges associated with its Internet promotion, including all server and bandwidth charges.

4.           Territory.  Distributor shall implement technological and other measures to ensure that Products are not (a) promoted outside of the Territory, or (b) shipped outside of the Territory.  Such measures may include page access denial for IP addresses outside the Territory, a prominent disclaimer on the Product page stating that Products will not be shipped outside the Territory, and canceling orders to be shipped to addresses outside the Territory.

5.           Pricing.  To the extent the pricing offered by Distributor through an Internet promotion is lower than the Manufacturer Suggested Retail Price, Distributor shall ensure that (a) the price may be viewed only by users on Distributor’s website that have logged in using a valid username and password, and (b) the price is not distributed via email, except in response to a valid inquiry requesting the price.

6.           Photos and Graphics.  Any Product photos or graphics used in an Internet promotion must accurately depict the Product, and must clearly display all trademarks that actually appear on the Product.  Distributor may use Product photos provided by OxySure®, so long as such photos are not altered in any manner and all copyright notices appearing on the photo remain intact.

7.           Manuals and Documentation.  Distributor may not post any photos, scans or other versions of Product manuals or other documentation related to the Products without the prior written consent of OxySure®.

8.           Product Reviews.  Distributor may allow Customers to post reviews of the Product, provided that Distributor will remove any Product review that OxySure reasonably believes is false, misleading, or not supported by verifiable evidence.

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IN WITNESS WHEREOF, the parties hereto have caused this Internet Distribution Attachment to be executed by their respective authorized representatives or officers, effective as of the day and year indicated above.

DISTRIBUTOR:	OxySure® Systems, Inc.:
By:         /s/ P.M. Nyewe	By:           /s/ Julian T. Ross
Title:           Director	Title:CEO
Date:           March 26, 2010____________	Date:          March 26, 2010______________________

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EX-10.31

NOTE PURCHASE AGREEMENT

This Agreement is made and entered into this 26th Day of March, 2010 by and between OxySure Systems, Inc., a Delaware Corporation (“OxySure” or the “Company”) and Afritex Medical Products (Pty) Ltd. (“Investor”).

WITNESSETH:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties to this Agreement, said parties agree as follows:

(a)   OxySure agrees to sell to Investor the note(s) issued by the Company with terms as summarized in Exhibit A with a face value in the amount of $270,000 (the “Securities”).

(b)   Investor agrees to purchase the Securities from OxySure.

(c)   OxySure shall issue Investor 270,000 warrants with a strike price of $2.50 and in the form shown in Exhibit B. The warrants shall expire 5 years subsequent to issuance.

(1) Representations and Warranties. The parties to this Agreement, and their agents represent and warrant they are entering into this Agreement and the performance by them, and their agents hereunder will not conflict with, violate or constitute a breach of, or require any consent or approval under any agreement, license, arrangement or understanding, or any law, judgment, decree, order, rule or regulation to which they and their agents are a party or by which it is bound.

The signatories and parties to this agreement warrant that they are authorized to enter into this agreement and is binding upon the parties hereto.  All entities which are parties to this agreement warrant that they are in good standing and current with their states or locations of domicile and that their entering into this agreement will not violate or breach any other binding agreement of the parties.

(2) Severability.  If any provision of this Agreement is invalid and unenforceable in any jurisdiction, then to the fullest extent permitted by law: (1) the other provisions hereof shall remain in full force and effect in such jurisdiction; and (2) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or unenforceability of such provision in any other jurisdiction.

(3) Entire Agreement.  This Agreement contains the entire understanding and agreement between the parties with respect to the subject matter hereof and cannot be amended, modified or supplemented in any respect except by a subsequent written agreement entered into by the parties.

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(4) Successors.  This Agreement may not be assigned.  Subject to the foregoing, in every respect, this Agreement shall inure to the benefit of and be binding upon the parties and their successors.

(5) Effect of Waiver. The waiver by either party of a breach of any provision of this Agreement shall not operate, to as or be construed as a waiver of any subsequent breach.

(6) Notices.  Any notice, request, demand or other communication in connection with this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested or sent by facsimile, (iii) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt or, in the case of a facsimile, upon receipt thereof and (iv) addressed as follows:

INVESTOR:	COMPANY:
Investor Name: Afritex Medical	OxySure Systems, Inc.
Address1: c/o Nolands, Noland Hse	10880 John W. Elliot Drive
Address2:Liesbeeck Pky, Mowbray	Suite 600
City, State Zip:7700 Cape, South Africa	Frisco, Texas 75034
Tel:(01127)82-552-5874	(972) 294-6450

or to any such other or additional persons and addresses as the parties may from time to time designate in writing delivered in accordance with this Section.

(7) Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(8) Applicable Law.  This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. In the event any action be instituted by a party to enforce any of the terms and provisions contained herein, the prevailing party in such action shall entitled to such reasonable attorneys' fees, costs and expenses as may be fixed by the Court.

IN WITNESS WHEREOF, the parties have executed this Agreement as the day and year first stated above.

OxySure Systems, Inc.	Investor:Afritex Medical Products (Pty) Ltd.
By:  /s/ Julian T. Ross	By: /s/ P.M. Nyewe
Julian T. Ross, CEO	Name, Title:P.M. Nyewe, Director

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EXHIBIT A

SUBORDINATED CONVERTIBLE NOTE

 $270,000   March 26, 2010

OxySure Systems, Inc., a company organized under the laws of the state of Delaware ("Obligor", which term, as used herein, shall include any successor thereto), for value received, hereby executes and delivers this Subordinate Convertible Note (“Note”) in favor of Afritex Medical Products (Pty) Ltd. ("Holder"), a resident of the state of Texas, and hereby promises to pay to Holder, his designees or his successors and permitted assigns, the principal sum of One Hundred Thousand Dollars ($70,000.00) (the "Principal Amount") on the Maturity Date (as defined below), together with accrued and unpaid interest through and including such date as herein provided at a rate per annum of sixteen percent (16%). Interest shall be computed on the basis of a 360-day year consisting of twelve (12) 30-day months for the actual number of days elapsed.

1.           Maturity Date.   The then outstanding Principal Amount, together with accrued and unpaid interest thereon as set forth above, or the Optional Conversion Shares (as provided for herein) as the case may be, shall become due on the 270th Day subsequent to the Issue Date (the "Maturity Date"). "Issue Date" means the date of first issuance of this Note as first set forth above.

2.           Acceleration.    Notwithstanding any provision hereof to the contrary, the obligations of Obligor hereunder shall forthwith mature and immediately accelerate and shall be immediately due and payable on the Default Date (as hereinafter defined) in the event that (i) the business of Obligor is discontinued, sold, liquidated or otherwise disposed of, whether by liquidation or dissolution, or (ii) Obligor shall take, or intends to take, or, as far as Obligor is aware, a judgment, order or decree from a court of competent jurisdiction, in each case, for the Obligor's winding up, liquidation, dissolution, merger or consolidation that is not pursuant to an agreement between Obligor and Holder, or for the appointment of a receiver in relation to any or all of Obligor's assets (each a "Default Event"). The date on which any Default Event occurs is referred to herein as the "Default Date."

3.           Prepayments.   Obligor may prepay any of the Principal Amount or any interest accrued on this Note at any time prior to the Maturity Date.

4.           Method of Payment.   Obligor shall pay all amounts payable under this Convertible Note in cash by wire transfer of immediately available funds to an account designated by Holder or, if no account has been designated, by certified check delivered to Holder at such place as Holder shall designate to Obligor in writing; provided however, that if Obligor exercises its Conversion Rights as provided for in Section 7 herein, Obligor shall deliver the Optional Conversion Shares to Holder in accordance with the provisions of Section 7.

5.           Presentment Waived.  Obligor hereby expressly waives presentment for payment, demand, notice of dishonor, protest and notice of protest. Acceptance by Holder of any payment that is less than the full amount then due and owing hereunder shall not constitute a waiver of Holder's right to receive payment in full at such time or at any prior or subsequent time.

6.           Subordination.   Prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount in accordance with the terms of this Note, all indebtedness evidenced by this Note (the "Subordinated Indebtedness") shall be subordinated to all other indebtedness of Obligor, whether existing as of the Issue Date or incurred at any time after the Issue Date (the "Senior Indebtedness"), and in that connection, prior to the Maturity Date, except for the obligations of Obligor upon any conversion of the Principal Amount and accrued but unpaid interest in accordance with the terms of this Note:

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(a)  the payment of the Subordinated Indebtedness shall be subordinated to all and any rights, claims and actions which any other person may now or hereafter have against Obligor in respect of the Senior Indebtedness;

(b)  the Subordinated Indebtedness shall not become capable of being subject to any right of set-off or counterclaim; and

(c)  except upon the Maturity Date, upon the acceleration pursuant to Section 2, or upon the conversion of the Principal Amount in accordance with the terms of this Note, Holder shall not claim, request, demand, sue for, take or receive (whether by way of set-off or in any other manner and whether from Obligor or any other person) any money or other property in respect of the Subordinated Indebtedness or any part thereof.

7.           Conversion Rights.   At any time on or prior to the Maturity Date, at the option of Obligor in its sole discretion, all or any portion of the then outstanding Principal Amount and accrued but unpaid interest of this Note may be converted (the "Optional Conversion") into a number of shares of Obligor’s common stock (the "Optional Conversion Shares") equal to the amount of the then outstanding Principal Amount plus the then accrued but unpaid interest to be converted, divided by the Conversion Price (herein so called) which shall be $1.00 per Optional Conversion Share.

In order to exercise the right of Optional Conversion, Obligor and shall give written notice to Holder of such exercise, substantially in the form of Exhibit A attached hereto (the "Optional Conversion Notice") and Holder shall surrender this Note within 5 business days of the date of the Optional Conversion Notice at the principal office of Obligor. Such Optional Conversion shall be deemed to have been effected at the close of business on the date on which such Optional Conversion Notice, duly completed and executed, shall have been given as aforesaid, and, subject to the last sentence of this Section 7, at which time such portion of the Principal Amount and accrued but unpaid interest as is subject to such Optional Conversion shall be applied by Obligor in full payment of the Optional Conversion Shares to be issued in consequence of the Conversion and that application shall discharge Obligor from all liability in respect of such portion of the Principal Amount and accrued but unpaid interest converted, and Holder shall be deemed for all purposes to have become the holder of the Optional Conversion Shares.

As promptly as practicable, but in no event later than twenty (20) Business Days after an Optional Conversion, Obligor, at its expense, shall cause Holder's name to be entered in the register of the shareholders of Obligor in respect of the Optional Conversion Shares and shall issue Holder certificates evidencing same. "Business Day" means any day other than a Saturday, Sunday or other day on which banks in the City of Dallas, State of Texas, United States of America are required or authorized to be closed. Notwithstanding any provision of this Note to the contrary, no Optional Conversion shall be deemed to have occurred unless and until Obligor shall have complied with the obligations set forth in the immediately preceding sentence, whereupon such Optional Conversion shall be deemed to have been effective as of the date the Optional Conversion Notice is given to Obligor; provided, however, that no failure by Obligor to so comply with such obligations shall prohibit Holder from exercising his rights as the holder of the Optional Conversion Shares.

8.           Treatment of Note.  Obligor will treat, account and report this Note as debt and not equity for accounting and tax (with respect to any returns filed with federal, state, local or foreign tax authorities) purposes.

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9.           Miscellaneous.

(a)  Specific Performance. Obligor and Holder acknowledge and agree that in the event of any breach of this Note, the non-breaching party would be irreparably harmed and could not be made whole solely by monetary damages. Obligor and Holder hereby agree that in addition to any other remedy to which any party may be entitled at law or in equity, to the extent permitted by applicable law, Obligor and Holder shall be entitled to obtain an injunction or compel specific performance of this Note in any action instituted in any Court.

(b)  Interpretation. The headings and captions in this Note are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof.

(c)  Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be (i) delivered by hand, (ii) delivered by a reputable commercial overnight delivery service, or (iii) transmitted by facsimile, in each case, sent to the address or telecopier number set below. Such notices shall be effective: (i) in the case of hand deliveries, when received; (ii) in the case of an overnight delivery service, when received; and (iii) in the case of facsimile transmission, when electronic confirmation of receipt is received by the sender. Any party may change its address and telecopy number by written notice to another party in accordance with this provision, provided that such notice shall be effective only upon receipt.

            If to Obligor, to:

OxySure Systems, Inc.

10880 John W. Elliott Dr., Suite 600

Frisco, TX 75034

                                Telecopy: 972-294-6501

Attention: Chief Executive Officer

            If to Holder, to:

Afritex Medical Products (Pty) Ltd.

c/o Nolands, Noland House

Liesbeeck Parkway, Mowbray

7700 Cape Town, South Africa

Email: mphathi@iafrica.com

(d)   Governing Law; Forum; Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Texas as to all matters, including validity, construction, effect, performance and remedies of and under this Note. Venue in any and all suits, actions and proceedings between the parties hereto and relating to the subject matter of this Note shall be in the courts located in and for Dallas County, Texas (the "Courts"), which shall have exclusive jurisdiction for such purpose, and Holder and Obligor hereby irrevocably submit to the exclusive jurisdiction of such Courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Holder and Obligor each hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Convertible Note or the transactions contemplated hereby.

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(e)   Severability. The invalidity, illegality or unenforceability of one or more of the clauses or provisions of this Note in any jurisdiction shall not affect the validity, legality or enforceability of this Note in such jurisdiction or the validity, legality or enforceability of this Note, including any such clause or provision in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(f)   Successors; Assigns; Third-Party Beneficiaries. The provisions of this Note shall be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Neither this Note nor the rights or obligations of Obligor may be assigned by Obligor without the prior written consent of Holder. Holder may freely assign his rights or obligations hereunder. Any attempted assignment in contravention of this Note shall be null and void and of no effect. This Note is for the sole benefit of the parties hereto and their respective heirs, successors and permitted assigns and no provision hereof, whether express or implied, is intended, or shall be construed, to give any other Person any rights or remedies, whether legal or equitable, hereunder.

(g)  Amendments.  This Note may not be amended, modified or supplemented except in a writing signed by Obligor and Holder.

(h)  Waiver. Any waiver (whether express or implied) of any default or breach of or by any party to this Convertible Note shall be effective unless evidenced by a writing signed by the party against which such waiver is sought to be enforced. No such waiver for any purpose shall constitute a waiver of any other or subsequent default or breach, or for any other purpose.

IN WITNESS WHEREOF, Obligor has caused this Convertible Note to be duly executed and delivered as of the date first set forth above.

OBLIGOR:

OXYSURE SYSTEMS, INC.

______________________________________

Name:_________________________________

Title: _________________________________

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EXHIBIT A

OPTIONAL CONVERSION NOTICE

To:   Afritex Medical Products (Pty) Ltd.

The undersigned, OxySure Systems, Inc. ("Obligor") issuer of that certain Subordinated Convertible Note dated March 26, 2010 in favor of Afritex Medical Products (Pty) Ltd. (“Note”) hereby irrevocably exercises the option to convert $270,000_________ of the Principal Amount and accrued but unpaid interest outstanding under the Note into the Conversion Shares in accordance with the terms of the Note. Certificates representing the Conversion Shares issuable and deliverable upon this conversion will be issued and delivered to the registered Holder of the Note unless a different name is provided by the Holder to Obligor in writing. Capitalized terms used in this Conversion Notice and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Note.

Signed: _____________________________________                                                               

Title: ______________________________________                                                               

Date:  _______________________________________                                                              

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EXHIBIT B

STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR ANY SECURITIES ON EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND APPLICABLE LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT LEGALLY REQUIRED.

STOCK PURCHASE WARRANT

This Stock Purchase Warrant (this “Warrant”), dated  __________________________________, is issued to (the “Holder”), by OxySure Systems, Inc., a Delaware corporation (the “Company”).

1.    Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company _______ fully paid and non-assessable shares of Common Stock, par value $_0.0004____ per share (the “Common Stock”), of the Company (as adjusted pursuant to Section 7 hereof, the “Shares”) for the purchase price specified in Section 2 below.

2.   Purchase Price.  The purchase price for the Shares is $ 2.50 per share.  Such price shall be subject to adjustment pursuant to Section 7 hereof (such price, as adjusted from time to time, is herein referred to as the “Warrant Price”).

3.    Exercise Period.  This Warrant is exercisable in whole or in part at any time from the date hereof through.

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4.    Transfer of Warrant.  Transfer of this Warrant to a third party shall be effected by execution and delivery of the Notice of Assignment attached hereto as Exhibit BC and surrender of this Warrant for registration of transfer of this Warrant at the primary executive office of the Company, together with funds sufficient to pay any applicable transfer tax.  Upon receipt of the duly executed Notice of Assignment and the necessary transfer tax funds, if any, the Company, at its expense, shall execute and deliver, in the name of the designated transferee or transferees, one or more new Warrants representing the right to purchase a like aggregate number of shares of Common Stock.

5.    Method of Exercise.  While this Warrant remains outstanding and exercisable in accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

(a)  surrender of this Warrant, together with a duly executed copy of the form of Exercise Notice attached hereto, to the Secretary of the Company at its principal offices, and the payment to the Company of an amount equal to the aggregate purchase price for the number of Shares being purchased, which shall be a whole number of shares; or

(b)  if the Common Stock is publicly traded as of such date, the instruction to retain that whole number of Shares having a value equal to the aggregate exercise price of the Shares as to which this Warrant is being exercised and to issue to the Holder the remainder of such Shares computed using the following formula:

X =           Y(A-B)

    A

Where:

X = the number of shares of Common Stock to be issued to the Holder.

Y=   A=   B= the number of shares of Common Stock as to which this Warrant is being exercised.   the fair market value of one share of Common Stock.   the Warrant Price.

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As used herein, the “fair market value of one share of Common Stock” shall mean:

(1)      Except in the circumstances described in clause (2) hereof, the price per share of the Common Stock determined in good faith by the Board of Directors of the Company; or

(2)       If such exercise is in conjunction with a merger, acquisition or other consolidation pursuant to which the Company is not the surviving entity, the value received by the holders of the Common Stock pursuant to such transaction for each share.

6.    Certificates for Shares; Partial Exercise of Warrants.

(a)    Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the Exercise Notice.

(b)    If this Warrant is surrendered for partial exercise, the Company shall execute and deliver to the Holder of the Warrant, without charge to the Holder, a new Warrant exercisable for an aggregate number of shares of Common Stock equal to the unexercised portion of the surrendered Warrant.

7.    Reservation of Shares.  The Company covenants that it will at all times keep available such number of authorized shares of its Common Stock, free from all preemptive rights with respect thereto, which will be sufficient to permit the exercise of this Warrant for the full number of Shares specified herein.  The Company further covenants that such Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

8.    Adjustment of Warrant Price and Number of Shares.  The number and kind of securities purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as follows:

(a)  Stock Dividends, Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by stock split or otherwise, combine its Common Stock or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend and proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or as of the record date of such dividend, or, in the event that no record date is fixed, upon the making of such dividend.

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(b)  Reclassification, Reorganization, Merger, Sale or Consolidation.  In the event of any reclassification, capital reorganization or other change in the Common Stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 7(a) above) or in the event of a consolidation or merger of the Company with or into, or the sale of all or substantially all of the properties and assets of the Company, to any person, and in connection therewith consideration is payable to holders of Common Stock in cash, securities or other property, then as a condition of such reclassification, reorganization or change, consolidation, merger or sale, lawful provision shall be made, and duly executed documents evidencing the same shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant immediately prior to such event, the kind and amount of cash, securities or other property receivable in connection with such reclassification, reorganization or change, consolidation, merger or sale, by a holder of the same number of shares of Common Stock as were exercisable by the Holder immediately prior to such reclassification, reorganization or change, consolidation, merger or sale.  In any such case, appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any cash, securities or property deliverable upon exercise hereof.  Notwithstanding the foregoing, (i) if the Company merges or consolidates with, or sells all or substantially all of its property and assets to, any other person, and consideration is payable to holders of Common Stock in exchange for their Common Stock in connection with such merger, consolidation or sale which consists solely of cash, or (ii) in the event of the dissolution, liquidation or winding up of the Company, then the Holder shall be entitled to receive distributions on the date of such event on an equal basis with holders of Common Stock as if this Warrant had been exercised immediately prior to such event, less the Warrant Price.  Upon receipt of such payment, if any, the rights of the Holder shall terminate and cease, and this Warrant shall expire.  In case of any such merger, consolidation or sale of assets, the surviving or acquiring person and, in the event of any dissolution, liquidation or winding up of the Company, the Company shall promptly, after receipt of this surrendered Warrant, make payment by delivering a check in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such person as it may be directed in writing by the Holder surrendering this Warrant.

9.    Pre-Exercise Rights.  Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a shareholder with respect to the Shares, including without limitation, the right to vote such Shares, receive preemptive rights or be notified of shareholder meetings, and the Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company.

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10.    Restricted Securities.  The Holder understands that this Warrant and the Shares purchasable hereunder constitute “restricted securities” under the federal securities laws inasmuch as they are being, or will be, acquired from the Company in transactions not involving a public offering and accordingly may not, under such laws and applicable regulations, be resold or transferred without registration under the Securities Act of 1933, as amended, or an applicable exemption from registration.  The Holder further acknowledges that the Shares and any other securities issued upon exercise of this Warrant shall bear a legend substantially in the form of the legend appearing on the face hereof.

11.    Certification of Investment Purpose.  Unless a current registration statement under the Securities Act of 1933, as amended, shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the Holder hereof, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, the Holder will deliver to the Company a written certification that the securities acquired by the Holder are acquired for investments purposes only and that such securities are not acquired with a view to, or for sale in connection with, any distribution thereof.

12.    Successors and Assigns.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and assigns.

13.    Governing Law.  This Warrant shall be governed by the laws of the State of Texas, excluding the conflicts of laws provisions thereof.

IN WITNESS WHEREOF, the undersigned hereby agrees to the terms hereof effective as of

COMPANY: OXYSURE SYSTEMS, INC.
By:	/s/ _______________________________________________
	Name: __________JULIAN ROSS_____________________
	Title:  ____________CEO________________________

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Exhibit BB

EXERCISE NOTICE

Dated:  _______________, ____

The undersigned hereby irrevocably elects to exercise the Stock Purchase Warrant, dated ____________________, , issued by _______________________________________, a _______________ corporation (the “Company”), to the undersigned to the extent of purchasing ___________ shares of Common Stock and hereby makes payment of $_________ in payment of the aggregate Warrant Price of such Shares.

 COMPANY:_____________________________________________

______________________________________________________

By: _________________________________________

Name:   ____________________________ _________   

Title:  _______________________________________ 

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Exhibit BC

ASSIGNMENT FORM

(To be executed only upon the assignment of the within Warrant)

FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant hereby sells, assigns and transfers unto _____________________, whose addressis________________________ all of the rights of the undersigned under the within Warrant, with respect to shares of Common Stock (as defined within the Warrant) of OxySure Systems, Inc., and, if such shares of Common Stock shall not include all the shares of Common Stock issuable as provided in the within Warrant, that a new Warrant of like tenor for the number of shares of Common Stock not being transferred hereunder be issued in the name of and delivered to the undersigned, and does hereby irrevocably constitute and appoint _________________ attorney to register such transfer on the books of OxySure Systems, Inc. maintained for that purpose, with full power of substitution in the premises.

Dated:_____________                                           

Signature Guaranteed

By:_______________________________________

                      (Signature of Registered Holder)

Title:  __________________________________

NOTICE:   The signature to this Notice of Assignment must correspond with the name upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatever.

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EX-23.2

EXHIBIT 23.2

We hereby consent to the incorporation by reference in the financial statements of OxySure Systems, Inc. for the years ended December 31, 2009 and December 31, 2008 of our reports dated May 14, 2010 included in its Registration Statement on Form S-1 dated July 7, 2010 relating to the financial statements and financial statement schedules for the years ended December 31, 2009 and December 31, 2008 listed in the accompanying index.

/S/ Sam Kan & Company

___________________________________

Firm’s Manual Signature

Alameda, CA

___________________________________

City, State

July 7, 2010

___________________________________

Date

EX-23.3

EXHIBIT 23.3

We hereby consent to the incorporation by reference in the financial statements of OxySure Systems, Inc. for the quarters ended March 31, 2010 and 2009 of our reports dated July 6, 2010 included in its Registration Statement on Form 10-Q dated July 6, 2010 relating to the financial statements and financial statement schedules for the quarters ended March 31, 2010 and 2009 listed in the accompanying index.

/s/ Sam Kan & Company

___________________________________

Firm’s Manual Signature

Alameda

___________________________________

City, State

July 6, 2010

___________________________________

Date

CORRESP

OxySure® Systems, Inc.

July 15, 2010

Mr. Geoffrey Kruczek

Securities and Exchange Commission

Washington, D.C. 20549

Re:          OxySure Systems, Inc.

Registration Statement on Form S-1/A

Filed August 12, 2009

File Number 333-189-402

Dear Mr. Kruczek:

We have received your comment letter dated September 1, 2009 (the “Comment Letter”) regarding our Registration Statement on Form S-1/A filed on August 12, 2009.  We  have prepared the following responses describing the general action(s) taken regarding each comment in the Comment Letter.  The following numbers herein are coordinated to the comment number in the Comment Letter.

1.     We have prepared and filed a marked version of the Registration Statement as Amendment No. 2 in accordance with Rule 472 of Regulation C.  We have also enclosed  two courtesy hard copies of the marked Registration Statement.

Registration Statement Cover

2.     We have amended the disclosure to state that: “The promoters named herein will sell at the specified fixed offering price of $1.00 throughout the offering period.”

We have revised the Registration Statement to identify affiliates and promoters as “underwriters.”

We have revised the Registration Statement to quantify the number of shares to be sold by promoters.

We have revised the Registration Statement to remove all affiliate shareholders from the selling stockholders, including any shares underlying warrants, options, or convertible preferred stock.

3.     We have revised the Registration Statement to remove Mr. Ross and any other affiliate from the selling stockholders list.

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4.     We have revised the Registration Statement to remove all affiliate shareholders from the selling stockholders, including any shares underlying warrants, options, or convertible preferred stock.

5.     We have revised the Registration Statement to state that the minimum purchase requirement is $25,000.

Warrants

6.     Any warrants that have not been issued are not being registered, and have been removed from this table and from the Registration Statement.  We no longer plan to issue any of the warrants that were deleted from the Registration Statement.

7.     On December 15, 2009, we entered into a Cancellation Agreement and Mutual Release with IR Services, Inc.  We paid IR Services, Inc. $50,000 in cash and issued IR Services, Inc. 125,000 shares of common stock for services rendered to us.

Related Party Transactions

8.     There is no written agreement containing the July 2008 transaction, and therefore no exhibit was provided.  In July 2008, we required working capital for continuing operations on an emergency basis which was provided by JTR Investments, Ltd. (please see the revised disclosure regarding the “Senior Note Interim Financing”).  Subsequently, terms were negotiated with the then Board of Directors, culminating in the agreement and ratification outlined in Exhibit 10.7.  We have revised the Registration Statement to state the basis for issuing warrants exercisable at $0.01 per share of common stock.

April 2009 Investor Relations Agreement

9.     We are no longer obligated to issue warrants to RKH as the contract was cancelled.  We have filed the cancellation agreement as Exhibit 10.27 to the Registration Statement.

Summary Financial Data

10.   We have revised the Registration Statement to remove the references to interim data as unaudited and the data for 2008 and 2009 as being audited.

2

Risk Factors

11.   We will prepare and file a Registration Statement on Form 8-A.

12.   We have revised the Registration Statement to relocate the risk factor numbered 37 to the beginning of the risk factor section titled “Risks Relating to the Early Stage of our Company” to more prominently present the risk factor.

13.   We have revised the Registration Statement to state that given that there is no minimum number of shares that must be sold and the possibility that we may receive substantially less than $5,000,000, we have included our use of proceeds based on several levels of shares being sold.  Selling stockholders will be able to sell their shares at less than the fixed price that applies to our sales, which may limit our ability to raise capital through this Registration Statement.

20.  We may face problems . . .

14.    The Registration Statement states that we are subject to the FAA’s regulations.  Also, the Registration Statement states that we may have increased costs associated with the delay or inability to obtain FAA approval.

29.  Our success is dependent on key personnel

15.   We have revised the Registration Statement to state the material terms of the employment agreement under the “Executive Compensation” section.  The employment agreements are attached to the Registration Statement as Exhibits 10.1 and 10.2.

Dilution

16.   Net tangible book value was calculated by taking our total assets, minus any intangible assets, less all liabilities and divided by the total outstanding shares of common stock.

17.   We have revised the Registration Statement to include the number and percentage of shares, including convertible securities, and total consideration paid by affiliates and non-affiliates in tabular form.

3

Selling Security Holders

18. 

a.    We have revised the Registration Statement to remove Agave Resources, LLC as a selling shareholder and note 4 corresponding to Agave Resources, LLC.  According to the Cancellation Agreement and Mutual Release Agreement dated December 15, 2009 with IR Services, Inc., 125,000 warrants were earned by IR Services, Inc. upon our filing of the Registration Statement.

b.    All shares of common stock underlying stock options have been removed from this Registration Statement.  All affiliate shares of commons stock underlying warrants have been removed from this Registration Statement.  The Registration Statement has been updated to remove the shares of common stock underlying warrants because the shares underlying the warrants are no longer being registered in this Registration Statement.

c.    We have revised the Registration Statement to update the aggregate number of shares to be registered, including updating the corresponding fees.

19.   All selling stockholders have been identified in the Registration Statement.

20.   Notes 18 and 19 have been added to the Registration Statement.

We have revised the Registration Statement to update the notes to correspond with the proper information in the Selling Security Holder’s table

We have revised the Registration Statement to include the exercise price for all warrants issued to the selling stockholders.

21.   We have revised the Registration Statement to state that Chris Aulds controls and holds sole voting power for the shares of common stock held by Aulds Family L.P.

22.   We have revised the Registration Statement to correct the number of shares held by JTR Investments, Inc. and Julian Ross.

23.   We have revised the Registration Statement regarding the issuance of warrants exercisable at $0.01 per share of common stock.  The warrants were issued with that exercise price because no interest is payable on the notes, our difficulty in attracting new investments at the time, market conditions and other factors.  Given these factors, we deemed the terms of these transactions to be fair.

We have revised the Registration Statement to remove shares of common stock underlying penny warrants held by affiliates.

24.   We have revised the Registration Statement to clarify the number of shares of common stock issued.

4

Shares Eligible For Future Sale

25.   We revised the Registration Statement because none of our shareholders have contractual registration rights.  Therefore, we deleted the reference to the shareholders’ registration rights.

26.   We have revised the Registration Statement to remove shares of common stock held by affiliates.

Lock-up Agreements and Registration

27.   Although some of the shareholders have lock-up agreements, the shareholders’ shares shall be released from the lock-up agreements in tranches.  We have revised the Registration Statement to remove shares of common stock held by affiliates.

Stock Options

28.   The shares held by IR Services, Inc. are no longer subject to a lock-up agreement.

Plan of Operation

29.   Plan of Operation has been deleted as not required by Regulation S-K, Item 303.

30.   Plan of Operation has been deleted as not required by Regulation S-K, Item 303.

Our Product and Market Application

31.   We have revised the Registration Statement to include that we are required to label our products as hazardous to comply with our approval letter.

Market Analysis

32.   We revised the Registration Statement to provide support for statistical data cited.  We did not finance any studies cited that were not completed by us.  We did not receive any consents for the statistical data we obtained through public resources.

5

Sales and Marketing Plan

33.   We revised the Registration Statement to explain “dual direct and indirect sales strategy.”

Strategic Marketing Efforts

34.   We revised the Registration Statement to state that “our current marketing efforts are comprised of press releases, press releases disseminated by newspapers, and videos in retailers.”

Market Research

35.   Market research was conducted by Julian Ross in 2002, prior to our formation in 2004.  We are continuing to conduct market research to find the most effective uses and ways to market our products to consumers.

Intellectual Property

36.   We have six patents in the United States.  Our six patents expire as follows: (1) Patent #7465428 expires on June 21, 2025; (2) Patent 7407632 expires on May 27, 2024; (3) Patent #7381377 expires on June 21, 2025; (4) Patent #D549342 expires on July 30, 2026; (5) Patent #D549341 expires on July 30, 2026, and (6) Patent #D615186 expires on June 24, 2022.  Also, we have a South African Patent #2006/05051 which expires March 31, 2024.

Production Operations

37.   We have revised the Registration Statement to state that some of the production is very labor intensive, thus, putting constraints and limitations in our production process.  The current constraints could be eliminated if we automate some or all of the production.

Summary Compensation Table

38.   We have revised the Registration Statement to remove the directors from the executive compensation table.

39.   Scott Freeman’s employment was terminated on October 1, 2009 and therefore this disclosure has been deleted as it is no longer relevant.

6

Security Ownership . . .

40.   We have revised the Registration Statement to accurately reflect the ownership percentages under “Security Ownership of Certain Beneficial Owners and Management.”

41.   We have revised the Registration Statement to remove notes 4 and 5.  The notes pertained to shareholders who were not in management or beneficial owners.  Mr. Freeman’s employment was terminated on October 1, 2009.  Therefore, the reference to Mr. Freeman’s security ownership has been removed from the Registration Statement.

42.   We have revised the Registration Statement to state that the notes are convertible at $1.50 per share of common stock.

Advisory Board, page 86

43.   We have revised the Registration Statement to state that our advisory board consists of: (1) Dr. R. Dean White; (2) Dr. Thomas Franklin; (3) Dr. Vincent Mossesso; (4) Mikael Ahlund; (5) Craig Turner; (6) Dr, Jonathan Burke; (7) George Brody; and (8) Dr. James R. Winn.

Loans involving Directors, Officers . . .

44.   We will repay the noteholders on their respective dates of maturity.  Our reference to “Related Companies” was incorrectly stated so we deleted the reference from the Registration Statement.

Financial Statements, page F-1

45.   We have revised the Registration Statement to remove the name and address of our independent registered public accounting firm on the first page of our interim and annual financial statements on pages F-1 and F-25

46.   We have revised the Registration Statement to revise the annual and interim balance sheets footnotes and total assets equal total liabilities plus stockholders’ equity.  We have revised the Registration Statement to revise the statements of operations, cash flows and stockholders’ equity to ensure that each of these statements foots and cross-foots as appropriate.

47.   We have revised the Registration Statement to revise Note 1 on pages F-8 and F-32 in accordance with paragraphs 915-210-45, 915-255-45-1, 915-230-45-1 and 915-205-45-1 of the iFASB Accounting Standards Codification (FASB ASC), including revising the following information:

 ·    Presented any cumulative net losses (including the current period net loss) in the balance sheet with a descriptive caption such as “deficit accumulated during the development stage” in the stockholders’ equity section;

 ·    Included an income statement and a statement of cash flows showing cumulative amounts from the enterprise’s inception; and

 ·    Identified each financial statement as those of a development stage enterprise

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48.   We have revised the Registration Statement to revise our interim financial statements to comply with Rule 8-03 of Regulation S-X by including income statements and statements of cash flows for the interim period of the comparable period of the preceding fiscal year.

49.   We have revised the Registration Statement to revise the interim financial statements, consistent with Instruction 2 to Rule 8-03 of Regulation S-X by including income statements and statements of cash flows for the interim period of the comparable period of the preceding fiscal year.

Balance Sheets, Page F-3

50.   We have revised the Registration Statement to state the date of the 2008 balance sheet and to revise our statements of operations and cash flows.

51.   We have revised the Registration Statement to remove any reference to the April 2009 Warrant Purchase Agreement as it was cancelled.

52.   We have revised the Registration Statement to reconcile the amount of other current assets for 2008 with the amount shown on page F-27.

53.   We have revised the Registration Statement to remove the word ‘audited’ from the 2008 column.  We have disclosed that the balance sheet was derived from our audited financial statements.  We have revised the Registration Statement to revise our statements of operations and cash flows.  Both 2008 and 2009 financial statements were audited by Sam Kan & Company.

54.   We have revised the Registration Statement to segregate our cash and cash equivalents from our accounts receivable.

55.   We have revised the Registration Statement to properly line up the subtotals related to our other current assets consistent with the presentation in our balance sheet on page F-27.

56.   Please be advised that the third amount should not have been included in the presentation, therefore, it was removed from the Registration Statement.  We have revised the Registration Statement to reconcile the number of common shares issued and outstanding as of June 30, 2009 with page F-7 and annual balance sheets on page F-27.

57.   We have revised the Registration Statement to reconcile our equity accounts as shown on our balance sheets on page F-3 with the accounts and balances shown on page F-7.

Statements of Operations, page F-4

58.   We have revised the Registration Statement to properly refer to our net loss and net loss per share as losses not income, including revising page F-28.

59.   We have revised the Registration Statement in conjunction with paragraph 206-10-55-3B of FASB ASC to make the diluted weighted average number of shares match the weighted average number of shares of pages F-4 and F-28.

8

Statements of Cash Flows, page F-5

60.   We have revised the Registration Statement to reconcile our net income as shown on page F-5 to our statements of operations on page F-4.  Further, we have also reconciled our depreciation and amortization.  We have revised the Registration Statement to reconcile pages F-28 and F-29.

61.   In accordance with paragraph 230-10-45-26 of FASB ASC, we have revised the Registration Statement to include appropriate line item descriptions for the types of cash flows from our financing activities included in the Additional Paid in Capital line item.  We have revised the Registration Statement to show the total of proceeds as cash from sale of common stock.

62.   In accordance with paragraph 231-10-50-3 of FASB ASC, we have revised the Registration Statement disclosures to include all non-cash investing and financing activities.

63.   In accordance with paragraph 230-10-45-14 FASB ASC, we have revised the Registration Statement to move the notes payable within cash flows used in operating activities to financing activity and pages F-5 and F-29.

Statement of Stockholders’ Deficit, Page F-6

64.   We have revised the Registration Statement to reconcile our net losses for the years ended December 31, 2008 and 2009 and for the three months ended March 31, 2010.

65.   We have revised the Registration Statement to reconcile our statement on page 10 that a total of 16,803 shares of preferred stock were converted into common stock with the information presented in our statement of shareholders’ equity.  Further, we reconciled the total number of shares of preferred stock sold with the information on page F-6.

66.   We have revised the Registration Statement to disclose the transaction more clearly.

Per the revised disclosure, the Series A financing ended on March 31, 2006.  At that point, 3,112,500 preferred shares were issued.  On September 25, 2006, we modified our original term sheet with Vencore Solutions regarding our leases.  This modification provided for the issuance of preferred shares to Vencore with Series A Preferred Shares “…in an amount(s) equal to 5% of each individual Lease Schedule, with the total grant of Shares not to exceed a maximum of 30,737.25 Shares.”  This provision was further memorialized under “Stock Grant,” Exhibit A-1 to the Master Lease Agreement between us and Vencore, dated October 26, 2006, submitted as Exhibit 10.15.  By way of example, Lease Schedule 03 was in the amount of $120,720 and we issued Vencore 6,036 preferred shares pursuant to this Lease Schedule 03.  Subsequent to the Master Lease Agreement being signed, we issued Vencore a total of 30,737 preferred shares pursuant to various lease schedules, increasing the total number of preferred shares issued to 3,143,237 shares.  Each issuance was expensed upon issuance.  Our Board duly authorized the increase in the number of shares available pursuant to the Series A to 3,143,237 preferred shares.

67.   We have revised the Registration Statement to revise the par value columns to show the total amount for the par value of our preferred and common shares for each line item for the periods presented instead of the par value of a single share of stock.

68.   We have revised the Registration Statement to reconcile our statements of stockholders’ equity from inception through December 31, 2009 with the statement on pages F-30 through F-31.

9

Note 1.  Summary of Significant Accounting Policies, page F-8

69.   We have revised the Registration Statement to change our statement at the bottom of each page referring to our audit report to review report.

Recently Enacted Accounting Standards, page F-10

70.   We have revised the Registration Statement to reflect the adoption of SFAS 159, 160, 161 and 163.  Therefore the reference in this section has been removed.  We further revised it to reflect the FASB Accounting Standards Codification.

Note 3.  Going Concern, page F-12

71.   We have revised the Registration Statement to reconcile the amount of our accumulated deficit to $9,594,814 with our balance sheet.

Note 6.  Note Payable, page F-14

72.   We have revised the Registration Statement to show the unamortized discount as of December 31, 2008 of $66,468.  Further, we have disclosed the amount of the discount as of June 30, 2009 and how we accounted for this discount.  The note has been changed as follows:

NOTE 6 – NOTE PAYABLE

On April 3, 2007, the Company entered into a note agreement with the City of Frisco, Texas for $243,000.  The note requires varying annual principal payments through August 2012.  The note is non-interest bearing; however, interest has been imputed at 12.18% per annum.  The unamortized discount at December 31, 2008 and June 30, 2009 is $66,468 and $50,791, based on the activity in 2008 per the terms of the agreement.  Individual annual payments will be forgiven if certain performance targets are achieved which include the number of full time employees, square feet occupied and taxable value of business and personal property in the City of Frisco.  The first annual payment for 2008 in the amount of $30,000 was forgiven.

10

Future principal payments of this note payable are as follows:

2009	$	40,000
2010		50,000
2011		60,000
2012		63,000
	$	213,000

Notes payable is now (after Sam Kan & Company’s audit):

The following table reflects the carrying value of the Company’s of the short-term and long-term notes payable for the years ended December 31, 2009 and 2008.

	December 31,
	2009		2008
Current notes payable
Julian T. Ross – Senior	$	115,850	$	422,850
Misc Notes		100,000		-
Frisco EDC		60,000		50,000
Don Reed Note		20,500		-
Shareholder loan		14,250		11,500
Total short-term notes payable		310,600		484,350
Long-term notes payable
Agave Resources Note 1	$	750,000		750,000
JTR - Senior		422,850		-
JTR Investment		250,000		250,000
Sinacola 2 Landlord Note		126,407		-
Sinacola 1 Landlord Note		125,000		-
Frisco EDC		86,802		4,732
Total long-term notes payable	$	1,761,059	$	1,004,732
Total short-term and long-term notes payable	$	2,071,659	$	1,489,082

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Note 8.  Stock Options and Warrants, page F-17

73.   The following table summarizes the Company’s stock option activities for the years ended December 31, 2008 and 2009:

	Employee			Weighted Average		Non-Employee			Weighted Average		Combined Total
	Options			Exercise Price		Options			Exercise Price		Options
Granted		1,254,000		$	0.3826		1,966		$	0.1147		1,255,966
Exercised	None			None			(1,066	)		0.0004		(1,066	)
Outstanding at December 31, 2004		1,254,000			0.3826		900			0.2500		1,254,900
Granted		451,250			0.7819		27,014			0.9273		478,264
Forfeited/Cancelled		(65,000	)		0.7200		- -			- -		(65,000	)
Outstanding at December 31, 2005		1,640,250			0.4791		27,914			0.9055		1,668,164
Granted		252,350			1.8216		14,188			1.8252		266,538
Forfeited/Cancelled		- -			- -		- -			- -		- -
Outstanding at December 31, 2006		1,892,600			0.6581		42,102			1.2154		1,934,702
Granted		187,300			1.20		35,000			0.00		222,300
Exercised		(59,250	)		0.4590		- -			- -		(59,250	)
Forfeited/Cancelled		(153,800	)		0.89		- -			- -		(153,800	)
Outstanding at December 31, 2007		1,866,850			0.70		77,102			0.89		1,943,952
Granted		64,259			1.33		2,280			2.50		66,539
Exercised		(35,000	)		0.25		- -			- -		(35,000	)
Forfeited/Cancelled		(86,500	)		1.69		- -			- -		(86,500	)
Outstanding at December 31, 2008		1,809,609			0.68		79,382			0.94		1,888,991
Granted		328,003			0.65		15,000			1.00		309,503
Exercised		- --			-		-			-		-
Forfeited/Cancelled		- --			- --		- --			- --		- --
Outstanding at December 31, 2009		2,047,612			0.68		94,382			- --		2,141,994

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74.  The following table summarizes the Company’s warrant activities for the years ended December 31, 2008 and 2009:

	Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2005		296,419			0.03
Granted		100,000			0.82
Forfeited/Cancelled		-			-
Outstanding at December 31, 2006		396,419			0.23
Granted		170,000			0.60
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at December 31, 2007		566,419			0.34
Granted		777,985			0.05
Exercised		(120,000	)		0.01
Forfeited/Cancelled		-			-
Outstanding at December 31, 2008		1,224,404			0.19
Granted		750,221			0.58
Exercised		(125,000	)		0.01
Forfeited/Cancelled		(843,419	)		0.01
Outstanding at December 31, 2009		1,224,404			0.58
Granted		384,166			0.31
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at March 31, 2009		1,608,570			0.22
Granted		1,156,777			0.01
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at June 30, 2009		2,765,347			0.13
Granted		-			-
Exercised		-			-
Forfeited/Cancelled		-			-
Outstanding at September 30, 2009		2,765,347			-
Granted		366,055			0.83
Exercised		(125,000	)		0.01
Forfeited/Cancelled		(843,419	)		0.01
Outstanding at December 31, 2009		2,162,983			-

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Annual Financial Statements, page F-25

75.   We have revised the Registration Statement to state that our accountants’ audit report refers to the years ended December 31, 2007 and 2008.

76.   We discuss our notes and the total of our notes payable of $568,512 in Note 6 of the Registration Statement.  We have revised the Registration Statement to reconcile the total amount to each of the notes where these notes payable are discussed.  Further, we have revised the Registration Statement reconcile the current portion of your long-term debt to the notes.  We have revised Note 6 as follows:

NOTE 6 – NOTE PAYABLE

On April 3, 2007 the Company entered into a note agreement with the City of Frisco, Texas for $243,000.  The note requires varying annual principal payments through August 2012.  The note is non-interest bearing; however, interest has been imputed at 12.18% per annum.  The unamortized discount at December 31, 2008 is $66,468, based on the activity in 2008 per the terms of the agreement.  Individual annual payments will be forgiven if certain performance targets are achieved which include the number of full time employees, square feet occupied and taxable value of business and personal property in the City of Frisco.  The first annual payment for 2008 in the amount of $30,000 was forgiven.

Future principal payments of this note payable are as follows:

2009	$	40,000
2010		50,000
2011		60,000
2012		63,000
	$	213,000

Related Party Financing – During March 2008, the Company completed a $1 million financing package consisting of a promissory note for $750,000 (“First Note”) and a promissory note with a draw down provision for $250,000 (“Second Note”) (collectively, the “Notes”).  The Notes are subordinated notes and are due and payable on the earlier of (i) completion of the next financing round we completed or (ii) one year after the Notes are issued.  The holder of the First Note is Agave Resources, LLC (“Agave”), and the President of Agave is Don Reed, a Director of the Company.  In connection with the First Note, on April 15, 2008 Agave was also issued penny warrants to purchase 350,000 shares of common stock.  The warrants are immediately exercisable and expire on April 15, 2013.  The holder of the Second Note is JTR Investments, Limited (“JTR”) a company controlled by the founder and President of the Company.  To date $250,000 has been drawn against the Second Note.  In connection with the Second Note, on December 31, 2008 JTR was also issued penny warrants to purchase 116,667 shares of common stock.  There is no interest payable on either the First Note or the Second Note.

In July 2008, JTR agreed to provide the Company an additional loan with a draw down provision of up to $750,000 to fund working capital and for general corporate purposes.  This is a Senior Note (the “Senior Note”) with no interest payable.  In connection with the Senior Note, we were to issue a warrant to purchase that certain number of shares of common stock equal to $0.47 of convertible at $0.01 for every dollar drawn under this facility.  These warrants have an exercise price of $0.01 per share.  As of June 30, 2009, the outstanding balance on this facility was $446,900, and 212,176 warrants were issued pursuant to the terms.  As of June 30, 2009, the total balance owed to JTR on both the Second Note and the Senior Note was $696,900, and 328,843 warrants were issued to JTR pursuant to the Second Note and the Senior Note.

The total amount of related party loans outstanding as of June 30, 2009 was $1,470,300, which included a $23,400 advance to the Company by the spouse of the Company’s President.  There was no interest payable on the $23,400 and 7,000 warrants were issued in connection with the first $11,500 of the $23,400 advance.  No warrants were issued in connection with the remainder.

Notes payable is now (after Sam Kan & Company’s audit):

The following table reflects the carrying value of the Company’s of the short-term and long-term notes payable for the years ended December 31, 2009 and 2008.

14

	December 31,
	2009		2008
Current notes payable
JTR – Senior	$	115,850	$	422,850
Misc Notes		100,000		-
Frisco EDC		60,000		50,000
Don Reed Note		20,500		-
Shareholder loan		14,250		11,500
Total short-term notes payable		310,600		484,350
Long-term notes payable
Agave Resources Note 1	$	750,000		750,000
JTR - Senior		422,850		-
JTR Investment		250,000		250,000
Sinacola 2 Landlord Note		126,407		-
Sinacola 1 Landlord Note		125,000		-
Frisco EDC		86,802		4,732
Total long-term notes payable	$	1,761,059	$	1,004,732
Total short-term and long-term notes payable	$	2,071,659	$	1,489,082

Statements of Operations, page F-28

77.   We have revised the Registration Statement to include all necessary disclosures from FASB ASC 260-10-50.

78.   We have revised the Registration Statement to reflect two separate numbers shown on two separate lines as $2,451 and $872.

79.   We have revised the Registration Statement to remove the dollar signs from the amounts of your weighted average shares outstanding.  Further, we have revised presentation on page 14 accordingly.

Statements of Cash Flows, page F-29

80.   We have revised the Registration Statement to reconcile the amounts for stock based compensation shown in the statements of cash flows to the statements of stockholders equity.

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Note 4, Intangibles, F-37

81.   In accordance with FAS 142, we have revised Note 4 to the Registration Statement as follows:

NOTE 4 – INTANGIBLES

On January 15, 2004, the Company executed an Asset Purchase and Stock Transfer Agreement with entities controlled by the founder of the Company.  In connection with this agreement, the Company acquired certain assets, including certain rights, title and interest to intellectual property, relating to the oxygen method and apparatus, developed by the founder of the Company.

As consideration for the purchase, the Company issued 14,000,000 shares of common stock and a promissory note for $150,000 to these entities.  The common stock was valued at $7,000 using the par value of the common stock on the date of issuance, which approximates these entities’ basis (which is not indicative of fair value).  The non-recourse promissory note bore interest at 6.5% per annum and was paid in full during 2006.

During 2009 and 2008, the Company incurred additional costs totaling $3,282.  and $213,903, respectively, for the application and filing of patents and trademarks related to the intellectual property acquired on January 15, 2004.  Those costs have been capitalized as intangible assets.  Amortization of these intangibles over their 17-year life began during October 2007 upon commencement of production.  During 2007, the Company abandoned patents totaling $84,318.  These patents have been written off as of December 31, 2007.  Future amortization of intangible assets is as follows:

2010	$	38,067
2011		38,067
2012		38,067
2013		38,067
2014		38,067
Thereafter	$	372,616
	$	562,951

Amortization of intangible assets for the six months ended June 30, 2009 was $19,034 and $36,403 during 2008.  Of the $562,951 in intangible assets, approximately 94% are in patents and 5% are in trademarks.  $157,000 of the patents was acquired from entities controlled by the founder of the Company in January 2004.

The carrying value of the Company’s amortized acquired intangible assets as of March 31, 2010 is as follows:

	31-Mar-10
Patents	$	608,642
Trademarks		45,723
		654,356
Accumulated Amortization		(151,741	)
Net	$	502,624

Of the net amount of $502,624 in intangible assets as of March 31, 2010, approximately 90.9% is in patents and 9.1% is in trademarks.  Of the total amount for patents, $157,000 was acquired from entities controlled by the founder of the Company in January 2004.  The remaining $345,624 represents amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications, net of amortization and impairment.

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We have two types of intangible assets: patents and trademarks.  We capitalize expenditures associated with patents and trademarks related to our various technologies.  Capitalized costs include amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications.  These assets are amortized on a straight-line method over their legal life.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with applicable accounting guidance.  During the year ended December 31, 2009, due to the change in business strategy, we determined that some of our existing patents cannot be used in future product developments and expected that no future revenues can be generated from those patents.  Consequently, we wrote off $100,978 related to the obsolete patents under “Selling, general and administrative” in the Statement of Operations and Accumulated Deficit for the year ended December 31, 2009.

On January 15, 2004, we executed an Asset Purchase and Stock Transfer Agreement with entities controlled by our founder.  In connection with this agreement, we acquired certain assets, including certain rights, title and interest to intellectual property, relating to the oxygen method and apparatus, developed by our founder prior to January 15, 2004.  As consideration for the purchase, we issued 14,000,000 shares of common stock and a promissory note for $150,000 to these entities.  The common stock was valued at $7,000 using the par value of the common stock on the date of issuance, this approximates these entities’ basis (which is not indicative of fair value).  The non-recourse promissory note bore interest at 6.5% per annum and was paid in full during 2006.

The carrying values of our amortized acquired intangible assets as of the December 31, 2009 and 2008, respectively, are as follows:

As of December 2009, we estimate the future amortization expense of the intangible assets for December 31, 2010, 2011, and 2012, to be as follows:

2010	$	29,566
2011		29,566
2012		29,566
2013		29,566
Thereafter		384,360
	$	502,624

Due to the nature of the intangible assets, we have amortized the cost of the patents and trademarks over their estimated useful lives.  The nature of the estimate did not change from 2008 to 2009.  Of the net amount of $502,624 in intangible assets as of December 31, 2009, approximately 90.9% is in patents and 9.1% is in trademarks.  Of the total amount for patents, $157,000 was acquired from entities controlled by our founder in January 2004.  The remaining $345,624 represents amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications, net of amortization.

82.  We have revised the Registration Statement to reflect the total intangible assets as of December 31, 2008 of $643,846; $157,000 as it relates to patents acquired from our founder and $306,890 related to costs incurred for the patents and trademarks in 2007 and 2008.  We have revised the Registration Statement to show the significant components of the other intangible assets of $179,968 and have explained how we acquired each of the components and whether the component was acquired from a related party.

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83.  We have revised the Registration Statement to revise the table on page F-37 to disclose the accumulated amortization by major intangible asset class for 2009 and 2008 consistent with paragraph 350-30-50-2 for FASB ASC.

Note 6, Note Payable, page F-38

84.  Note 6 is now reflected in Note 4 and in the current portion of long-term debt and notes payable in the Registration Statement.

Note 7, Capital Stock, page F-38

Preferred Stock, page F-38

85.  We have revised the Registration Statement to revise our balance sheet to clearly state that our preferred stock is convertible.

86.  We have revised the Registration Statement to revise that the Preferred Stock is subject toautomatic conversion upon consummation of underwritten offering of shares of common stock to the public, in which the aggregate cash proceeds are at least $3 million and the price paid per share is at least $5.00.

Note 8.  Stock Options and Warrants, page F-41

87.  We have revised the Registration Statement to explain the valuation method we plan to use and/or have used for the warrants.  In accordance with paragraphs 915-215-45-1 and 505-50-50-14 of FASB ASC, we have disclosed the valuation method and significant assumptions underlying options and warrants issued to non-employees.

88.  We have revised the Registration Statement to explain the significant terms of each of the warrants outstanding and how we accounted for them.

89. In accordance with FASB ASC 718-10-50, we have revised the Registration Statement to include the method of estimating the fair value, a description of the significant assumptions used, the total compensation cost recognized in income, the total compensation cost related to non-vested awards, and the weighted average grant day fair value.

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Note 9, Income Taxes, page F-45

90.  We have revised the Registration Statement to disclose the nature of the ‘other’ item of our deferred tax assets.

Note 11, Commitments and Contingencies, page F-46

Operating Lease, page F-46

91.  Pursuant to the lease agreement, we have a set amount that can offset rental payments if certain improvements are made.  We have not contracted to make any of the specified improvements, therefore the allowance remains the same amount.

Financing Package, page F-45

92.  In accordance with 470-20-25-2 of FASB ASC, we have revised the Registration Statement to allocate the proceeds to the debt and warrants based on their relative fair values and then amortized the discount using the effective interest rate over the term of the notes.

Note 12, Capital Leases, page F-27

93.  We have revised the Registration Statement to reconcile the amount shown in Note 13 with our balance sheet on page F-27.  Further we have reconciled the amounts shown in Note 12 on page F-24 with page F-3.

94.  We have revised the Registration Statement to revise and disclose the nature of our account for premium on notes payable and capital leases as shown on page F-27.  Further, we have revised the Registration Statement to disclose how we measured this account and explained why the balance has not changed between periods.

Item 15.  Recent Sales of Unregistered Securities, page II-3

95.  We have revised the Registration Statement to provide specific dates for each issuance of securities so we can arrange the issuances chronologically.  Also, we provided the value of the consulting services received for each issuance of securities where applicable.

Signatures, page II-11

96.   Julian Ross is signing as principal accounting officer.

97.   Julian Ross, Reed Daniels, and Tracy Jones are our directors.

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Exhibit 3.1

98.   This is the Amended and Restated Articles of Incorporation.

Exhibit 4.1

99.   We have revised the Registration Statement to state that we are registering the shares underlying the warrants.

Exhibit 10.8

100. We have attached a complete copy of the Asset Purchase and Stock Transfer Agreement between the Company and JTR Investments, Limited, and affiliates, dated January 15, 2004.

Exhibit 10.9

101. We have revised the Registration Statement to include the original Agreement with IR Services, Inc. dated November 7, 2008; the First Amendment to the IR Services, Inc. Agreement dated December 5, 2008; and the Amended and Restated Agreement with IR Services, Inc. dated June 22, 2009.

Exhibit 23.1

102. We have revised the Registration Statement to refer to the audited period from inception through December 31, 2009 and to the reference to the firm as experts.

103. We have revised the Registration Statement to reflect the date of the consent of auditors.

Thank you for your review of this document.  Please advise if you have any further comments.

Sincerely,
By:	/s/ Julian Ross
	Chief Executive Officer
	OxySure Systems, Inc.

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