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. 3 )

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		1,676,8163	$	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		2,563,7495	$	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_____________________     

i

PRELIMINARY PROSPECTUS

9,240,565

Shares of Common Stock

OxySure® Systems, Inc.

This is our initial public o ffering.  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 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 ”).  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 is being registered for resale that have been or may be acquired upon the 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 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: October 4 , 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.

ii

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	3 7
PLAN OF DISTRUBUTION	3 9
DESCRIPTION OF BUSINESS	50
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	74
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	79
DESCRIPTION OF SECURITIES	8 2
INTERESTS OF NAMED EXPERTS AND COUNSEL	8 6
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION	8 7
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	9 0
AVAILABLE INFORMATION	9 1
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING	9 2

iii

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.

iv

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 accelerator, and we were selected as an NTEC program company in early 2004, and we were the first program company to graduate from the accelerator program in November 2005.  In December 2005, we received Food and Drug Administration (“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 to the FEDC economic incentive , 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 an 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 is 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, 918 ,317 warrants to purchase shares of our common stock.   All of the warrants are exercisable immediately.  The following table sets out the warrants by groups, amounts and aggregate exercise prices:

Group	Total Number of Warrants Outstanding		Aggregate Exercise Price		Number of Warrants Exercisable Immediately		Number of Warrants held by Affiliates and Promoters		Aggregate Exercise Price of Warrants held by Affiliates and Promoters
Licensing Agreements		551,200	$	1.22		551,200		-		-
Financing		880,483	$	0.29		880,483		773,483	$	0.01
Consultants		240,719	$	0.42		240,719		-		-
Rent		220,915	$	0.49		220,915		-		-
Community Grants		25,000	$	1.00		25,000		-		-
Totals		1,918,317	$	0.62		1,918,317		773,483	$	0.01

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 to purchase common stock (net of forfeitures and conversions) with an aggregate exercise price of $0.838 per share.  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 Offering	5,000,000
Common stock being registered for resale that have been or may be acquired upon the conversion of Series A Convertible Preferred Stock	2,563,749
Total common stock offered by Selling Security Holders and Direct Public Offering	9,240,565
Use of proceeds	We will not receive any proceeds from the sale of the common stock by the Selling Security Holders. We will receive $5,000,000 in gross proceeds if we sell all of the shares being registered herein in our Offering.  Proceeds will be used for sales and marketing; payment of debt and accounts payable; administrative costs; costs associated with production; research and development; and offering expenses.  See “Use of Proceeds.”
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 data should be read in conjunction with “Management’s Discussion and Analysis,” “Plan of Operation,” and the Financial Statements and Notes thereto, included elsewhere in this Prospectus. The statement of operations and balance sheet data are derived from our December 31, 2009 and 2008 audited financial statements.  The data derived from our June 30, 2010 and 2009 financial statements are unaudited.

Statements of Operations

	Six Months Ended June 30 , 2010			Six Months Ended June 30 , 2009			Fiscal Year Ended December 31, 2009			Fiscal Year Ended December 31, 2008
REVENUE , net	$	276,084		$	155,126		$	387,361		$	97,060
COST OF SALES	$	25,458		$	53,360		$	194,518		$	50,433
GROSS PROFIT	$	250,627		$	101,765		$	192,843		$	46,626
OPERATING EXPENSES		-			-			-			-
Selling, General & Administrative expenses	$	715,124			2,524,830		$	2,573,508		$	2,911,759
LOSS FROM OPERATING EXPENSES	$	(464,498	)	$	(2,423,064	)	$	(2,380,665	)	$	(2,865,133	)
OTHER INCOME / (EXPENSES)	$	3,047		$	710			-		$	33,323
INTEREST EXPENSE	$	(27,656	)	$	(11,320	)	$	(48,244	)	$	(68,583	)
Net loss	$	(489,107	)	$	(2,433,675	)	$	(2,428,909	)	$	(2,900,393	)
Accumulated deficit - beginning of the period	$	(9,780,087	)	$	(7,410,000	)	$	(7,410,000	)	$	(4,508,980	)
Prior period adjustment		-			-		$	58,822		$	(627	)
Accumulated deficit - end of the year	$	(10,269,194	)	$	(9,843,675	)	$	(9,780,087	)	$	(7,410,000	)

5

Balance Sheet Summaries

	June 30 , 2010		December 31, 2009		December 31, 2008
ASSETS
Current assets
Cash and cash equivalents	$	50,323	$	73,077	$	393
Accounts receivable	$	160,518	$	36,365	$	3,401
Inventory	$	188,202	$	138,737	$	284,736
Prepaid Expenses	$	40,487	$	40,143	$	52,673
Total current assets	$	439,529	$	288,322	$	341,203
Property & Equipment, net	$	396,958	$	518,976	$	921,860
Intangible assets, net	$	488,421	$	502,624	$	597,724
Other Assets	$	256,252	$	13,132	$	32,415
TOTAL ASSETS	$	1,581,159	$	1,323,054	$	1,893,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities		-		-		-
Accounts payable and Accrued Liabilities	$	473,616	$	332,701	$	342,594
Capital lease s - current	$	300,195	$	326,057	$	275,343
Notes payable - current	$	662,200	$	310,600	$	484,350
Deferred Revenue	$	120,955		-	$	91,207
Total current liabilities	$	1,556,966	$	969,358	$	1,193,494
Long-term liabilities
Capital lease s	$	46,492	$	47,036	$	106,891
Notes payable	$	1,761,059	$	1,761,059	$	1,004,732
Total long-term liabilities	$	1,807,551	$	1,808,095	$	1,111,624
TOTAL LIABILITIES	$	3,364,517	$	2,777,453	$	2,305,117

6

Balance Sheet Summaries (Continued)

	June 30 , 2010			December 31, 2009			December 31, 2008
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005 per share , 25,000,000 shares authorized; 3,126,434 Series A convertible preferred shares issued and outstanding in 2009 and 2008	$	1,563		$	1,563		$	1,563
Common stock, par value $0.0004 per share , 100,000,000 shares authorized; 15,724,816 and 15,482,316 shares issued and outstanding in 2009 and 2008 respectively	$	6,290		$	6,290		$	6,193
Warrants issuance	$	167,750		$	167,750			-
Additional Paid-in Capital	$	8,310,233		$	8,150,084		$	6,990,329
Accumulated deficit	$	(10,269,194	)	$	(9,780,087	)	$	(7,410,000	)
TOTAL EQUITY	$	(1,783,358	)	$	(1,454,399	)	$	(411,915	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,581,159		$	1,323,054		$	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 June 30 , 2010 is $10,269,194 .

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 $10,269,194 and have an overall deficit of $1,783,358 in stockholders’ equity as of June 30 , 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 and 2011  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 has worked 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.

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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.

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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.

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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.

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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.

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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 any 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.

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.

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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 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  related to  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.  

Furthermore, delivery and logistics providers such as United Parcel Service (“UPS”) and Federal Express typically charge a hazardous materials fee (“hazmat fee”) for products shipped with a UN3356 designation.  These issues have caused us to experience problems related to shipping, including the following:

 ·    To date, we have typically passed any shipping hazmat fees on to our customers, but we have experienced customer resistance to these fees.

 ·    During the period that we are shipping under the UN3356 shipping designation, the OxySure Model 615 can be transported by all modalities, including rail, road, ocean, and air.  However, when transported by air it has to be: (i) transported on cargo aircraft; (ii) appropriately labeled; and (iii) no more than 25 kilograms gross in weight.  However, several air cargo transporters have declined to transport “chemical oxygen generators,” especially internationally.  This has caused problems for us in shipping limited quantities of products by air to international destinations.

During the period that we are shipping under the UN3356 shipping designation, we may not be able to continue to pass the hazmat fees on to our customers.  If we elect to absorb these hazmat fees, it may significantly increase our shipping costs.  If we continue to pass these hazmat fees on to our customers, it may limit our revenue potential.  Further, 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.  A permanent suspension of our ability to ship could result from, without limitation, repeated, gross violations of applicable regulations that have remained uncured, while we are shipping under the UN3356 shipping designation.

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.  

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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 and 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.

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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.

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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.

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We have 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 individuals , our President, Julian T. Ross and Donald Reed, a member of our Board of Directors, beneficially own 91.78 % of our total outstanding shares of common stock and preferred stock before this Offering.  This amount includes warrants, options, and convertible notes 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.

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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  for our direct public o ffering.  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	1		12.0	%	$	325,000	1		8.7	%	$	500,000	1		10.0	%
Payment on First and Second Landlord Notes2	$	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	1		8.0	%	$	500,000	1		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	%

___________________

1 These proceeds will be used for the repayment of notes held by affiliates.

2 Payment of the First and Second Landlord Notes are based on the amount raised in the direct public offering.  If we raise $1,000,000, we must pay $50,281 of the principal balance of the notes.  If we raise $1,500,000, we must pay $100,563 of the principal balance of the notes.  If we raise $2,000,000, we must pay $150,844 of the principal balance of the notes.  If we raise $3,000,000, we must pay $201,126 of the principal balance of the notes.  If we raise $4,000,000, we must pay the entire principal balance of the notes.

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	%

Investments in research and development include, but are not limited to, (i) product improvements, including investigation and testing of more cost-effective parts and materials, and (ii) process improvements, including ways to streamline our production process.  In addition, it may also include investigation, development and testing of new products and accessories.   The proceeds allocated to research and development will be sufficient to accomplish some but not all of the research and development.

Investments in production include, but are not limited to, (i) acquisition of production equipment, including additional acquisitions of equipment currently being used to add production capacity and new equipment to enhance production capacity and production throughput; and (ii) upgrades to and maintenance of existing equipment.  The proceeds allocated to production will be sufficient to accomplish some but not all of the production enhancements.

Investments in marketing efforts include, but are not limited to, investments in: (i) the development and implementation of marketing campaigns, including online and offline campaigns to increase product awareness, market education, and sales of our products; (ii) participation in exhibitions and shows; (iii) the development of brand awareness; (iv) marketing collateral; and (v) other related, promotional, advertising, marketing and sales activities.  The proceeds allocated to marketing efforts will be sufficient to accomplish some but not all of the marketing goals.

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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 calculated by taking our total assets, minus any intangible assets, less all liabilities and divided by the total outstanding shares of common stock.   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 June 30, 2010 was ($0. 144 ) per share.  Assuming all shares offered herein are sold, our net tangible book value will be $0.111 per share.  Therefore, the purchasers of the Common Stock in this Offering will suffer an immediate dilution of approximately $0 .889 per share while our present stockholders will receive an immediate increase of $0. 255 per share in the net tangible book value of the shares they hold.  This will result in an 88.9 % dilution for purchasers of stock in this Offering.  All numbers are exclusive of the dilutive effect of convertible notes , 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)                                   ($0.144)

Net Tangible Book Value per Share (After Offering)                                      $  0.111

Per Share Dilution to New Investors                                                                $  0.889

Percentage Dilution per Share to New Investors                                                  88.9%

Stock Comparison

The stock comparison below assumes that we sell 5,000,000 shares of common stock for $5,000,000 in the Offering.

Affiliate Equity Holders
Number of Shares		% Ownership			Total Consideration		% of Total Consideration			% Ownership After Conversion of Convertible Securities
	14,065,000		67.87	%	$	145,200		2.00	%		73.93	%
Non-Affiliate Equity Holders
Number of Shares		% Ownership			Total Consideration		% of Total Consideration			% Ownership After Conversion of Convertible Securities
	1,659,816		8.00	%	$	2,111,436		29.10	%		22.45	%
Direct Public Offering Holders
Number of Shares		% Ownership			Total Consideration		% of Total Consideration			% Ownership After Conversion of Convertible Securities
	5,000,000		24.13	%	$	5,000,000		68.90	%		16.14	%

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.   The Offering Price been determined arbitrarily and is not necessarily based on our financial condition or on any market value.  However, if common stock is publicly traded by Selling Security Holders (defined below), who are not affiliates or promoters , 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.

 ·    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.

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 Offering1
Name of Selling Security Holder	Number of Shares Owned2		Percentage Owned3		Number of Shares Offered		Number of Shares Owned		Percentage Owned
AHMAD, Baher A.4		30,500		*		30,500		0		0	%
ANTWI, Dr. Ernest 5		61,000		*		61,000		0		0	%
ANTWI, Kwadwo 6		70,000		*		70,000		0		0	%
AULDS Family L.P.  #1 7		80,000		*		80,000		0		0	%
BERT, Raymond E. & Rachael Jane Bert 8		30,500		*		30,500		0		0	%
Bluestar Corporation Co. Ltd. 9		61,000		*		61,000		0		0	%
BRADY, Jeff L.10		30,500		*		30,500		0		0	%

* Less than 1%.

1 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.

2 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.    Unless otherwise noted below, all selling security holders acquired Series A preferred shares convertible into common stock at a price of $1.00 per share in a private placement which was completed on March 30, 2006.

3 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.  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.

4 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.

5 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.

6 Received as a gift in November 2004.

7 Acquired for cash in December 2007 in a private placement of Common Stock which ended in March 2008.  Chris Aulds exercises sole voting power over the shares of Common Stock held by AULDS Family L.P. #1.

8 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.

9 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.

10 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.

30

BRODY, George11	75,000	*	61,000	14,000	*
BURKE, Dr. Jonathan12	143,000	*	122,000	21,000	*
CARR, Gregory W.13	50,500	*	50,500	0	0	%
COCKEREL, Dr. Clay & Brenda14	30,500	*	30,500	0	0	%
COTHERN, Robert Q.15	61,000	*	61,000	0	0	%
CURLETT, Jesse D. 16	1,000	*	1,000	0	0	%
CURLETT, Samuel R. 17	2,000	*	2,000	0	0	%
DeGIRONIMO, Paul Bruno18	122,000	*	122,000	0	0	%
DICKERSON, Carl 19	10,000	*	5,000	5,000	*
DORREL, Ronald Kenton 20	40,000	*	40,000	0	0	%
DUFFY, Joshua 21	2,000	*	2,000	0	0	%
EVERSON Jr., Robert H. 22	10,000	*	10,000	0	0	%
FELDMAN, David B.23	40,500	*	40,500	0	0	%
FOSTER, T. Scott 24	1,066	*	1,066	0	0	%
FREEMAN, John E.25	61,000	*	61,000	0	0	%
FROST, Dr. David E. 26	20,000	*	20,000	0	0	%

11 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.

12 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.

13  Consists of 20,000 share of common stock acquired for services in April and July 2007 in a private placement of Common Stock which ended in March 2008; and 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 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.

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.

16 Received as a gift in April 2009.

17 Received as a gift in April 2009.

18 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.

19 Consists of 5,000 shares of Common stock acquired for cash in March 2009 in a private placement of Common Stock which ended in April 2009 ; and 5,000 shares of Common Stock issuable upon the exercise of options.

20 Acquired for cash in August 2007 in a private placement of Common Stock which ended in March 2008.

21 Acquired from a third party in December 2007.

22 Acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008.

23 Consists of 10,000 share of common stock acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008; and 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.

24 Acquired for services valued at $5,063 in November 2004.

25 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.

26 Acquired for cash in April 2007 in a private placement of Common Stock which ended in March 2008.

31

GEORGE, Holly27	30,500	*		30,500	0	0	%
GUNTER, James Kyle28	30,500	*		30,500	0	0	%
HAACK, Dr. Gregory J.29	61,000	*		61,000	0	0	%
HACKLER, Joe30	30,500	*		30,500	0	0	%
HARRIS, Dennis O.31	15,000	*		12,500	2,500	0	%
HILL, Steven32	61,000	*		61,000	0	0	%
HOYT, Matthew & Susan 33	5,000	*		5,000	0	0	%
HUPP, Dr. James R. 34	15,000	*		15,000	0	0	%
HUTTON, Tim35	483,333	3.02	%	200,000	283,333	1.77	%
IR Services, Inc. 36	125,000	*		125,000	0	0	%
JEFFREY, Lisa 37	10,000	*		10,000	0	0	%
JENNINGS, Robert38	25,000	*		25,000	0	0	%
JENNINGS, Robert IFO Zack Jennings39	5,000	*		5,000	0	0	%
JERNIGAN, Steve 40	70,000	*		70,000	0	0	%
JJ Johnson Investments, Ltd.41	100,500	*		100,500	0	0	%
JOHNSON, Joseph Q.42	30,500	*		30,500	0	0	%

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.

28 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.

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 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 Consists of 12,500 shares of Common stock acquired for cash in December 2008 in a private placement of Common Stock which ended in April 2009; and 2,500 shares of Common Stock issuable upon the exercise of options.

32 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.

33 Acquired for cash in February 2008 in a private placement of Common Stock which ended in March 2008.

34 Acquired for cash in April 2007 in a private placement of Common Stock which ended in March 2008.

35 Consists of 17,000 shares of Common Stock acquired for cash in December 2008 in a private placement of Common Stock which ended in April 2009; 283,333 shares of common stock issuable upon exercise of warrants; 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.

36 Donson Brooks exercises sole voting power over the shares of Common stock held by IR Services, Inc.  Acquired for services valued at $135,729 in October 2009 through the exercise of warrants.

37 Acquired for cash in February 2008 in a private placement of Common Stock which ended in March 2008.

38 Acquired for cash in December 2008 in a private placement of Common Stock which ended in April 2009.

39  Acquired for cash in December 2008 in a private placement of Common Stock which ended in April 2009.  Zack Jennings has sole voting and investment rights.

40 Consists of 20,000 shares of Common Stock acquired for cash in March 2008 in a private placement of Common Stock which ended in March 2008; and 50,000 shares of Common Stock acquired for cash in April 2009 in a private placement of Common Stock which ended in April 2009.

41  Consists of 20,000 shares of common stock acquired for cash in May 2007 in a private placement of Common Stock which ended in March 2008; 50,000 shares of Common Stock acquired for cash in November 2008 in a private placement of Common Stock which ended in April 2009; and 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.

42 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.

32

JONES, G.  Christopher 43	42,500	*		42,500	0	0	%
JONES, Guy Breese 44	12,500	*		12,500	0	0	%
KARPER, Dr. Robert E. 45	20,000	*		20,000	0	0	%
KELLY, David and Randi 46	61,000	*		61,000	0	0	%
KING, Janet 47	122,000	*		122,000	0	0	%
KRAMER, Dr. Robert I.48	30,500	*		30,500	0	0	%
LANZI, Dr. Guy L.49	136,500	*		136,500	0	0	%
LARSON, Mr. & Mrs. 50	10,000	*		10,000	0	0	%
LAVERDURE, Kristianne 51	20,000	*		20,000	0	0	%
LAVERDURE, Maurice 52	10,000	*		10,000	0	0	%
LAVERDURE, Maurice Jr. 53	10,000	*		10,000	0	0	%
LE, Giang54	30,500	*		30,500	0	0	%
LE, Phong55	400,083	2.53	%	300,000	99,583	*
LINDSAY, David 56	6,000	*		6,000	0	0	%
LINDSAY, Jamie B.57	4,000	*		4,000	0	0	%
LINDSAY, Jerry 58	50,000	*		50,000	0	0	%

43 Acquired for cash in April 2006 and August 2007 in a private placement of Common Stock which ended in March 2008.

44 Acquired for cash in April 2006 in a private placement of Common Stock which ended in March 2008.

45 Acquired for cash in April 2007 in a private placement of Common Stock which ended in March 2008.

46 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.

47 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.

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.

49 Consists of 20,000 share of common stock acquired for cash in April 2007 in a private placement of Common Stock which ended in March 2008; 25,000 shares of Common Stock acquired for cash in November 2008 in a private placement of Common Stock which ended in April 2009; and 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.

50 Acquired for cash in April 2007 in a private placement of Common Stock which ended in March 2008.

51 Acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008.

52 Acquired for cash in September 2007 in a private placement of Common Stock which ended in March 2008.  

53 Acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008.

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 300,000 shares of Common Stock acquired for cash in May 2004 in a private placement of Common Stock which ended in June 2004; 83,333 shares of Common Stock issuable upon the exercise of warrants, and 16,750 shares of Common Stock issuable upon the exercise of options.

56 Acquired for cash in August 2007 in a private placement of Common Stock which ended in March 2008.  

57 Acquired for cash in August 2007 in a private placement of Common Stock which ended in March 2008.

58 Acquired for cash in August 2007 in a private placement of Common Stock which ended in March 2008.

33

LUCAS, Jonathan E.59	1,000	*		1,000	0	0	%
MANNING, Michael60	30,500	*		30,500	0	0	%
MCDONALD, Henry61	15,000	*		10,000	5,000	*
MIRE, Patrick62	91,500	*		91,500	0	0	%
MOORE, Craig Henderson63	61,000	*		61,000	0	0	%
MORRISON, Kenneth Morrison Trust No. 164	61,000	*		61,000	0	0	%
MOSS, Jerry W.65	30,500	*		30,500	0	0	%
NELMS, James W., Jr. 66	62,600	*		62,600	0	0	%
NELMS, Jim & Shelley 67	25,000	*		25,000	0	0	%
NEW DAWN Acquisitions, LLC68	35,000	*		35,000	0	0	%
NTEC, Inc69	296,450	1.50	%	15,250	281,200	1.42	%
Oxygen Technology Investors Group, LLC.70	30,500	*		30,500	0	0	%
PACIFIC Cattle Corporation71	506,500	3.18	%	206,500	300,000	1.88	%
PARK, Jin 72	20,000	*		20,000	0	0	%

59 Received as a gift in April 2009.  

60 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.

61 Consists of 10,000 shares of Common Stock acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008; and 5,000 shares of Common Stock issuable upon the exercise of options.

62 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. 

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.

64 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. 

65 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.

66 Acquired from a third party in August 2007.  

67 Acquired for cash in January 2009 in a private placement of Common Stock which ended in April 2009.

68 Acquired for cash in January 2009 in a private placement of Common Stock which ended in April 2009.   NEW DAWN Acquisitions, LLC is controlled by Julie Nichols, who has sole voting and investment rights. 

69 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.

70 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. 

71 Consists of 50 , 000 Shares of Common Stock acquired for cash in September 2008 in a private placement of Common Stock which ended in April 2009; 65,000 shares of Common Stock acquired from third parties; 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, 200,000 shares of Common Stock issuable upon the exercise of warrants; 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.

72 Acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008.

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PHILLIPS, Gregory73	30,500	*		30,500	0	0	%
PHOENIX Capital Ventures, Inc.74	18,650	*		18,650	0	0	%
POUYAT, Scott 75	5,000	*		5,000	0	0	%
RBC Dain Rauscher FBO:  James W.  Nelms, Jr., SEP76	57,500	*		57,500	0	0	%
REEVES, William M., DDS, MS Defined Benefit Pension Plan77	61,000	*		61,000	0	0	%
REEVES, William McDonald78	30,500	*		30,500	0	0	%
REVELL, Oliver B.79	61,000	*		61,000	0	0	%
ROSATO, Vincent80	30,500	*		30,500	0	0	%
ROSATO, Vincent, Jr.81	30,500	*		30,500	0	0	%
SCHWARTZ, Dr. Daniel C.82	131,000	*		131,000	0	0	%
SHEEHAN, Jana Lynn83	10,000	*		10,000	0	0	%
SHEFTEL, Scott 84	5,000	*		5,000	0	0	%
SPRADLEY Holdings85	20,000	*		20,000	0	0	%
STAPLES, Jon86	270,650	1.368	%	30,500	240,150	1.21	%

73 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. 

74 Acquired from a third party in April 2009.  Phoenix Capital Ventures, Inc. is controlled by Josh B. Curlett, who has sole voting and investment rights.

75 Acquired for cash in December 2008 in a private placement of Common Stock which ended in April 2009.  

76 Consists of 20,000 Shares of Common Stock acquired for cash in October and December 2008 in a private placement of Common Stock which ended in April 2009; and 37,500 shares of Common Stock acquired from third parties.  James W.  Nelms has sole voting and investing rights.

77 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. 

78 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.

79 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. 

80 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.

81 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. 

82 Consists of 40,000 share of common stock acquired for cash in May and November 2007 in a private placement of Common Stock which ended in March 2008; 30,000 shares of Common Stock acquired for cash in October 2008 in a private placement of Common Stock which ended in April 2009; and 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.

83  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. 

84 Acquired for cash in February 2008 in a private placement of Common Stock which ended in March 2008.

85  Acquired for cash in June 2007 in a private placement of Common Stock which ended in March 2008.   Spradley Holdings is controlled by Dr. Larry Spradley, who has sole voting and investment rights. 

86 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.

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STAPLES, Richard C., Jr.87	61,000	*	61,000	0	0	%
STEINHARDT, James88	10,000	*	10,000	0	0	%
TABER, Steven M.89	20,000	*	20,000	0	0	%
The Sullivan Trust u/t/a Dated Oct 21, 1998 (Att: Dr. S.  Sullivan)90	61,000	*	61,000	0	0	%
The Willhite Group & SGW Profit Sharing Plan UAD 2/1/198991	30,500	*	30,500	0	0	%
TIMBREZA, Charles K. 92	1,500	*	1,500	0	0	%
VenCore Solutions, LLC93	37,499	*	37,499	0	0	%
WHITE, Dean R.94	116,250	*	81,000	35,250	*
WILLIAMSON, J.  Keith95	30,500	*	30,500	0	0	%
WJVEST Holding General Partnership96	25,000	*	25,000	0	0	%
WOOD, David 97	10,000	*	10,000	0	0	%

______________________

Notes:

* Less than 1%.

87 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.

88 Acquired for cash in October 2007 in a private placement of Common Stock which ended in March 2008.  

89 Acquired for cash in June 2007 in a private placement of Common Stock which ended in March 2008.

90 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. 

91 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.

92 Received as a gift in April 2009.  

93 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, acquired pursuant to a lease agreement between October 2006 and March 2007.   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.

94 Consists of 20, 000 shares of Common stock acquired for cash in August 2007 in a private placement of Common Stock which ended in March 2008; 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. 

95 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.

96  Acquired from a third party in October 2007.   Casey Jensen is the General Partner in the WJVEST Holding General Partnership.  Voting and investment rights are shared by Casey Jensen and Chet Wilke. 

97 Acquired from a third party in May 2008.

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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 15,724,816 shares of common stock outstanding as of the date of this Prospectus.  Assuming the maximum amount of the direct public Offering is sold (5,000,000 shares ), we will have 20,724,816 shares of our common stock issued and outstanding.   We also have 3,126,434 shares of preferred stock outstanding which are convertible into 3,814,429 shares of common stock.    Therefore, if the maximum amount of the direct public Offering is sold and all preferred shares are converted into common shares, we will have 24,539,065 shares of common stock outstanding.   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, 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.
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.
5,000,000	Direct Public Offer ing .  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: Shareholders 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 1st day subsequent to our shares becoming publicly traded in a nationally recognized market and ending on the 90 th 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 DISTRIBUTION

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.

Each 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.

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.

41

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.   This revenue recognition policy applies both to customers and distributors. 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  six months ended  June 30 , 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. $9,287 and $30,241 were incurred in the years ended December 31, 2009 and 2008, respectively.

Income Taxes.   We account 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 our Consolidated Financial Statements, but have not been reflected in our taxable income.  A valuation allowance has been established to reduce deferred tax assets to their estimated realizable value.  Therefore, we provide a valuation allowance to the extent that we do 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.  We recognize interest and penalties related to unrecognized tax benefits in income tax expense.

Stock-Based Compensation.   We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants tothe consultants and related parties.  We are 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.  We have 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.  We evaluate 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.

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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, we continue 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 on five year security treasury notes interest rates appropriate for the expected term of the stock options.  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 we do 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 $133,604 and $89,957, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to the employees.

We follow 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 ASC Topic 505-50, these stock options and warrants issued as compensation for services to be provided to us 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.  We recognize 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 $1,092,770 and $821,368, 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.

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 $ 2,191 in advertising and promotion costs for the six months ended June 30 , 2010 as compared to $ 41,573 for the six months ended June 30, 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 $50,323 as of June 30 , 2010, as compared to $908 as of June 30, 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 $1,117,437 as of June 30 , 2010 as compared to $ 2,536,150 as of June 30, 2009 and negative working capital of $681,036 and $852,291 as of December 31, 2009 and 2008, respectively.

We generally provide our customers with terms of up to 30 days on our accounts receivable.  In some cases we require prepayment, depending on history or credit review.  Further, we generally require pre-payment on orders shipped to international destinations.  Our accounts receivable, net of allowances for sales returns and allowance for doubtful accounts, were $160,518 and $36,365 as at June 30, 2010 and December 31, 2009, respectively.  This significant increase in accounts receivable is primarily due to the balance of a significant receivable from an international distributor waiting on foreign exchange approval prior to payment of our receivable. As of the date of this prospectus, this approval was obtained, and the receivable was cleared.

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 $10,269,194 at June 30, 2010 .

We completed product development and launched sales in early 200 8 .  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 our common stock.

During the remainder of 2010 and 2011 , 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 $286,500 during the year ended December 31, 2009 and $352,950 during the year ended 2008 through the sale of common stock preferred stock, and the exercise of warrants and 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.

We have First and Second Landlord Notes outstanding with Sinacola Commercial Properties, LLC.  Payments under these notes shall become due and payable on the earlier to occur of: (i) December 31, 2011; or (ii) the closing of the direct public offering.  Upon the closing of the direct public offering, (i) if we raised $1,000,000 in the direct public offering, we must pay $50,281 of the principal balance of the notes; (ii) if we raised $1,500,000 in the direct public offering, we must pay $100,563 of the principal balance of the notes; (iii) if we raised $2,000,000 in the direct public offering, we must pay $150,844 of the principal balance of the notes; (iv) if we raised $3,000,000 in the direct public offering, we must pay $201,126 of the principal balance of the notes; or (v) if we raised $4,000,000 in the direct public offering, we must pay the entire principal balance of the notes.  If we fail to pay the principal balance through the direct public Offering proceeds, the remaining principal balance of the notes shall become due and payable on December 31, 2011.

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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:

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

Our business is relatively new, and we are not aware of any material trends that are at least likely to impact our financial condition, liquidity and results of operation.

Going Concern

Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations to meet our obligations on a timely basis or obtain financing as may be required.  As of June 30, 2010 and December 31, 2009, we have incurred net losses from operations and have stockholders’ deficits of $10,269,194 and $9,780,087, respectively.  We have a working capital deficit of approximately $1,117,437 as of June 30, 2010 and $681,036 as of December 31, 2009.  These factors raise doubt about our ability to continue as a going concern.

During the next 12 months, our foreseeable cash requirements will relate to continual development of the operations of our business, maintaining our 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.  We may experience a cash shortfall and be required to raise additional capital.  Historically, we have relied upon internally generated funds and funds from the sale of shares of stock and loans from our shareholders and private investors to finance our operations and growth.  Management may raise additional capital through future public or private offerings of our stock or through loans from private investors, although there can be no assurance that we will be able to obtain such financing.  Our failure to do so could have a material and adverse affect upon us and our shareholders.

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We have a series of plans to mitigate the going concern:

·   Lower Cash Requirements: Cash requirements were approximately $1.8 million in 2007, $1.4 million in 2008 and $680,000 in 2009.  We have aggressively and successfully trimmed our expenses, and have worked to implement a cost model that is as invariable as possible.  

·   Management has a draw down provision in place – the JTR Senior Note, which allows us to draw down up to $750,000.  We have approximately $129,700 available under this facility.  

·   We have 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.  

·   We plan to raise $5 million in a direct public Offering through this prospectus.  

·   Our sales during 2010 will be derived from existing markets (schools/districts, churches, commercial), government markets and international markets.  

·   International: We received ANVISA approval in Brazil in March 2010.  We have appointed a distributor in Brazil who is contracted to purchase a minimum of 3,000 units per annum to maintain exclusivity.  In addition, we have concluded a significant distribution agreement in South Africa, and other countries are pending.  We also have concluded a Memorandum of Understanding with an AED manufacturer in Europe for distribution in thirteen countries.  

·   We plan to add delivery capacity through additional distributors – we have approximately 17 in the U.S. and management expects that to grow to approximately 30 by the end of 2010.  In addition, we have three international distributors and plan to increase that to approximately six by the end of 2010.  

·   We have migrated to selling solutions, thereby diversifying our revenue opportunities.  We have added new products, and recently added higher priced items like AEDs.  

·   Rent Satisfaction Agreement: we have successfully partnered with our landlord to find a creative solution for past rent expenses.  Further, we have successfully lowered our cash requirements for expenses for 2010 – we are currently only paying operating expenses and any differences deferred are expected to be converted to equity or a combination of debt and equity.  

·   We have successfully partnered with Vencore Solutions to defer our 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, or new debt obligations.

Results of Operation s

Results for the six months ended June 30, 2010 compared to the six months ended June 30, 2009.

Revenue

Total revenues for the six months to June 30, 2010 increased to $276,084 from $155,126 for the six months ended June 30, 2009.  This continued increase is a result of increased sales volume from our products during the periods and from license fees.

Revenue from license fees totaled $225,000 and $0 for the six months to June 30, 2010 and 2009 respectively.  This increase is due to a new license agreement entered into on March 26, 2010 which was not in effect in the prior period.  The license agreement is with Afritex Medical Products (Pty) Ltd, a South African company.

Expenses

Total expenses for the six months ended June 30, 2010 were $742,780, which amount includes $715,124 of general and administrative expenses, as compared to total expenses for the six months ended June 30, 2009 of $2,536,150, which amount includes $2,524,830 of general and administrative expenses.  The significant decrease in general and administrative expenses is partly attributable to a decrease in operating expenses, including consulting expenses and payroll.

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Research and Development

R&D expense for the six months ended June 30, 2010 was $935 as compared to $8,613 for the six months ended June 30, 2009.  This decrease is due to us focusing more on production and distribution and less on R&D.

Net Loss

Net loss as of June 30, 2010 was $489,107 and diluted net loss per share was $0.03 as compared to a net loss as of June 30, 2009 of $2,423,064 and diluted net loss per share was $0.16.  The reduction in net loss is attributable to a reduction in general and administrative expenses and an increase in revenues, including a non-recurring license fee of $225,000 from Afritex.

Results for the fiscal year ended December 31, 2009 compared to the fiscal year ended December 31, 2008.

Revenue

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

Expenses

Total expenses for the year ended December 31, 2009 were $2,621,752, which amount includes $2,573,508 of general and administrative expenses, as compared to total expenses for the year ended December 31, 2008 of $2,980,342, which amount includes $2,911,759 of general and administrative expenses.  The significant decrease in general and administrative expenses is partly attributable to a decrease in operating expenses, including consulting expenses and payroll.  In addition, the decrease was impacted by the reversal of a charge of $836,062 in December 2009, due to the cancellation of 843,418 warrants issued to a formerly retained investor relations and consulting firm.

Research and Development

Research and development (“R&D”) expenses for the year ended December 31, 2009 was $30,241 as compared to $9,287 for the year ended December 31, 2008.  This decrease is due to us transitioning towards production and distribution and defocusing on R&D.

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Net Loss

Net loss decreased to $2,428,909 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 $0.16 from $0.19 in the prior period.  The reduction in net loss is attributable to a reduction in general and administrative expenses and in increase in sales.

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.

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.

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 of the related research and development of our products , 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 accelerator , and we were accepted as an NTEC program company in early 2004.  

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We were the first program company to graduate  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 in industrial, 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 plans 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.1

Chronic obstructive pulmonary disease (COPD) is a term which refers to a large group of lung diseases characterized by obstruction of air flow that interferes with normal breathing. Emphysema and chronic bronchitis are the most important conditions that compose COPD and they frequently coexist.2  COPD is the fourth-ranked cause of death in the United States.2  In 2007, 10.2 million U.S. adults aged 18 years and older were estimated to have COPD.3
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1 American Heart Association, Heart Disease and Stroke Statistics, 2008.

2 American Lung Association, “Trends in COPD”, April 2009, Page 3

3 Id. at Page 5

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Oxygen supplementation is one of the few known effective treatments for a COPD 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, and 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  could 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, 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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Our  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.4

 ·    11,000 accredited programs for infants to children of 8 years.  This includes day care and after school programs.5

 ·    4,140 United States College and Universities.6

Manufacturing Facilities

According to the U.S. Department of Commerce, Economics and Statistics Administration, there are 350,735 manufacturing facilities in the United States in 2002 .

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.7

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

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

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

7 New U-Mich Study: RV Ownership Reaches All-Time High (December 18, 2005)

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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 allow us 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.

Our Model 615’s may be use d in military combat situations , includ ing but not limited to, 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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7 http://hirr.hartsem.edu/research/fastfacts/fast_facts.html/#numcong

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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 two direct sales persons and 17 independent third party distributors in the United States .  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 and videos in retail 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 agreements 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 ofexpanding 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 9 , 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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9 The contents of the website are not incorporated by reference in or otherwise a part of this Registration Statement.

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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

To enhance our product quality, reduce cost, and keep pace with technological advances and evolving market trends, we plan to continue to engage in research and development.  We spent $9,287 and $30,241 on research and development in 2009 and 2008 respectively, which includes direct expenses related to development, and indirect expenses.  Our research and development effort will be 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, 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 plan to continue to invest in technologies to maintain our market position and to develop new applications and products.

Historically, we have conducted 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 have been to improve research and development management and market analysis, in addition to establishing and regulating the production projects.  Historically, our departments have worked together to research new material and techniques, test product performance, inspect products and to test performance of parts used in the manufacturing process.  Currently, our research and development activities are minimal.  We plan to increase our research and development activities in the future as budgets allow.

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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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 four 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”

(4) Registration Number 3514251 entitled "Technology at Work Saving Lives"

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,” which expires on May 27, 2024

(2) 7,381,377 entitled “Method for controlled production of a gas,” which expires on June 21, 2025

(3) 7,465,428 entitled “Method and apparatus for controlled production of a gas,” which expires on June 21, 2025

(4) D549,341 entitled “Breathing device utilizing a catalytic oxygen generation method,” which expires on July 30, 2026

(5) D549,342 entitled “Breathing device utilizing a catalytic oxygen generation method,” which expires on July 30, 2026

(6) D615,186 entitled “Chemical reaction activation plunger,” which expires on June 24, 2022

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 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  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 $9,287 and $30,241 on research and development in 2009 and 2008 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 plan to continue to invest in technologies to maintain our market position and to develop new applications and products.

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Historically, we have conducted  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 have worked  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.  We plan to pursue the obtainment of product liability insurance in the foreseeable future. When 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. Accordingly, there can be no assurance that we will 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. The lease expires October 15, 2012.  The cost for the lease is as follows:

Lease Year		Base Rent per Square Foot of Rentable Area (per year)		Annual Base Rent		Monthly Base Rent
	1	$	8.50	$	137,700.00	$	11,475.00
	2	$	10.75	$	174,150.00	$	14,512.50
	3	$	12.00	$	194,400.00	$	16,200.00
	4	$	12.25	$	198,450.00	$	16,537.50
	5	$	12.50	$	202,500.00	$	16,875.00

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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.

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

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 and manufacturing, having functioned both in consulting and operational capacities at senior management level.  His vertical experience includes technology and corporate finance.  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 the Senior Vice President for AT&T since June 2005.  Ms. Jones has more than 28 years experience in the telecommunications and data networking industry, 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 2008 of our executive officers.

Summary Compensation Table

Name and principal position	Year	Salary ($)			Bonus ($)		Option Awards ($)			Total ($)
Julian T. Ross, CEO, President, and CFO	2009	$	280,115		$	0	$	142,497		$	422,612
	2008	$	457,889	1	$	0	$	0		$	457,889
Scott T. Freeman, Vice President of Operations 2	2009	$	19,640	3	$	0	$	32,637	3	$	52,277
	2008	$	110,000	4	$	0	$	11,611	5	$	121,611

___________________

1 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.

2  Scott T. Freeman’s employment was terminated on July 12, 2009.   Prior to that, Mr. Freeman’s employment agreement, per the second amendment dated January 15, 2009 provided 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 Mr. Freeman's medical insurance benefits; (c) OxySure shall issue Mr. 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 Mr. 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;  and (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.

3 During the period January 15, 2009 and the termination date, July 12, 2009 the actual remuneration received by Mr. Freeman comprised $19,640 in cash, and options to purchase 64,503 shares of Common Stock at an exercise price of $0.82 per share, which were granted on January 15, 2009 and expire January 15, 2014. These options were valued at $32,637.  Upon termination, Mr. Freeman forfeited 60,000 options originally issued in 2006 but not yet vested. The value attributable to these options is $19,261, which was reversed on July 12, 2009.  Therefore, the value of the options issued to Mr. Freeman during 2009, net of forfeitures was $13,376.

4 Mr. Freeman’s initial employment agreement dated September 6, 2005 (the Freeman Base Employment Agreement) provided for a base annual salary of $110,000.

5 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.  These options were issued in accordance with the Second Amendment (dated August 31, 2008) of the Freeman Base Employment Agreement.

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The following table sets out equity awards for executive officers as of December 31, 2009 .  We have not issued any additional stock awards as of the date of this disclosure.

Outstanding Equity Awards as of December 31, 2009
	Option awards
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
		165 ,000		15,000	$	0.25	1	1/15/2019
Scott T. Freeman2		51,450		0	$	0.82	3	9/6/2012
		9,000		0	$	0.82	4	12/1/10
		11,900		0	$	0.82	4	9/6/2011
		90,000		60,000	$	0.82	5	9/6/2010
		18,334		-	$	0.50	4	10/15/2013

________________________ 

1 Vests and becomes exercisable as to (i) 15,000 options per month with the first vesting date being February 15, 2004.  As at December 31, 2009, 15,000 options were not vested and are unexercisable.  As of December 31, 2009, 71,038 options had been exercised.

2  Terminated on July 12, 2009.

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

4 Fully vested and exercisable.

5 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 December 31, 2009 .

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Director Compensation
Name	Fees earned or paid in cash ($)		Stock awards ($)		Option awards ($)6			All other compensation ($)		Total ($)
Julian Ross		0		0		0	7		0		0
Don Reed		0		0	$	2,610	8		0	$	2,610
Vicki Jones		0		0	$	301	9		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 JTR Investments, Ltd., a company controlled by Mr. Ross 7,000 warrants exercisable at $0.01 per share of common stock 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 30 , 2010 , there was a total of $620,300 outstanding under the Senior Note, and a total of 306,816 warrants issued to JTR Investments, Ltd. 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, 157,500 were related to the Exchange Modification.

___________________________

6 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.

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

8 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.

9 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.

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 2,678,006 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.  Up to July 2009 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 provided access to a voluntary 401(k) plan, but we did not provide any matching contributions at this time.   We currently use PayvisionOnline to process our payroll.

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 owner1	Amount and nature of beneficial ownership2			Percentage of class
Julian T. Ross, Chairman, CEO, President, CFO		15,797,145	3		86.25	%
Donald Reed, Director		2,917,000	4		16.39	%
Vicki Jones, Director		201,000	5		1.26	%
All Officers & Directors as a group (3 people)		18,915,145			91.93	%
JTR Investments, Limited6 5100 Eldorado Parkway Suite 102-801 McKinney, TX  75070		13,803,683	7		82.52	%
Agave Resources, LLC8 2215 S. Loop 288, Suite 418 Denton, TX  76205		2,790,000	9		15.68	%

__________________

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

2  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. 

3  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; 423,483 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; 1,128,962 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 issued to Pearl Ross, the spouse of Mr. Ross , expiring on dates ranging from 3/1/2014 through 3/1/2019; 580,200 shares of common stock issuable upon the conversion of two notes totaling $870,300 held by JTR Investments, Limited ; 8,000 shares of common stock held by Pearl Ross; 7,000 shares of common stock issuable upon exercise of warrants held by Pearl Ross, Mr. Ross’s spouse; 108,000 shares of common stock issuable upon exercise of warrants issued to Afritex, Medical Products, Ltd. expiring on March 26, 2015; and 270,000 shares of common stock issuable upon the conversion of a note totaling $270,000 held by Afritex, Medical Products, Ltd.  

4  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; 350,000 shares of common stock issuable upon exercise of warrants issued to Agave Resources, LLC expiring April 15, 2013; and 500,000 shares of common stock issuable upon the conversion of a $750,000 note held by Agave Resources, LLC.  

5 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. 

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

7  Includes 423,483 shares of common stock issuable upon exercise of warrants expiring on dates ranging from 12/31/2013 through 3/31/2015; and 580,200 shares of common stock issuable upon the conversion of two notes totaling $870,300.  

8  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. 

9  Includes 1,220,000 shares of common stock convertible from 1,000,000 shares of preferred stock; 350,000 shares of common stock issuable upon exercise of warrants expiring on April 15, 2013; and 500,000 shares of common stock issuable upon the conversion of a $750,000.

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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 previously earn ed 750 stock options for every quarter served on the Advisory Board.   However, we have discontinued this practice and have no intention of issuing option to Advisory Board members in the foreseeable future.  We issued a total of 132,000 options to the Advisory Board in the past .  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.

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 summary of our capital stock discloses all material information relating to our common stock but is not a full description of all information relating to our common stock.  The summary 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, JTR Investments, LTD., and Agave Resources, LLC   together beneficially own a majority of our outstanding shares of common stock and will continue to do so even if we sell the maximum offering .  Accordingly, these stockholders can and will continue to 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 of Series A Convertible Preferred stock held by 50 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 2,321,994 options and 1,918,317  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 an application for quotation of our common stock by a market maker on 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 Holders 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 Holder 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  84121, telephone number (801) 274-1088.

INTERESTS OF NAMED EXPERTS AND COUNSEL

Sam Kan & Company, LLC has reviewed our Financial Statements for the quarter s ended March 31, 2010 and June 30, 2010 and audited our Financial Statements for the periods ended December 31, 2009 and December 31, 2008 and to the extent set forth in its reports, two of 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 we 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 June 30, 2010 , the outstanding balance under the Senior Note was $620,300 and the number of warrants issued to JTR pursuant to the Senior Note was 306,816 .  As of June 30 , 2010, the total balance owed to JTR on both the Second Note and the Senior Note was $870,300 , and the number of warrants issued to JTR pursuant to the Second Note and the Senior Note was 423,483 .  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 June 30 , 2010 was $1, 655 ,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  June 30 , 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		$	620,300		$	34,750	10
Interest rate		0	%		0	%		0	%		0	%
Maturity	April 15, 2011			April 15, 2011			$160,450 is current ; $422,850 – December 31, 2011			None

_____________________

10 Consists of a $21,000 loan from Don Reed and a $13,750 loan from Pearl Ross.  Neither loan is convertible into shares of common stock.

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On March 26, 2010, we entered into a license agreement with Afritex Medical Products (Pty) Ltd, a South African company (“Afritex”).   Afritex is a privately held company, incorporated in the Republic of South Africa in 2008.  Afritex was created to pursue the sale and distribution of medical devices in South Africa and surrounding territories.  The company is funded by shareholders from another South African investment holding company, with indirect investments in industries such as gaming and hospitality, commercial real estate, mining, media and technology.   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 Afritex 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  June 30 , 2010.

Julian T. Ross, our Chairman, Chief Executive Officer, President, and Chief Financial Officer is also a shareholder and director of Afritex. Julian T. Ross has shared voting power and control over the securities issued to 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 p ursuant to the exercise of 125,000 warrants at $0.01 per share of common stock.  IRSVS received the 125,000 warrants for services completed as of December 15, 2009.    The warrants were exercised by IRSVS on October 9, 2009 .  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.

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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.

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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.

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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 our fiscal years ending December 31, 2008 and December 31, 2009, our financial statements did not contain any adverse opinions or a disclaimer of opinions, nor were the reports qualified or modified as to uncertainty, audit scope, or accounting principles.  During Blakwing’s 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.

We provided a copy of this disclosure to Blackwing and requested Blackwing to furnish us with a letter addressed to the Securities and Exchange Commission stating whether Blackwing agrees with the statements made by us in this report, and, if not, stating the respects in which they do not agree.

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

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

OxySure Systems, Inc.

Frisco, Texas

We have reviewed the accompanying balance sheets of OxySure Systems, Inc. as of June 30, 2010 and December 31, 2009, and the related statements of operation, stockholders' equity, and cash flows for the three-month periods ended June 30, 2010 and 2009. These interim financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with United States generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the financial statements, the Company has suffered recurring losses and has experienced negative cash flows from operations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note 15 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-1

OXYSURE SYSTEMS INC.

BALANCE SHEETS

	June 30, 2010			December 31, 2009
	Unaudited
ASSETS
Current assets
Cash and cash equivalents	$	50,323		$	73,077
Accounts receivable, net of allowances for sales returns and allowance for doubtful accounts		160,518			36,365
Inventories		188,202			138,737
Prepaid expenses and other current assets		40,487			40,142
Total current assets		439,529			288,322
Property and equipment, net		396,958			518,976
Intangible assets, net		488,421			502,624
Other assets		256,252			13,132
TOTAL ASSETS	$	1,581,159		$	1,323,054
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	473,616		$	332,701
Capital leases - current		300,195			326,057
Notes payable - current		662,200			310,600
Deferred revenue		120,955			-
Total current liabilities		1,556,966			969,358
Long-term liabilities
Capital leases		46,492			47,036
Notes payable		1,761,059			1,761,059
Total long-term liabilities		1,807,551			1,808,095
TOTAL LIABILITIES		3,364,517			2,777,453
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized
3,126,434 Series A convertible preferred shares issued and outstanding as of June 30, 2010 and December 31, 2009.		1,563			1,563
Common stock, par value $0.0004 per share; 100,000,000 shares authorized;
15,724,816 shares of voting common stock issued and outstanding as of June 30, 2010 and December 31, 2009.		6,290			6,290
Warrant issuance		167,750			167,750
Additional Paid-in Capital		8,310,233			8,150,084
Accumulated deficit		(10,269,194	)		(9,780,087	)
TOTAL EQUITY		(1,783,358	)		(1,454,399	)
TOTAL LIABILITIES  AND STOCKHOLDERS’ EQUITY	$	1,581,159		$	1,323,054

See accompanying notes to financial statements

F-2

OXYSURE SYSTEMS INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2010			2009			2010			2009
Revenues, net	$	8,907		$	48,695		$	276,084		$	155,126
Cost of goods sold		4,756			21,049			25,458			53,360
Gross profit		4,151			27,646			250,627			101,765
Operating expenses
Selling, general and administrative		328,191			1,608,916			715,124			2,524,830
Loss from operating expenses		(324,040	)		(1,581,270	)		(464,498	)		(2,423,064	)
Other income (expenses)
Other income (expense)		40			39			3,047			710
Interest expense		(20,969	)		(5,660	)		(27,656	)		(11,320	)
Total other income (expenses)		(20,929	)		(5,621	)		(24,609	)		(10,610	)
Net loss		(344,969	)		(1,586,892	)		(489,107	)		(2,433,675	)
Accumulated deficit - beginning of the period		(9,924,225	)		(8,256,783	)		(9,780,087	)		(7,410,000	)
Prior period adjustment		-			-			-			-
Accumulated deficit - end of the period	$	(10,269,194	)	$	(9,843,675	)	$	(10,269,194	)	$	(9,843,675	)
Basic net income (loss) per common share	$	(0.02	)	$	(0.10	)	$	(0.03	)	$	(0.16	)
Diluted net income (loss) per common share	$	(0.02	)	$	(0.10	)	$	(0.03	)	$	(0.16	)
Weighted average common shares outstanding:
Basic		15,662,316			15,422,566			15,662,316			15,422,566
Diluted		15,662,316			15,422,566			15,662,316			15,422,566

See accompanying notes to financial statements

F-3

OXYSURE SYSTEMS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD JANUARY 1, 2008 THROUGH JUNE 30, 2010

(Expressed in US Dollars)

(Unaudited)

	Convertible Preferred Stock						Common Stock				Warrant		Additional Paid In Capital - Preferred		Additional Paid In Capital - Warrants and		Additional Paid In		Decficit			Total Stockholders' Equity
	Shares			Par Value			Shares		Par Value		issuance		Stock		Options		Capital		Accumulated			(Deficit)
Balance as of January 1, 2008		3,143,237			1,572			15,050,316		6,020		-		3,189,405		710,863		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		-		3,214,401		1,643,035		2,132,893		(7,410,000	)		(411,915	)

See accompanying notes to financial statements

F-4

	Convertible Preferred Stock				Common Stock				Warrant		Additional Paid In Capital - Preferred		Additional Paid In Capital - Warrants and		Additional Paid In		Decficit			Total Stockholders' Equity
	Shares		Par Value		Shares		Par Value		issuance		Stock		Options		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, netof cancellations														123,909							123,909
- Common Stock warrants issued in conection with rent expense														132,574							132,574
- 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																		(2,428,909	)		(2,428,909	)
Balance as of December 31, 2009		3,126,434		1,563		15,724,816		6,290		167,750		3,214,401		2,685,337		2,250,346		(9,780,087	)		(1,454,400	)
- 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																		(144,138	)		(144,138	)
Balance as of March 31, 2010		3,126,434		1,563		15,724,816		6,290		167,750		3,214,401		2,795,722		2,250,346		(9,924,225	)		(1,488,153	)
- Common Stock options issued for compensation														28,955							28,955
- Common Stock warrants issued pursuant to financing														20,809							20,809
Net Loss for quarter ending June 30, 2010																		(344,969	)		(344,969	)
Balance as of June 30, 2010		3,126,434		1,563		15,724,816		6,290		167,750		3,214,401		2,845,486		2,250,346		(10,269,194	)		(1,783,358	)

See accompanying notes to financial statements

F-5

OXYSURE SYSTEMS INC.

STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,						Year Ended December 31,
	2010			2009			2009
	Unaudited			Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(489,107	)	$	(2,433,675	)	$	(2,428,909	)
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation		122,595			209,470			421,040
Amortization		41,663			19,034			5,120
Issuance of common stock warrants in connection with financing		41,624			47,936			135,729
Impairment of intangible assets		-			-			100,978
Prior period adjustment		-			-			58,822
Decrease in Deferred Rent		-			-			185,272
Issuance of common stock warrants in connection with rent expense		-			3,133			132,574
Issuance of common stock warrants in connection with
license agreements		70,267			-			-
Issuance of common stock options to employees as
compensation		48,259			90,805			133,604
Issuance of common stock options and warrants in exchange
for services		-			1,475,258			639,195
Changes in current assets and liabilities
Accounts receivable		(124,154	)		348			(32,964	)
Inventory		(49,464	)		16,962			145,999
Prepaid expenses and other current assets		(344	)		2,893			(153,459	)
Accounts payable and accrued liabilities		140,915			193,964			(9,893	)
Deferred revenue		120,955			-			(91,207	)
NET CASH USED IN OPERATING ACTIVITIES		(76,792	)		(373,871	)		(758,098	)
CASH FLOWS FROM INVESTING ACTIVITIES
Other assets		(645	)		(3,282	)		(10,998	)
Purchases of property and equipment		(512	)		(16,303	)		(18,156	)
NET CASH USED IN INVESTING ACTIVITIES		(1,157	)		(19,585	)		(29,154	)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds		81,600			127,750			582,577
Payment of capital leases		(26,405	)		(19,029	)		(9,142	)
Issuance of Preferred Stock		-			-			-
Issuance of Common Stock		-			117,500			117,550
Proceeds from exercise of common stock options and warrants		-			-			1,200
Proceeds from issuance of warrants treated as prepaid warrants		-			167,750			167,750
NET CASH PROVIDED BY FINANCING ACTIVITIES		55,195			393,971			859,935
Net decrease in cash and cash equivalents		(22,754	)		515			72,683
Cash and cash equivalents, at beginning of period		73,077			393			393
Cash and cash equivalents, at end of period	$	50,323		$	908		$	73,076
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	20,969		$	11,320		$	48,244
Income taxes	$	-		$	-		$	-
Supplemental non-cash investing and financing activities:
Notes payable issued in connection with license agreement
and distribution agreement	$	270,000		$	-		$	-
Notes payable issued in connection with rent satisfaction agreement	$	-		$	-		$	251,407
Warrants issued pursuant to financing	$	41,624		$	47,936		$	135,729

See accompanying notes to financial statements

F-6

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS

JUNE 30, 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 System, 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.  The Company believes that the disclosures in the interim financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.

F-7

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.  This revenue recognition policy is applied to both customers and distributors.

The Company records estimated reductions to revenue for customer incentive offerings, discounts and sales returns allowance in the same period that the related revenue is recognized. The customer incentive offerings primarily involve volume rebates for its products in various target markets. If market conditions were to decline, it may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered.  Moreover, the Company also offers discounts to the customers who purchase the products in large volume and the discounts result in a reduction of revenue at the time when the discounts are offered. 

 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.  Deferred Revenue was $120,955 and $91,207 for the six month periods ended June 30, 2010 and 2009 respectively.

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.

F-8

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 fair 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 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 $122,595 and $209,470 for the six month periods ended June 30, 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 $41,663 and $19,034 for the six month periods ended June 30, 2010 and 2009 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.

F-9

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

No impairment loss on patents was recorded for the six month periods ended June 30, 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.  $935 and $8,613 were incurred in the six months ended June 30, 2010 and 2009 respectively.

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.

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 on 5-year security treasury notes 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 six month periods ended June 30, 2010 and 2009 stock based compensation expense was approximately $48,259 and $90,805, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to the employees.

F-10

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 ASC Topic 505-50, 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 six month periods ended June 30, 2010 and 2009 stock based compensation expense was approximately $111,890 and $1,526,327, 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.

Advertising Costs - Advertising costs are charged to operations when incurred.  During in the six month periods ended June 30, 2010 and 2009 the Company incurred $2,191 and $41,573 respectively in advertising and promotion costs.

Litigation and Settlement Costs - Legal costs are expensed as incurred. 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.  The Company is not presently involved in any legal proceedings, litigation or other legal actions.

Loss Per Share - Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants, convertible preferred stock and convertible notes. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows:

F-11

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	Six months ended June 30,
	2010			2009
Historical net loss per share:
Numerator
Net loss, as reported		(489,107	)		(2,423,064	)
Less: Effect of amortization of interest expense on convertible notes		-			-
Net loss attributed to common stockholders (diluted)		(489,107	)		(2,423,064	)
Denominator
Weighted-average common shares outstanding		15,662,316			15,422,566
Effect of dilutive securities		-			-
Denominator for diluted net loss per share		15,662,316			15,422,566
Basic and diluted net loss per share	$	(0.03	)	$	(0.16	)

The following outstanding options, warrants, convertible preferred shares and convertible note shares were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.

	Six months ended June 30,
	2010		2009
Options to purchase common stock		2,321,994		2,221,994
Warrants to purchase common stock		1,918,317		2,258,681
Common shares issuable upon conversion of convertible preferred stock		3,814,249		3,814,249
Common shares issuable upon conversion of prepaid warrants		519,166		519,166
Convertible note shares outstanding		1,679,805		964,600

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-12

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 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-13

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 2 -- BALANCE SHEET COMPONENTS

	June 30,			December 31,
	2010			2009
Cash and cash equivalents:
Cash		50,323		$	73,077
Total cash and cash equivalents	$	50,323		$	73,077
Accounts Receivable, net of allowances	$	160,518		$	36,365
Inventories:
Total inventories	$	188,202		$	138,737
Property and equipment, net:
Machinery and equipment	$	919,736		$	930,367
Leasehold improvements		547,855			547,855
Computer equipment and furniture and fixtures		197,549			186,406
Software		10,691			10,626
		1,675,831			1,675,255
Accumulated depreciation and amortization		(1,278,873	)		(1,156,279	)
Total property and equipment, net	$	396,958		$	518,976
Accounts payable and accrued expenses
Accounts payable		228,519			108,157
Other accrued liabilities	$	245,097			224,544
Total accounts payable and accrued expenses	$	473,616		$	332,701

F-14

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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 the six month periods ended June 30, 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.

The carrying value of the Company’s amortized acquired intangible assets as of June 30, 2010 is as follows:

	June 30, 2010
	Gross		Accumulated Amortization and write off			Net
Patents	$	609,222	$	(165,179	)	$	444,043
Trademarks		45,723		(1,345	)		44,378
Total	$	654,945	$	(166,524	)	$	488,421

Of the net amount of $488,421 in intangible assets as of June 30, 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 $331,421 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 un-amortized discount at June 30, 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 June 30, 2010 is $213,000.

F-15

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 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 were 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.  In August 2010 First Note and the Second Note were further modified by extending the maturity date in each caseto April 15, 2012.  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, 2008 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.

The fair value of the warrants issued to Agave pursuant to the First Note was estimated to be $392,853 using the Black-Scholes pricing model with a volatility of 37% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.68%.

The fair value of the warrants issued to JTR pursuant to the Second Note was estimated to be $115,587 using the Black-Scholes pricing model with a volatility of 50% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 1.55%.

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 June 30, 2010 the outstanding balance under the Senior Note was $620,300.  As of June 30, 2010 the number of penny warrants issued to JTR pursuant to the Senior Note was 306,817.  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.

F-16

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

The fair value of the all the warrants issued to JTR pursuant to the Senior Note was estimated to be $304,040 as at June 30, 2010, using the Black-Scholes pricing model with volatilities ranging from 19% to 55% and the following assumptions: no dividend yield, life of 5 years and risk-free interest rates ranging from 1.55% to 2.67%.

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 January 6, 2011 (prior to a recent amendment, the maturity was September 6, 2010 ). The Alcedo Note is convertible into the common stock, at the option of the Company on or before January 6, 2011 , 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 360th Day (as amended on September 2, 2010) 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. As at June 30, 2010 the total interest accrued under the Alcedo Note was $8,933.

The fair value of the warrants issued to Alcedo Trust pursuant to the Alcedo Note was estimated to be $25,614 using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.18%.

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.

F-17

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

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 fair value of the New Landlord Warrant was estimated to be $161,984 using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.67%.

The change in fair value of the First Landlord Warrant due to the modification was estimated to be ($32,543) using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.67%.

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 and a distribution agreement, both 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:

F-18

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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 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.

The Afritex Note was capitalized under Other Current Assets, and approximately 70% will be amortized over 7 years (the term of the license agreement) and 30% will be amortized over one year (the initial term of the distribution agreement).

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. As at June 30, 2010 the total interest accrued under the Afritex Note was $11,400.

The fair value of the warrants issued to Afritex pursuant to the Afritex Note was estimated to be $70,267 using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.50%.

F-19

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 4 – NOTES PAYABLE (CONTINUED)

The following table reflects the carrying value of the Company’s of the short-term and long-term notes payable as at June 30, 2010:

	June 30, 2010
Current Notes Payable:
Afritex Note	$	270,000
Alcedo Note		100,000
Senior Note, JTR		197,450
Frisco EDC Note		60,000
Other Notes		34,750
Total current notes payable	$	662,200
Long Term Notes Payable:
First Note, Agave	$	750,000
Second Note, JTR		250,000
First Landlord Note		125,000
Second Landlord Note		126,407
Senior Note, JTR		422,850
Frisco EDC Note		86,802
Total long term notes payable	$	1,761,059
Total short and long term notes payable	$	2,423,259

At June 30, 2010 future minimum payments on Notes Payable for the years ended June 30, 2011, 2012 and thereafter were as follows:

2010	$	292,200
2011	$	456,802
2012	$	1,674,257
Thereafter	$	0
Total	$	2,423,259

F-20

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 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 the issuance of up to 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 June 30, 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 Stock for cash at a price of $1.00 per share.  During 2005, the Company sold 600,000 shares of Series A Preferred Stock for cash 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 Stock, 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 services performed in lieu of cash payment. These shares were valued at $25,000 using the original issue price of the Series A Preferred Stock, which is management’s best estimate of fair value. In March 2006, the Company sold 2,325,000 shares of Series A Preferred Stock 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 Stock in lieu of cash payments for premiums on its capital leases (see Note 9). 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 the Series A Preferred Stock were converted into Common Stock. As at June 30, 2010 the Company had 3,126,434 shares of Series A Preferred Stock 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-21

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 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 $5,063.  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 2207,"the Comrany issued 20,000 shares of common stock for services valued at $50.000 based on the fair value of the common stock"on the fate"of issuance and 59,250 shares were issugd for stock"optkons exercised for proceeds of $24,068.  For dgtains, please rgfer"to Note 6, “Stock Options and Warrants.&#:221;>/div>

Durkng 2008, the Coopany 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 details, 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 details, please refer to Note 6, “Stock Options and Warrants.”  As at June 30, 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, consultants, Board members and Advisory Board members 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.

F-22

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Options generally expire between five and ten 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 period January 1, 2008 through June 30, 2010:

	Employee				Non-Employee			Combined Total
Outstanding at January 1, 2008		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
Granted		- -		- -		- -	- -		- -
Exercised		- -		- -		- -	- -		- -
Forfeited/Cancelled		- --		- --		- --	- --		- --
Outstanding at June 30, 2010		2,227,612		0.62		94,382	0.95		2,321,994

Valuation Assumptions

The Company values its stock-based payment awards granted using the Black-Scholes model, during the six months ended June 30, 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.

F-23

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

For the six months ended June 30, 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:

		Equity Incentive Plans for Years Ended December 31, Q2 2010
Expected terms (in years)		5.00
Volatility		19%-55%
Risk-free interest rate		1.875%-2.25%
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 options by optionees.  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 on 5-year security treasury notes interest rates appropriate for the expected term of the stock options.  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 six months ended June 30, 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.

The following table summarizes information about employee stock options outstanding under the Plan at June 30, 2010:

June 30, 2010
		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstan-ding		Weighted average remaining contractual life		Weighted average exercise price		Number exer-cisable		Weighted average remaining contract- ual life		Weigh- ted average exercise price
$	0.20-$0.25		1,203,962		3.23	$	0.25		963,962		3.93	$	0.25
$	0.50-$1.00		812,825		2.24	$	0.79		727,825		2.19	$	0.78
$	2.00		173,900		1.75	$	2.00		143,900		1.87	$	2.00
$	2.50		36,925		3.31	$	2.50		16,925		2.27	$	2.50
			2,227,612						1,852,612

F-24

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

The following table summarizes information about non-employee stock options outstanding under the Plan at June 30, 2010:

June 30, 2010
		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstan-ding		Weighted average remaining contractual life		Weighted average exercise price		Number exer-cisable		Weighted average remaining contractual life		Weigh-ted average exer-cise price
$	0.2 - $0.25		900		3.92	$	0.25		900		3.92	$	0.25
$	0.50-$1.00		78,952		1.98	$	0.75		58,945		2.65	$	1.00
$	2.00		12,250		1.17	$	2.00		12,250		1.17	$	2.00
$	2.50		2,280		2.92	$	2.50		2,280		2.92	$	2.50
			94,382						74,375

F-25

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants

The following table summarizes the Company’s warrant activities for the period January 1, 2008 through June 30, 2010:

	Warrants			Weighted Average Exercise Price
Outstanding at January 1, 2008		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		17,500		$	0.31
Exercised		-		$	-
Forfeited/Cancelled		-		$	-
Outstanding at March 31, 2009		1,241,904		$	0.19
Granted		1,016,777		$	0.01
Exercised		-		$	-
Forfeited/Cancelled		-		$	-
Outstanding at June 30, 2009		2,258,681		$	0.11
Granted		-		$	-
Exercised		-		$	-
Forfeited/Cancelled		-		$	-
Outstanding at September 30, 2009		2,258,681		$	0.11
Granted		316,055		$	0.80
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
Granted		21,000		$	0.01
Exercised		-		$	-
Forfeited/Cancelled		-		$	-
Outstanding at June 30, 2010		1,918,317		$	0.61

F-26

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

The following table indicates the significant terms of each of our warrants issued and outstanding as at June 30, 2010, and the accounting treatment of each:

	Date of Grant	#Warrants Outstanding At June 30, 2010		Exercise Price		Expiration Date	Weighted Average Remaining Life (Years)		Fair Value Expensed			Term of Expense (Years)
1	04/08/04		281,200		0.0005	4/8/2014		4.02	$	78,643		1.00
2	4/15/2008		350,000		0.01	4/15/2013		3.04	$	392,853		Expensed upon issuance
3	12/31/2008		280,485		0.01	12/31/2013		3.76	$	277,889		Expensed upon issuance
4	6/22/2009		48,358		0.01	6/22/2014		4.23	$	47,936		Expensed upon issuance
5	11/19/2008		100,000		0.01	11/19/2013		3.64	$	99,098		Expensed upon issuance
6	5/7/2008		8,000		0.01	5/7/2013		3.10	$	19,931		Expensed upon issuance
7	9/30/2008		7,000		0.01	9/30/2013		3.50	$	6,940		Expensed upon issuance
8	02/16/05		5,000		0.10	2/16/2010		0.88	$	3,686		Expensed upon issuance
9	3/31/2009		2,500		0.01	3/31/2014		4.00	$	2,477		Expensed upon issuance
10	3/31/2009		5,000		0.01	3/31/2014		4.00	$	4,954		Expensed upon issuance
11	12/31/2009		163,415		0.01	12/31/2014		4.76	$	161,984		Expensed upon issuance	*
12	12/31/2009		52,640		0.01	12/31/2014		4.76	$	52,179		Expensed upon issuance
13	3/31/2010		21,000		0.01	12/31/2014		4.76	$	20,815		Expensed upon issuance
14	6/30/2010		21,000		0.01	6/30/2014		4.25	$	20,809		Expensed upon issuance
15	05/18/05		10,219		0.82	5/18/2010		0.13	$	3,293		Expensed upon issuance
16	2/1/2009		10,000		1.00	2/1/2014		3.84	$	4,563		Expensed upon issuance
17	12/1/2008		7,500		1.00	2/1/2013		2.84	$	3,327		5.00
18	11/19/2008		25,000		1.00	11/19/2013		3.64	$	10,959		Expensed upon issuance
19	01/27/06		100,000		0.82	1/27/2011		0.83	$	37,179		Expensed upon issuance
20	12/10/09		100,000		2.50	12/10/2014		4.70	$	25,614		Expensed upon issuance
21	08/10/07		50,000		1.00	8/10/2012		2.36	$	(32,543	)	5.00	**
22	03/26/10		270,000		2.50	3/26/2015		4.99	$	70,267		Expensed upon issuance
			1,918,317

 * This warrant relates to Sinacola Commercial and was issued pursuant to the 2009 RSA, and was expensed upon restatement of our audited financial statements for 2009.

** This issuance relates to Sinacola Commercial, and this is the net effect of the original issuance and the modification pursuant to the 2009 RSA.

F-27

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 7 - INCOME TAXES

The Company adopted the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes,” on January 1, 2008.

As of December 31, 2009 and 2008, the Company had net operating loss carry-forwards of approximately $8,009,996 and $6,804,181 respectively, which expire in varying amounts between 2017 and 2027.   Realization of this potential future tax benefit is dependent on generating sufficient taxable income prior to expiration of the loss carry-forward. The deferred tax asset related to this (and other) potential future tax benefits has been offset by a valuation allowance in the same amount. The amount of the deferred tax asset ultimately realizable could be increased in the near term if estimates of future taxable income during the carry-forward period are revised.

Deferred income tax assets of $2,803,499 and $2,381,463 at December 31, 2009 and 2008 respectively were offset in full by a valuation allowance.

The components of the Company's net deferred tax assets, including a valuation allowance, are as follows:

Deferred Tax Assets	As of December 31, 2009			As of December 31, 2008
Net operating loss carry-forwards	$	8,009,996		$	6,804,181
Net deferred tax assets before valuation allowance	$	2,803,499		$	2,381,463
Less: Valuation Allowance		(2,803,499	)	$	(2,381,463	)
Net deferred tax assets		--			--

A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. income tax rate to pre-tax loss is as follows:

	As of December 31, 2009			As of December 31, 2008
Statutory federal income tax		(35	%)		(35	%)
Change in valuation allowance on deferred tax assets		(35	%)		(35	%)

Due to the inherent uncertainty in forecasts and future events and operating results, the Company has provided for a valuation allowance in an amount equal to gross deferred tax assets resulting in the above figures for the periods audited.

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.

F-28

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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:

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 approximately 55% 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.

F-29

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

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.

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 June 30, 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	$	97,706
2011		198,956
2012		177,188
	$	473,850

Rental expense for the six months ended June 30, 2010 was $97,200 of which $90,826 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.

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 non-cancellable lease payments required under the capital leases as at June 30, 2010 are as follows:

F-30

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

Total minimum lease payments
2010	$	300,195
2011		24,098
2012		21,814
2013		580
Total minimum lease payments		346,687
Total capital lease obligations	$	346,687
Less: current portion		(300,195	)
Long-term capital lease obligations	$	46,492

Legal Proceedings

OxySure is not presently involved in any legal proceedings and was not involved in any such proceedings during the six months ended June 30, 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 Policy

In considering ASC 450-20, including 450-20-03-1 and 450-20-25-3, the Company will recognize the loss contingency in the financial statements and discloses in the footnotes if it is probable the loss will incur and the amount of loss can be reasonably estimated. The Company will disclose in the notes (without recognizing in the financial statements) if it is reasonably possible that the loss will incur. No disclosure will be made if the Company determines the possibility of loss is remote.

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.

F-31

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 10 – RELATED PARTY TRANSACTIONS (CONTINUED)

A summary of the related party financings as at June 30, 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	$620,300	$34,750
Interest rate	0%	0%	0%	0%
Maturity	April 15, 2012	April 15, 2012	December 31, 2011: $422,850(3) Current: $197,450	Current

(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.

(3) Of the total amount outstanding on the Senior Note, $422,850 is due on December 31, 2011 provided that, in the event the company completes an equity event prior to December 31, 2011 then up to a maximum total of $500,000 is repayable upon and at the time of such equity event, including the current portion of the JTR Senior Note outstanding at the time of the equity event.

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 June 30, 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 details.

NOTE 11 – NET INCOME (LOSS) PER SHARE

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

	Six Months Ended June 30,
	2010			2009
Net income (loss)		(489,107	)	$	(2,433,675	)
Shares used in computing basic per share amounts (weighted ave.)		15,662,316			15,422,566
Net income (loss) per share:
Basic and diluted	$	(0.03	)	$	(0.16	)

F-32

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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:

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:

NOTE 12 – FAIR VALUE MEASUREMENTS (CONTINUED)

	Total		Level 1		Level 2		Level 3
Cash (1)	$	50,323	$	50,323		-		-
Total cash equivalents as of June 30, 2010	$	50,323	$	50,323	$	-	$	-

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

F-33

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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 for the six months ended June 30, 2010 and for the year ended December 31, 2009:

	Six months Ended June 30, 2010		Year Ended December 31, 2009
Revenues:
United States - product sales	$	51,084	$	351,341
South Africa - License fee and product sales	$	225,000	$	36,020
Total revenues	$	276,084	$	387,361

Revenues during the six months ended June 30, 2010 included a non-recurring revenue amount of $225,000 from a license agreement entered into with a South African company.

F-34

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

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 June 30, 2010 and December 31, 2009, the Company has incurred net losses from operations and has stockholders’ deficits of $10,269,194 and $9,780,087 respectively since inception.  The Company has a working capital deficit of approximately $1,117,437 as of June 30, 2010 and $681,036 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 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. As of June 30, 2010 the Company has approximately $129,700 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 and international markets.

F-35

OXYSURE® SYSTEMS, INC.

NOTES TO REVIEWED FINANCIAL STATEMENTS - CONTINUED

JUNE 30, 2010

(Unaudited)

NOTE 15 – GOING CONCERN (CONTINUED)

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. 20 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.

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 entered into a rent satisfaction agreement with its landlord for most of its rent expenses for FY 2009.  The Company has commenced discussions with its landlord for a rent satisfaction agreement with its landlord for most of its rent expenses for FY 2010.

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.

12.   As of June 30, 2010 the Company has $662,200 in current notes payable on its balance sheet.  Of this, $370,000 relates to convertible notes, specifically the Alcedo Note and the Afritex Note.  These notes are convertible at the Company’s option on or prior to maturity.

F-36

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

OxySure Systems, Inc.

Frisco, Texas

We have audited the accompanying balance sheets of OxySure Systems, Inc. as of December 31, 2009 and 2008, and the related statements of operations, stockholders' equity (deficit), and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of OxySure Systems, Inc. as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

We were not engaged to examine management's assessment of the effectiveness of OxySure Systems, Inc.'s internal control over financial reporting as of December 31, 2009 and 2008, and accordingly, we do not express an opinion thereon.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the financial statements, the Company has suffered recurring losses and has experienced negative cash flows from operations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note 15 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-37

OXYSURE SYSTEMS INC.

 BALANCE SHEETS

	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		40,143			52,673
Total current assets		288,322			341,203
Property and equipment, net		518,976			921,860
Intangible assets, net		502,624			597,724
Other assets		13,132			32,415
TOTAL ASSETS	$	1,323,054		$	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		-			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
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized
3,126,434 Series A convertible preferred shares issued and outstanding as of December 31, 2009 and 2008.		1,563			1,563
Common stock, par value $0.0004 per share; 100,000,000 shares authorized;
15,724,816 and 15,482,316 shares of voting common stock issued and outstanding as of December 31, 2009 and 2008 respectively.		6,290			6,193
Warrant issuance		167,750			-
Additional Paid-in Capital		8,150,084			6,990,329
Accumulated deficit		(9,780,087	)		(7,410,000	)
TOTAL EQUITY		(1,454,399	)		(411,915	)
TOTAL LIABILITIES  AND STOCKHOLDERS’ EQUITY	$	1,323,054		$	1,893,202

See accompanying notes to financial statements

F-38

OXYSURE SYSTEMS INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

	For the year ended December 31,
	2009			2008
Revenues, net	$	387,361		$	97,060
Cost of goods sold		194,518			50,433
Gross profit		192,843			46,626
Operating expenses
Selling, general and administrative		2,573,508			2,911,759
Loss from operating expenses		(2,380,665	)		(2,865,133	)
Other income (expenses)
Other income (expense)		-			33,323
Interest expense		(48,244	)		(68,583	)
Total other income (expenses)		(48,244	)		(35,260	)
Net loss		(2,428,909	)		(2,900,393	)
Accumulated deficit - beginning of the period		(7,410,000	)		(4,508,980	)
Prior period adjustment		58,822			(627	)
Accumulated deficit - end of the period	$	(9,780,087	)	$	(7,410,000	)
Basic net income (loss) per common share	$	(0.16	)	$	(0.19	)
Diluted net income (loss) per common share	$	(0.16	)	$	(0.19	)
Weighted average common shares outstanding:
Basic		15,603,566			15,220,546
Diluted		15,603,566			15,220,546

See accompanying notes to financial statements

F-39

OXYSURE SYSTEMS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Expressed in US Dollars)

	Convertible Preferred Stock						Common Stock				Warrant		Additional Paid In Capital - Preferred		Additional Paid In Capital - Warrants and		Additional Paid In		Decficit			Total Stockholders' Equity
	Shares			Par Value			Shares		Par Value		issuance		Stock		Options		Capital		Accumulated			(Deficit)
Balance, January 1, 2008		3,143,237			1,572			15,050,316		6,020		-		3,189,405		710,863		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																677,68							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		-		3,214,401		1,643,035		2,132,893		(7,410,000	)		(411,915	)

See accompanying notes to financial statements

F-40

	Convertible Preferred Stock				Common Stock				Warrant		Additional Paid In Capital - Preferred		Additional Paid In Capital - Warrants and		Additional Paid In		Decficit			Total Stockholders' Equity
	Shares		Par Value		Shares		Par Value		issuance		Stock		Options		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 of cancellations														123,909							123,909
- Common Stock warrants issued in conection withrent expense														132,574							132,574
- 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																		(2,428,909	)		(2,428,909	)
Balance as of December 31, 2009		3,126,434		1,563		15,724,816		6,290		167,750		3,214,401		2,685,337		2,250,346		(9,780,087	)		(1,454,400	)

See accompanying notes to financial statements

F-41

OXYSURE SYSTEMS INC.

STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,428,909	)	$	(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
Issuance of common stock warrants in connection with financing		135,729			677,681
Impairment of intangible assets		100,978			-
Prior period adjustment		58,822			(627	)
Decrease in Deferred Rent		185,272
Issuance of common stock warrants in connection with rent expense		132,574			-
Issuance of common stock options to employees as compensation		133,604			89,957
Issuance of common stock options and warrants in exchange for services		639,195			143,687
Issuance of common stock options and warrants in connection		-			10,959
with corporate social responsibility grants		-
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	)		29,305
Accounts payable and accrued liabilities		(9,893	)		(108,793	)
Deferred revenue		(91,207	)		91,207
NET CASH USED IN OPERATING ACTIVITIES		(758,098	)		(1,649,439	)
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 exercise of common stock options and warrants		1,200			9,887
Proceeds from issuance of warrants treated as prepaid warrants		167,750			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		859,935			1,422,391
Net decrease in cash and cash equivalents		72,684			(319,365	)
Cash and cash equivalents, at beginning of period		393			319,758
Cash and cash equivalents, at end of period	$	73,077		$	393
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	48,244		$	68,583
Income taxes	$	-		$	-
Supplemental non-cash investing and financing activities:
Notes payable issued in connection with rent satisfaction agreement	$	251,407		$	-
Issuance of common stock warrants in connection with financing	$	135,729		$	677,681

See accompanying notes to financial statements

F-42

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

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 System, 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.  The Company believes that the disclosures in the interim financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.

F-43

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.  This revenue recognition policy is applied to both customers and distributors.

The Company records estimated reductions to revenue for customer incentive offerings, discounts and sales returns allowance in the same period that the related revenue is recognized. The customer incentive offerings primarily involve volume rebates for its products in various target markets. If market conditions were to decline, it may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered.  Moreover, the Company also offers discounts to customers who purchase the products in large volume and the discounts result in a reduction of revenue at the time when the discounts are offered. 

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. Deferred Revenue was $0 and $91,207 for the years ended December 31, 2009 and 2008 respectively.

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.

F-44

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 fair 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 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 the years ended 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 the years ended 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

F-45

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. $9,287 and $30,241 were incurred in the years ended December 31, 2009 and 2008, respectively.

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.

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 on 5-year security treasury notes 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

F-46

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 $133,604 and $89,957, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to the employees.

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 ASC Topic 505-50, 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 $1,092,770 and $821,368, 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.

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 and promotion costs.

Litigation and Settlement Costs - Legal costs are expensed as incurred. 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. The Company is not presently involved in any legal proceedings, litigation or other legal actions.

Loss Per Share - Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants, convertible preferred stock and convertible notes. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows:

F-47

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	Year ended December 31,
	2009			2008
Historical net loss per share:
Numerator
Net loss, as reported		(2,428,909	)		(2,900,393	)
Less: Effect of amortization of interest expense on convertible notes		-			-
Net loss attributed to common stockholders (diluted)		(2,428,909	)		(2,900,393	)
Denominator
Weighted-average common shares outstanding		15,603,566			15,220,546
Effect of dilutive securities		-			-
Denominator for diluted net loss per share		15,603,566			15,220,546
Basic and diluted net loss per share	$	(0.16	)	$	(0.19	)

The following outstanding options, warrants, convertible preferred shares and convertible note shares were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.

	Year ended December 31,
	2009		2008
Options to purchase common stock		2,141,994		1,888,991
Warrants to purchase common stock		1,606,317		1,224,404
Common shares issuable upon conversion of convertible preferred stock		3,814,249		3,814,249
Common shares issuable upon conversion of prepaid warrants		519,166		-
Convertible note shares outstanding		1,336,005		948,567

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.

F-48

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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-49

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 2 -- BALANCE SHEET COMPONENTS

	December 31,
	2009			2008
Cash and cash equivalents:
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
Accounts Receivable, net of allowances	$	36,365		$	3,401
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

F-50

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

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 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

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

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.  In August 2010 First Note and the Second Note were further modified by extending the maturity date in each caseto April 15, 2012. 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, 2008 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.

The fair value of the warrants issued to Agave pursuant to the First Note was estimated to be $392,853 using the Black-Scholes pricing model with a volatility of 37% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.68%.

F-53

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

The fair value of the warrants issued to JTR pursuant to the Second Note was estimated to be $115,587 using the Black-Scholes pricing model with a volatility of 50% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 1.55%.

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.

The total fair value of the all the warrants issued to JTR pursuant to the Senior Note was estimated to be $262,417 and $162,302 as at December 31, 2009 and 2008 respectively, using the Black-Scholes pricing model with volatilities ranging from 19% to 55% and the following assumptions: no dividend yield, life of 5 years and risk-free interest rates ranging from 1.55% to 2.67%.

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").

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

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. No interest was accrued under the Alcedo Note during 2009.

NOTE 4 – NOTES PAYABLE (CONTINUED)

The fair value of the warrants issued to Alcedo Trust pursuant to the Alcedo Note was estimated to be $25,614 using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.18%.

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.

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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 – 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 fair value of the New Landlord Warrant was estimated to be $161,984 using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.67%.

The change in fair value of the First Landlord Warrant due to the modification was estimated to be ($32,543) using the Black-Scholes pricing model with a volatility of 55% and the following assumptions: no dividend yield, life of 5 years and a risk-free interest rate of 2.67%.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)

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
Alcedo Note		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

F-57

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 4 – NOTES PAYABLE (CONTINUED)
 

Aggregate maturities of debt for each of the five years and thereafter are as follows:

As of December 31, 2009:
2010	$	310,600
2011	$	761,059
2012	$	1,000,000
2013	$	0
Thereafter	$	0
Total	$	2,071,659

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 the issuance of up to 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 Stock for cash at a price of $1.00 per share.  During 2005, the Company sold 600,000 shares of Series A Preferred Stock for cash at a price of $1.00 per share.  In May 2005, the Company issued 25,000 shares of Series A Preferred Stock 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 Stock, which is in the management’s best estimate of fair value.  In June 2005, the Company issued 12,500 shares of Series A Preferred Stock 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 Stock, which is management’s best estimate of fair value.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

 NOTE 5 - SHAREHOLDERS’ EQUITY (CONTINUED)

In February 2006, 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 Stock, which is management’s best estimate of fair value. In March 2006, the Company sold 2,325,000 shares of Series A Preferred Stock 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 Stock 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 Stock 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 Stock 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 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.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 5 - SHAREHOLDERS’ EQUITY (CONTINUED)

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 $5,063.  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 details, 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 details, 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 details, 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.

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, consultants, Board members and Advisory Board members 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 generally expire between five and ten 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.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

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				Combined Total
	Options			Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options
Outstanding at January 1, 2008		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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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 years 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 options by optionees.  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 on 5-year security treasury notes interest rates appropriate for the expected term of the stock options. 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.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

The following table summarizes information about employee stock options outstanding under the Plan at December 31, 2009:

December 31, 2009
		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average remaining contractual life		Weighted average exercise price
$	0.20 - $0.25		1,023,962		4.04	$	0.25		963,962		4.05	$	0.25
$	0.50 - $1.00		812,825		2.49	$	0.79		727,825		2.43	$	0.78
$	2.00		173,900		2.00	$	2.00		143,900		2.12	$	2.00
$	2.50		36,925		2.50	$	2.50		16,925		2.52	$	2.50
			2,047,612						1,852,612

The following table summarizes information about non-employee stock options outstanding under the Plan at December 31, 2009:

December 31, 2009
		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average remaining contractual life		Weighted average exercise price
$	0.20 - $0.25		900		4.16	$	0.25		900		4.16	$	0.25
$	0.50 - $1.00		78,952		2.23	$	0.75		58,945		2.98	$	1.00
$	2.00		12,250		1.41	$	2.00		12,250		1.41	$	2.00
$	2.50		2,280		3.17	$	2.50		2,280		3.17	$	2.50
			94,382						74,375

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants.

The following table summarizes the Company’s warrant activities for the years ended December 31, 2008 and 2009:

	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

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 6 - STOCK OPTIONS AND WARRANTS (CONTINUED)

The following table indicates the significant terms of each of our warrants issued and outstanding as at December 31, 2009, and the accounting treatment of each:s

	Date of Grant	#Warrants Outstanding At December 31, 2009		Exercise Price		Expiration Date	Weighted Average Remaining  Life (Years)			Fair Value Expensed	Term of Expense (Years)
1	04/08/04		281,200		0.0005	4/8/2014		4.02	$	78,643	1.00
2	4/15/2008		350,000		0.01	4/15/2013		3.04	$	392,853	Expensed upon issuance
3	12/31/2008		280,485		0.01	12/31/2013		3.76	$	277,889	Expensed upon issuance
4	6/22/2009		48,358		0.01	6/22/2014		4.23	$	47,936	Expensed upon issuance
5	11/19/2008		100,000		0.01	11/19/2013		3.64	$	99,098	Expensed upon issuance
6	5/7/2008		8,000		0.01	5/7/2013		3.10	$	19,931	Expensed upon issuance
7	9/30/2008		7,000		0.01	9/30/2013		3.50	$	6,940	Expensed upon issuance
8	02/16/05		5,000		0.10	2/16/2010		0.88	$	3,686	Expensed upon issuance
9	3/31/2009		2,500		0.01	3/31/2014		4.00	$	2,477	Expensed upon issuance
10	3/31/2009		5,000		0.01	3/31/2014		4.00	$	4,954	Expensed upon issuance
11	12/31/2009		163,415		0.01	12/31/2014		4.76	$	161,984	Expensed upon issuance	*
12	12/31/2009		52,640		0.01	12/31/2014		4.76	$	52,179	Expensed upon issuance
15	05/18/05		10,219		0.82	5/18/2010		0.13	$	3,293	Expensed upon issuance
16	2/1/2009		10,000		1.00	2/1/2014		3.84	$	4,563	Expensed upon issuance
17	12/1/2008		7,500		1.00	2/1/2013		2.84	$	3,327	5.00
18	11/19/2008		25,000		1.00	11/19/2013		3.64	$	10,959	Expensed upon issuance
19	01/27/06		100,000		0.82	1/27/2011		0.83	$	37,179	Expensed upon issuance
20	12/10/09		100,000		2.50	12/10/2014		4.70	$	25,614	Expensed upon issuance
21	08/10/07		50,000		1.00	8/10/2012		2.36	$	(32,543)	5.00	**
			1,606,317

 * This warrant relates to Sinacola Commercial and was issued pursuant to the 2009 RSA, and was expensed upon restatement of our audited financial statements for 2009.

** This issuance relates to Sinacola Commercial, and this is the net effect of the original issuance and the modification pursuant to the 2009 RSA.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 7 - INCOME TAXES

The Company adopted the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes,” on January 1, 2008.

As of December 31, 2009 and 2008, the Company had net operating loss carry-forwards of approximately $8,009,996 and $6,804,181 respectively, which expire in varying amounts between 2017 and 2027.   Realization of this potential future tax benefit is dependent on generating   sufficient taxable income prior to expiration of the loss carry-forward. The deferred tax asset related to this (and other) potential future tax benefits has been offset by a valuation allowance in the same amount. The amount of the deferred tax asset ultimately realizable could be increased in the near term if estimates of future taxable income during the carry-forward period are revised.

Deferred income tax assets of $2,803,499 and $2,381,463 at December 31, 2009 and 2008 respectively were offset in full by a valuation allowance.

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.

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

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

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.

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.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

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		22,757
Total minimum lease payments		373,093
Total capital lease obligations	$	373,093
Less: current portion		(326,057	)
Long-term capital lease obligations	$	47,036

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.

F-68

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 9 – COMMITMENTS AND CONTINGENCY (CONTINUED)

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(2)			Related Party
Amount	$	750,000		$	250,000		$	538,700		$	34,750
Interest rate		0	%		0	%		0	%		0	%
Maturity	April 15, 2011			April 15, 2011			December 31, 2011: $422,850(3) Current: $115,859			Current

F-69

OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 10 – RELATED PARTY TRANSACTIONS (CONTINUED)

(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.

(3) Of the total amount outstanding on the Senior Note, $422,850 is due on December 31, 2011 provided that, in the event the company completes an equity event prior to December 31, 2011 then up to a maximum total of $500,000 is repayable upon and at the time of such equity event, including the current portion of the JTR Senior Note outstanding at the time of the equity event.

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 (loss) per share:

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008
Net income (loss)	$	(2,428,909	)	$	(2,900,393	)
Shares used in computing basic per share amounts (weighted ave.)		15,603,566			15,220,546
Net income (loss) per share:
Basic and diluted	$	(0.16	)	$	(0.19	)

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

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:

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.

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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 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-72

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 - product sales	$	351,341	$	97,060
ROW - product sales	$	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 since inception.  The Company has a working capital deficit of $681,037 as of December 31, 2009 and a working capital deficit of $852,291 as of December 31, 2008. These factors raise doubt about the Company’s ability to continue as a going concern.

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OXYSURE® SYSTEMS, INC.

NOTES TO AUDITED FINANCIAL STATEMENTS - CONTINUED

DECEMBER 31, 2009 AND 2008

NOTE 15 – GOING CONCERN (CONTINUED)

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 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. Management expects to break even in 2011.

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 “Going Concern”.

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. 20 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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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-75

OxySure® Systems, Inc.

9,240,565 Shares

$1.00 Per Share

STOCK

PROSPECTUS

October 4 , 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, 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	$	24,500.00
Total	$	129,660.00

(1) All amounts are estimates other than the Commission’s registration fee.

Item 14.  Indemnification of Directors and Officers

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

a)   During 2006, the Company sold 25,000 shares of common stock for proceeds of $50,000.

b)   During March 2006, the Company sold 2,325,000 shares of Series A Preferred at a price of $1.00 per share for total cash proceeds of $2,325,000.

c)   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.

d)   During 2006 the Company issued 24,979 shares of Series A Preferred in lieu of cash payment for premiums on its capital leases. These shares were valued at $60,924 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 has been amortized into interest expense over the term of the related lease.

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e)   During 2006 the Company issued options valued at $29,155 for compensation.

f)   During 2006 the Company issued warrants valued at $47,007 for services.

g)   During the period April 2007 through November 2007 we sold a total of 635,000 shares of common stock to 27 purchasers at $2.50 per share for total cash proceeds of $1,587,500 in a series of transactions related to a private placement of common stock.

h)   During the period April 2007 through July 2007, we issued 20,000 shares of Common Stock for legal services valued at $50,000 based on the fair value of the Common Stock on the dates of issuance.

i)   During October 2007 we issued 59,250 shares for stock options exercised for cash proceeds of $24,068.

j)   During February and March 2007, we issued a total of 5,758 shares of Series A convertible Preferred Stock in lieu of cash payments for premiums on our capital leases.  These shares were valued at $17,554 using the fair value of the shares on the dates of issuance.

k)   During the period January 2007 through October 2007 we issued warrants to purchase a total of 270,000 shares of common stock for services, valued at $356,461 in total, as follows:

·   During January 2007, we issued warrants to purchase 100,000 shares of common stock with an aggregate exercise price of $0.82 per share in return for consulting services.  These options were valued at $37,179 using the fair value of the underlying shares on the date of issuance.

·   During August 2007, we issued warrants to purchase 50,000 shares of common stock with an aggregate exercise price of $2.00 per share in connection with a property lease agreement.  These options were valued at $57,434 using the fair value of the underlying shares on the date of issuance.

·   During October 2007, we issued warrants to purchase 120,000 shares of common stock with an aggregate exercise price of $0.01 per share 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.

l)   During 2007, we issued options to purchase 187,300 shares of common stock with an aggregate exercise price of $0.92 per share 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.  Net of forfeitures, the value was $146,356.

m)   During April 2008, we issued 120,000 shares for warrants exercised for proceeds of $1,200.

n)   During June 2008, we issued 35,000 shares for stock options exercised for proceeds of $8,750.

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o)   During the February 2008 and March 2008 we sold a total of 40,000 shares of common stock to 4 purchasers at $2.50 per share for total cash proceeds of $100,000 in a series of transactions related to a private placement of common stock commenced in April 2007.

p)   During the period September 2008 through December 2008 we sold a total of 237,000 shares of common stock to 10 purchasers for total cash proceeds of $218,000 in a series of transactions related to a private placement of common stock.

q)   During September 2008 we received the return of 25,000 shares of our Series A convertible preferred stock pursuant to a settlement agreement reached with a former legal services provider.

r)   During September 2008 we issued 8,197 shares of our Series A convertible preferred stock for $25,000 in cash to one purchaser.

s)   During the period April 2008 through December 2008 we issued penny warrants to purchase a total of 637,485 shares of common stock in connection with financing, valued at $677,681 in total, as follows:

·   During April 2008, we issued warrants to purchase 350,000 shares of common stock with an aggregate exercise price of $0.01 per share in connection with financing.  These warrants were valued at $392,853 using the fair value of the underlying shares on the date of issuance.

·   During September 2008, we issued warrants to purchase 7,000 shares of common stock with an aggregate exercise price of $0.01 per share in connection with financing.  These warrants were valued at $6,940 using the fair value of the underlying shares on the date of issuance.

·   During December 2008, we issued warrants to purchase 280,485 shares of common stock with an aggregate exercise price of $0.01 per share in connection with financing.  These warrants were valued at $277,889 using the fair value of the underlying shares on the date of issuance.

t)   During November 2008, we issued warrants to purchase 25,000 shares of common stock with an aggregate exercise price of $1.00 per share in connection with corporate social responsibility programs.  These warrants were valued at $10,959 using the fair value of the underlying shares on the date of issuance.

u)   During 2008 we issued options to purchase a total of 66,539 shares of common stock with an aggregate grant date fair value of $1.37 per share to employees and non-employees under the 2004 Stock Option Plan for employment and services.  Net of cancellations and forfeitures for the period, these options were valued at $89,957 in total using the fair value of the underlying shares on the dates of issuance.

v)   During the period May 2008 through December 2008 we issued warrants to purchase a total of 115,500 shares of common stock for services, valued at 143,687 in total, as follows:

·   During May 2008, we issued warrants to purchase 8,000 shares of common stock with an aggregate exercise price of $0.01 per share in connection with financial advisory services.  These warrants were valued at $19,931 using the fair value of the underlying shares on the date of issuance.

·   During November 2008, we issued warrants to purchase 100,000 shares of common stock with an aggregate exercise price of $0.01 per share in connection with consulting services related to our GSA contract.  These warrants were valued at $120,429 using the fair value of the underlying shares on the date of issuance.

·   During December 2008, we issued warrants to purchase 7,500 shares of common stock with an aggregate exercise price of $1.00 per share in connection with rent expense.  These warrants were valued at $3,327 using the fair value of the underlying shares on the date of issuance.

w)   During the period January through April 2009 we sold a total of 117,500 shares of common stock to 4 purchasers for total cash proceeds of $117,500 in a series of transactions related to a private placement of common stock.

x)   During December 2009, we issued 125,000 shares for warrants exercised for proceeds of $1,250.

y)   During the period June through December 2009 we issued warrants to purchase a total of 210,998 shares of common stock with an aggregate exercise price of $1.19 per share in connection with financing.  These warrants were valued at $135,729 in total using the fair values of the underlying shares on the date of issuance.

z)   During June 2009 we issued warrants to purchase 125,000 shares, net of cancellations, of common stock with an aggregate exercise price of $0.01 per share for services related to investor relations and consulting related to our direct public offering.  These warrants were valued at $123,909 in total using the fair values of the underlying shares on the date of issuance.

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aa)   During December 2009 we issued warrants to purchase 163,415 shares of common stock with an aggregate exercise price of $0.01 per share in connection with rent expense.  These warrants were valued at a total of $132,574 using the fair values of the underlying shares on the dates of issuance, net of modifications to prior warrants.

bb)   During 2009 we issued options to purchase a total of 343,003 shares of common stock with an aggregate grant date fair value of $0.663 per share to employees and non-employees under the 2004 Stock Option Plan for employment and services.  Net of cancellations and forfeitures for the period, these options were valued at $133,604 in total using the fair value of the underlying shares on the dates of issuance.

cc)   During 2009 we recognized a total expense of $515,286 related to warrants issued for consulting, advisory and marketing services.

dd)   During 2009 we received $167,750 in cash in connection with warrants treated as prepaid warrants.

ee)   During the January 2010 we issued options to purchase a total of 180,000 shares of common stock with an aggregate grant date fair value of $0.80 per share to an employee under the 2004 Stock Option Plan.  These options were valued at $144,777 in total using the fair value of the underlying shares on the dates of issuance.  Of this amount, we recognized expenses of $19,304 and $28,955 during 1Q 2010 and 2Q 2010 respectively.

ff)   During the period January through June 2010 we issued warrants to purchase a total of 42,000 shares of common stock with an aggregate exercise price of $0.01 per share in connection with financing.  These warrants were valued at $41,623 in total using the fair values of the underlying shares on the date of issuance.  Of this amount, we recognized expenses of $20,815 and $20,809 during 1Q 2010 and 2Q 2010 respectively.

gg)   In March 2010 we issued warrants to purchase 270,000 shares of common stock with an aggregate exercise price of $2.50 per share in connection with a license agreement.  These warrants were valued at a total of $70,267 using the fair values of the underlying shares on the dates of issuance, net of modifications to prior warrants

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*
3.7	Second Amended Certificate of Designations Series A Convertible Preferred Stock
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*

__________________

* Previously filed as an exhibit to our Form S-1/A filed with the SEC on August 12, 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 *
10.5.2	Third Modification of Agreement of Note with Agave Resources, LLC dated August 30, 2010
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 *
10.6.2	Third Modification of Agreement of Note with JTR Investments, Limited dated August 30, 2010
10.7	“Senior Note” Board Approval, dated November 1, 2008*

 ________________________

* Previously filed as an exhibit to our Form S-1/A filed with the SEC on August 12, 2009.

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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*
10.8.1	Exhibits to 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*
10.10.1	Voting Stock Option Plan as Amended and Restated July 19, 2004
10.11	Form of Subcontractor Agreement and Assignment of Intellectual Property*
10.12	Form of Lock-up Agreement-Common Stock*
10.12.1	Addendum to Lock-up Agreements dated September 8, 2010
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*

________________________

* Previously filed as an exhibit to our Form S-1/A filed with the SEC on August 12, 2009.

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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*
10.26	Cancellation Agreement and Mutual Release with RKH Capital, dated June 22, 2009
10.27	Sinacola Commercial Properties, Ltd. Letter Agreement, dated December 10, 2009
10.28	Note Agreement with Tony & Judy Alcedo Family Trust, dated December 10, 2009
10.28.1	Modification of Agreement dated September 1, 2010
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
10.32	Federal Supply Schedule Contract V797P-41 53b effective November 15, 2008 through November 14, 2013
10.33	Form of Distribution Agreement
14.1	Code of Ethics*
15.1	Report of Independent Registered Public Accounting Firm
16.1	Letter from the Blackwing Group, LLC dated August 16, 2010
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
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 Prospectuses 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 October 4 , 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: October 4 , 2010

/s/ Donald Reed

Donald Reed

Director

Date: October 4 , 2010

/s/ Vicki Jones

Vicki Jones

Director

Date: October 4 , 2010

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EX-3.7

EXHIBIT 3.7

OXYSURE SYSTEMS, INC.

Second Amended Certificate of Designations

Series A Convertible Preferred Stock

Par Value $0.0005 per share

_________________

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

__________________

The undersigned, Julian Ross, Chief Executive Officer of OxySure Systems, Inc., a Delaware corporation (hereinafter called the “Corporation”), DOES HEREBY CERTIFY that the following is a true and correct copy of a resolution duly adopted by unanimous written consent of the Board of Directors of the Corporation on March 22, 2006, and that the resolution has not been rescinded or amended and is in full force and effect as of the date hereof:

RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board”) by the provisions of the Certificate of Incorporation of the Corporation (as amended from time to time, the “Certificate of Incorporation”), there hereby is created, out of the five million (5,000,000) shares of Preferred Stock, par value $0.0005 per share, of the Corporation authorized in Article IV of the Certificate of Incorporation (“Preferred Stock”), a series of Preferred Stock of the Corporation consisting of 3,143,237 shares, having the following powers, designations, preferences and relative participating, optional and other rights, and the following qualifications, limitations and restrictions:

1.           Designation; Number of Shares; Par Value.  The shares of such series will be designated as “Series A Convertible Preferred Stock” (the “Series A Preferred”).  The number of shares of Series A Preferred will be limited to 3,143,237.  The original issue price of the Series A Preferred is $1.00 per share (the “Original Issue Price”).

2.           Rank.  The Series A Preferred will rank, with respect to rights on Liquidation (as defined in Section 4(c)), (a) senior to the common stock, par value $0.0004 per share, of the Corporation (the “Common Stock”) and each other class of capital stock or series of Preferred Stock established after the date of this Certificate of Designations that does not expressly provide that it ranks senior to or on parity with the Series A Preferred as to rights on Liquidation (collectively referred to as “Junior Securities”), (b) on a parity with each other class of capital stock or series of Preferred Stock established after the date of this Certificate of Designations that expressly provides that such series will rank on a parity with the Series A Preferred as to rights on Liquidation (collectively referred to as “Parity Securities”) and (c) junior to each other class of capital stock or series of Preferred Stock established after the date of this Certificate of Designations that expressly provides that such series will rank senior to the Series A Preferred as to rights on Liquidation (collectively referred to as “Senior Securities”).

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3.           Dividends. The holders of shares of Series A Preferred Stock shall be entitled to receive dividends quarterly in arrears in the amount of one cent ($.01) per share, which shall be non-cumulative.  The dividends payable hereunder shall be payable in cash quarterly on the last day of March, June, September and December with respect to the preceding quarter (“Dividend Payment Dates”), on a pro rata basis, if applicable; provided, however, no such dividend shall be earned or payable except out of funds legally available therefor.  All dividends as aforesaid shall be payable to the holders of Series A Preferred Stock of record on the Dividend Payment Date in question.

“Distribution” in this Section 3 means the transfer of cash or property without consideration, whether by way of dividend or otherwise (except a dividend in shares of the corporation) or the purchase or redemption of shares of the corporation for cash or property.  The time of any distribution by way of dividend shall be the date of declaration thereof and the time of any distribution by purchase or redemption of shares shall be the day on which cash or property is transferred by the corporation, whether or not pursuant to a contract of an earlier date; provided that where a negotiable debt security is issued in exchange for shares, the time of the distribution is the date when the corporation acquires the shares in such exchange.

The Corporation may not declare, pay or set aside for payment any dividend or distribution (whether in cash, securities or other property) on shares of Common Stock or other Junior Securities (other than dividends on Common Stock payable solely in additional shares of Common Stock or rights to acquire shares of Common Stock), unless such dividend or distribution is also paid or made on the Series A Preferred as though such shares of Series A Preferred had been converted into shares of Common Stock in accordance with Section 5 at the record date for the determination of stockholders entitled to such dividends, assuming for this purpose only that shares of Series A Preferred are convertible into fractional shares of Common Stock.

4.           Liquidation Preference.  Upon the occurrence of a Liquidation, distributions to the holders of Series A Preferred will be made in the following manner:

(a)           Priority of Distributions to Series A Preferred on Liquidation.  After payment or provision for payment of the Corporation’s debts and other liabilities and any payments and distributions payable to the holders of any Senior Securities has been made, the holders of Series A Preferred then outstanding will be entitled to receive, prior and in preference to any distribution of any assets or surplus funds of the Corporation to the holders of shares of Common Stock or other Junior Securities by reason of their ownership of such stock, an amount equal to the Series A Liquidation Preference (as defined in Section 4(c)).  If, upon any Liquidation, the assets and surplus funds of the Corporation are insufficient to make payment in full of the Series A Liquidation Preference and any payments and distributions payable to the holders of any Parity Securities, then such assets and funds will be distributed ratably among the holders of Series A Preferred and the holders of Parity Securities then outstanding in proportion to the full amounts to which they would otherwise be entitled.

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(b)           Valuation of Non-Cash Assets.  If any of the assets distributed by the Corporation upon a Liquidation is other than cash, its value will be deemed to be its fair market value determined as follows:

(i)           Securities not subject to restrictions on free marketability will be valued as follows: (A) if traded on a securities exchange or through the Nasdaq National Market, the value will be deemed to be the average of the closing prices of the securities on such exchange over the thirty (30) day period ending on the business day immediately prior to date of the Liquidation; (B) if actively traded over-the-counter, the value will be deemed to be the average of the closing sale price, or, if there is no sale on a particular date, the closing bid price, over the thirty (30) day period ending on the business day immediately prior to date of the Liquidation; and (C) if there is no active public market, the value will be the fair market value thereof, as determined in good faith by the Board.

(ii)           Securities subject to restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) will be valued in such a manner as to make an appropriate discount from the market value determined pursuant to Section 4(b)(i) to reflect the approximate fair market value thereof, as determined in good faith by the Board.

(iii)           Any other asset will be valued at its fair market value as determined in good faith by the Board.

(c)           Certain Definitions.

(i)           “Liquidation” means the occurrence of any one of the following events:  (A) any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (other than a liquidation, dissolution or winding up effected for the purpose of reincorporating the Corporation in another jurisdiction wherein the rights of the Series A Preferred are not adversely affected) or (B) at the election of the holders of a majority of the shares of Series A Preferred then outstanding, (i) the sale, transfer or other disposition of all or substantially all of the assets of the Corporation (other than a transfer by pledge or mortgage to a bona fide lender) or (ii) the merger or consolidation of the Corporation with or into any other entity, or the consummation of any other transaction or series of related transactions by the stockholders of the Corporation, that results in the stockholders of the Corporation immediately prior to such merger, consolidation, transaction or series of related transactions owning less than a majority of the voting securities of the Corporation (or the surviving entity in any such merger or consolidation) immediately following such merger, consolidation, transaction or series of related transactions.

(ii)           “Series A Liquidation Preference” means, for each share of Series A Preferred, 100% of the Original Issue Price (as adjusted for any stock splits, stock dividends, recapitalizations or the like affecting the Series A Preferred).

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5.           Conversion Rights.  The holders of shares of Series A Preferred will have conversion rights as follows:

(a)           Optional Conversion of Series A Preferred.  Each share of Series A Preferred will be convertible at any time, at the option of the holder thereof, into fully paid and nonassessable shares of Common Stock.  Any holder of Series A Preferred may exercise the conversion rights pursuant to this Section 5(a) as to all of such holder’s shares of Series A Preferred, or any portion thereof, by delivering to the Corporation during regular business hours, at the Corporation’s principal office or at the office of any transfer agent of the Corporation for such Series A Preferred, as the case may be, or at such other place as may be designated by the Corporation, the certificate or certificates for the shares of Series A Preferred to be converted, duly endorsed for transfer to the Corporation (if required by it), accompanied by written notice stating that the holder elects to convert such shares.

(b)           Automatic Conversion of Series A Preferred.  All shares of Series A Preferred will automatically convert into fully paid and nonassessable shares of Common Stock upon the closing of the sale of Common Stock, in a firm-commitment, underwritten public offering registered under the Securities Act of 1933, as amended (the “Securities Act”), and lead managed by an underwriter approved by the Board, at a public offering price of at least $5.00 per share (as adjusted for any stock splits, stock dividends, recapitalizations or the like affecting the Common Stock) resulting in gross proceeds to the Corporation of at least $ 3,000,000 (net of underwriting commissions and expenses).

(c)           Conversion Rate.  The number of shares of Common Stock into which each share of Series A Preferred will be converted pursuant to this Section 5 will be determined by dividing the Original Issue Price by $0.82 (the “Initial Conversion Price”) such that each share of Series A Preferred will be convertible into (1.22) shares of Common Stock, subject to adjustment as provided in Section 6.

(d)           Conversion Date.  Conversion will be deemed to be effective on the date when all required deliveries for option conversion set forth in Section 5(a) have been made or the conditions for automatic conversion set forth in Section 5(b) have been satisfied, and such date is referred to herein as the “Conversion Date.”  As promptly as practicable after the Conversion Date, the Corporation will issue and deliver to the holder a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled and a check for cash with respect to any fractional interest as provided in Section 5(e).  The holder will be deemed to have become a stockholder of record of Common Stock on the applicable Conversion Date unless the transfer books of the Corporation are closed on that date, in which event the holder will be deemed to have become a stockholder of record of Common Stock on the next succeeding date on which the transfer books are open, but the Conversion Price will be that in effect on the Conversion Date.  Upon conversion of only a portion of the number of shares of Series A Preferred represented by a certificate surrendered for conversion, the Corporation will issue and deliver to the holder a new certificate for the number of shares of Series A Preferred represented by the unconverted portion of the certificate surrendered.

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(e)           Fractional Shares.  No fractional shares of Common Stock will be issued upon conversion of shares of Series A Preferred.  Instead of issuing any fractional shares of Common Stock that would otherwise be issuable upon conversion of any shares of Series A Preferred, the Corporation will pay a cash amount in respect of such fractional interest equal to the fair market value of such fractional interest as determined in good faith by the Board.  If the shares of Series A Preferred being converted by a holder at one time are represented by more than one certificate surrendered for conversion, the number of whole shares of Common Stock issuable upon such conversion will be computed on the basis of the aggregate number of shares of Series A Preferred to be converted and represented by all such surrendered certificates.

(f)           Taxes.  The holder of the Series A Convertible Preferred Stock is responsible for any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series A Preferred pursuant hereto.  In addition, the Corporation will not be required to pay any tax that may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred so converted were registered.

(g)           Reservation of Shares.  The Corporation will at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of the Series A Preferred, the full number of shares of Common Stock issuable upon the conversion of all shares of Series A Preferred from time to time outstanding.  The Corporation will from time to time (subject to obtaining necessary director and stockholder action), in accordance with the laws of the State of Delaware, increase the authorized amount of its Common Stock if at any time the authorized number of shares of its Common Stock remaining unissued will not be sufficient to permit the conversion of all of the shares of Series A Preferred at the time outstanding.

(h)           No Reissuance of Shares.  All certificates of Series A Preferred surrendered for conversion will be appropriately canceled on the books of the Corporation, and the shares so converted will not thereafter be issuable by the Corporation.

6.           Adjustment of the Conversion Price.  The Conversion Price in effect from time to time will be subject to adjustment from time to time as follows:

(a)           Stock Dividends, Stock Splits or Combinations.  If the Corporation, at any time after the effective date of this Certificate of Designations (the “Effective Date”), subdivides the outstanding shares of Common Stock, or issues a dividend on its outstanding Common Stock in shares of Common Stock or securities exchangeable or convertible into shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or the issuance of such dividend will be proportionately decreased, and in case the Corporation at any time combines the outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such combination will be proportionately increased, effective at the close of business on the date of such subdivision, dividend or combination, as the case may be.

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(b)           Other Distributions.  If the Corporation, at any time after the Effective Date, declares a distribution on its outstanding Common Stock payable in securities (other than shares of Common Stock or securities exchangeable or convertible into shares of Common Stock), evidences of indebtedness issued by the Corporation or other persons or other assets (other than cash dividends), then, in each such case, the holders of Series A Preferred will be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock into which their shares of Series A Preferred are convertible as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution.

(c)           Reorganization or Reclassification.  Upon the effectiveness of any capital reorganization (other than a subdivision or combination of outstanding shares of Common Stock or a Liquidation) or any reclassification of the capital stock of the Corporation, each share of Series A Preferred will thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock deliverable upon conversion of such Series A Preferred would have been entitled upon such reorganization or reclassification; and, in any such case, appropriate adjustment (as determined in good faith by the Board) will be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series A Preferred, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the Conversion Price) will thereafter be applicable, as nearly as reasonably may be, in relation to any share of stock or other property thereafter deliverable upon the conversion of the Series A Preferred.

(d)           Discount Sale of Common Stock.  The Conversion Price will be adjusted in accordance with this Section 6(d) in the event that the Corporation consummates any Discount Sale of Common Stock (as defined in Section 6(d)(vii)).  The provisions of this Section 6(d) will similarly apply to successive Discount Sales of Common Stock.

(i)           Weighted Average.  Upon the consummation of any Discount Sale of Common Stock, the Conversion Price theretofore in effect will become the greater of the Minimum Conversion Price or the price, calculated to the nearest cent, obtained by dividing:

(A)           an amount equal to the sum of (1) the then-existing Conversion Price multiplied by the number of shares of Common Stock outstanding immediately prior to such Discount Sale of Common Stock (assuming the full exercise of all options, rights and warrants then exercisable for Equity Securities and the full conversion or exchange of all Equity Securities that are then convertible or exchangeable for Common Stock, including all shares of the Series A Preferred, at the rate of conversion or exchange then in effect) and (2) an amount equal to the aggregate consideration received by the Corporation upon such Discount Sale of Common Stock;

by

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(B)           the number of shares of Common Stock outstanding immediately after such Discount Sale of Common Stock (assuming the full exercise of all options, rights and warrants then exercisable for Equity Securities and the full conversion or exchange of all Equity Securities that are then convertible or exchangeable for Common Stock, including all shares of the Series A Preferred, at the rate of conversion or exchange then in effect).

(ii)           Valuation of Consideration.  In the case of a Discount Sale of Common Stock for cash, the “aggregate consideration received” by the Corporation therefor will be deemed to be the amount of cash received before deducting therefrom any commissions or expenses paid by the Corporation.  In case of a Discount Sale of Common Stock for consideration other than cash, or consideration partly other than cash, the value of the “aggregate consideration received” other than cash received by the Corporation for such shares will be the fair market value of such property received by the Corporation as determined in accordance with Section 4(b).

(iii)           Issuance of Options to Purchase Common Stock.  If the Corporation issues any options, rights or warrants to subscribe for or purchase shares of Common Stock, all shares of Common Stock issuable upon the exercise of such options, rights or warrants will be deemed issued as of the date such options, rights or warrants are issued, and the amount of the “aggregate consideration received” by the Corporation for such deemed issuance of Common Stock will be deemed to be the total of (A) the amount of consideration received by the Corporation, if any, upon the issuance of such options, rights or warrants, plus (B) the minimum aggregate consideration, if any, other than the surrender of such options, rights or warrants, to be received by the Corporation upon the exercise of such options, rights or warrants for shares of Common Stock.

(iv)           Issuance of Convertible Securities.  If the Corporation issues any obligations or shares of stock that are, or may be under specified circumstances, convertible into or exchangeable for Common Stock, all shares of Common Stock issuable upon the conversion or exchange of such obligations or shares will be deemed issued as of the date such obligations or shares are issued, and the amount of the “aggregate consideration received” by the Corporation for such deemed issuance of Common Stock will be deemed to be the total of (A) the amount of consideration received by the Corporation, if any, upon the issuance of such obligations or shares, plus (B) the minimum aggregate consideration, if any, other than the surrender of such obligations or shares, to be received by the Corporation upon such conversion or exchange for shares of Common Stock.

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(v)           Issuance of Options to Purchase Convertible Securities.  If the Corporation issues any options, rights or warrants to subscribe for or purchase any obligations or shares of stock that are, or may be under specified circumstances, convertible into or exchangeable for Common Stock, all shares of Common Stock issuable upon the exercise of such options, rights or warrants for such obligations or shares and the concurrent conversion or exchange or such obligations or shares for shares of Common Stock will be deemed issued as of the date such options, rights or warrants are issued, and the amount of the “aggregate consideration received” by the Corporation for such deemed issuance of Common Stock will be deemed to be the total of (A) the amount of consideration received by the Corporation, if any, upon the issuance of such options, rights or warrants, plus (B) the minimum aggregate consideration, if any, other than the surrender of such options, rights or warrants, to be received by the Corporation upon the exercise of such options, rights or warrants for such obligations or shares, plus (C) the minimum aggregate consideration, if any, other than the surrender of such obligations or shares, to be received by the Corporation upon such conversion or exchange of such obligations or shares for shares of Common Stock.

(vi)           Recalculation Upon Expiration of Options.  On the expiration of any options, rights or warrants referred to in Section 6(d)(iii) or Section 6(d)(v) or the termination of any right of conversion or exchange referred to in Section 6(d)(iv) or Section 6(d)(v) or upon any change in the number of shares of Common Stock deliverable or actually delivered upon the exercise of such options, rights or warrants or upon the conversion of or exchange of such convertible or exchangeable securities, the Conversion Price then in effect will forthwith be readjusted to the Conversion Price that would have been obtained had the adjustments made upon the issuance of such option, right or convertible or exchangeable securities been made upon the basis of the delivery of only the number of shares of Common Stock actually delivered or to be delivered upon the exercise of such options, rights or warrants or upon the conversion or exchange of such securities.  No readjustment pursuant to this Section 6(d)(vi) will have the effect of increasing the Conversion Price to an amount that exceeds the lower of (A) the Conversion Price on the original adjustment date or (B) the Conversion Price that would have resulted from other Discount Sales of Common Stock occurring between the Effective Date and such adjustment date; provided, however, that nothing in this Section 6(d)(vi) will limit the application of Section 6(a) under the circumstances described therein.

(vii)           Certain Definitions.

(A)           “Discount Sale of Common Stock” means any issuance, other than an Exempt Issuance (as defined below), by the Corporation of any Equity Security after the First Issue Date for consideration per share of Common Stock, or per share of Common Stock into which such Equity Security is exercisable and/or convertible, that is less than the Conversion Price in effect immediately prior to the effective time of such issuance or sale.

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(B)           “Equity Security” means (1) Common Stock, (2) any right or option to purchase Common Stock, (3) any obligation or security convertible into or exchangeable for Common Stock and (4) any right or option to purchase any obligation or security convertible into or exchangeable for Common Stock.

(C)           “Exempt Issuance” means any issuance of Equity Securities (1) pursuant to any employee benefit plan of the Corporation in effect on the First Issue Date; (2) to officers, directors, employees or consultants of the Corporation pursuant to the grant or exercise of options that are granted pursuant to any employee benefit plan approved by the shareholders of the Corporation after the First Issue Date; (3) upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the First Issue Date, provided that the terms of any such right, option, obligation or security are not amended or otherwise altered on or after the First Issue Date; (4) in connection with the sale and issuance of shares of Series A Preferred, shares of Series B Preferred, shares of Series C Preferred, and Senior Convertible Notes on the First Issue Date (including (a) the issuance of options or warrants to the initial purchasers of Series A Preferred, Series B Preferred, Series C Preferred, and Senior Convertible Notes and (b) the conversion, redemption, exchange or exercise of such Series A Preferred, Series B Preferred, Shares of Series C Preferred, Senior Convertible Notes, options and warrants in accordance with their respective terms), provided that the terms of any such securities are not amended or otherwise altered on or after the First Issue Date; (5) in connection with any stock dividend, stock subdivision, reorganization or recapitalization described in Section 6(a) or Section 6(c); (6) (a) to suppliers, customers or strategic partners of the Corporation in connection with a commercial relationship with the Corporation, the primary purpose of which is not to raise capital, and (b) as consideration for mergers or consolidations or acquisitions of businesses or their tangible or intangible assets, other than transactions in which cash or cash equivalents represent a majority of the assets acquired; (7) in connection with leases; and (8) to former employees in satisfaction of severance obligations of the Corporation.

(D)           “First Issue Date” means the date on which the first shares of Series A Preferred are issued.

(E)           “Minimum Conversion Price” means (1) if approved by the shareholders (and such approval is sufficient, under the rules and regulations of the Principal Market, to permit the conversion of Series A Preferred at a conversion price not less than par value), the par value of the Common Stock, or (2) if otherwise, the Issue Date Market Price.

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(e)           Computation and Notice.  Upon the occurrence of each adjustment of any Conversion Price pursuant to this Section 6, the Corporation will promptly compute such adjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred affected thereby a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based.

(f)           No Impairment.  The Corporation will not, by amendment of its Certificate of Incorporation or this Certificate of Designations or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Certificate of Designations and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of Series A Preferred against impairment.

7.           Call and Redemption Rights.  Subject to the limitations set forth in Section 8, the shares of Series A Preferred will be subject to call and redemption as follows:

All (but not less than all) of the outstanding shares of Series A Preferred Stock may be called at any time by the Corporation within ten (10) years, but not prior to two (2) years after issuance and shall be surrendered by the holders of such shares upon at least thirty (30) days prior notice to such holders and upon the payment, on the appropriate date prescribed in such notice, of one hundred percent (100%) of Redemption Value, which is One Dollar ($1.00) per share, plus an amount equal to all unpaid dividends thereon (up to and including the date fixed for redemption).  The holders of Series A Preferred shall be entitled to look solely to the assets of the Corporation for redemption proceeds.

8.           Voting Rights.  The holders of Series A Preferred will have voting rights as follows:

(a)           Voting Together With Common Stock.  The holder of each share of Series A Preferred issued and outstanding will have the right to one vote for each share of Common Stock into which such share of Series A Preferred could be converted on the record date for the vote or consent of stockholders.  Each holder of shares of Series A Preferred will be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation.  The holders of Series A Preferred will vote with the holders of the Common Stock (and the holders of shares of the Series A Preferred will have voting rights and powers equal to those of the holders of the Common Stock) upon all matters upon which holders of Common Stock have the right to vote, except those matters required by law, the Certificate of Incorporation or this Certificate of Designations to be submitted to a class or series vote.  Fractional votes will not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares of Common Stock into which shares of Series A Preferred held by each holder could be converted) will be rounded to the nearest whole number (with one-half being rounded upward).

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(b)           Special Voting Rights of the Series A Preferred.  The Corporation will not take any of the following actions without first obtaining the approval (by vote or written consent in the manner provided by law) of the holders of at least a majority of the total number of shares of Series A Preferred then outstanding, voting separately as a class:

(i)           any amendment or alteration of or addition to the Certificate of Incorporation or this Certificate of Designations that has an adverse affect on the rights, preferences or privileges of the Series A Preferred;

(ii)           a Liquidation.

9.           Notices.  All notices, demands and other communications hereunder must be in writing and will be deemed to have been duly given if delivered by hand or when sent by facsimile transmission (with receipt confirmed), provided a copy is also sent by express (overnight, if possible) courier, addressed (a) in the case of a holder of the Series A Preferred, to such holder’s address of record and (b) in the case of the Corporation, to the Corporation’s principal executive offices to the attention of the Corporation’s Secretary.

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 IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be signed by its Chief Executive Officer on this 22nd day of March, 2006.

By:	/s/ Julian Ross
	Julian Ross
	OxySure Systems, Inc.

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EX-10.5.2

EXHIBIT 10.5.2

THIRD MODIFICATION OF AGREEMENT

WHEREAS, OxySure Systems, Inc. (“OxySure”) and Agave Resources, LLC. (“Agave”) (OxySure and Agave jointly, the “Parties”) entered into that certain Promissory Note (“Note”) dated 4/15/08 in the principal amount of $750,000; and

WHEREAS, The Parties have agreed that it is in their best interests to modify the terms of the Note.

NOW, WHEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

Section 1 of the Note shall be amended as follows:

Maturity Date.  The then outstanding Principal Amount shall become due and payable on the 48 month anniversary of the Issue Date (the “Maturity Date”). “Issue Date” means the later of the date of first issuance of this Note as set forth above or the date of signature hereof.

All other provisions of the Note shall remain unchanged.

Agreed to and accepted:

By: /s/Don Reed	By:  /s/Julian T. Ross
Mr. Don Reed, President	Mr. Julian Ross, CEO
Agave Resources, LLC	OxySure Systems, Inc.
Date:  8/30/10	Date: 8/30/10

EX-10.6.2

EXHIBIT 10.6.2

THIRD MODIFICATION OF AGREEMENT

WHEREAS, OxySure Systems, Inc. (“OxySure”) and JTR Investments, Ltd. (“JTR”) (OxySure and JTR jointly, the “Parties”) entered into that certain Promissory Note (“Note”) dated 3/1/08 in the principal amount of $250,000; and

WHEREAS, The Parties have agreed that it is in their best interests to modify the terms of the Note.

NOW, WHEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

Section 1 of the Note shall be amended as follows:

Maturity Date. The then outstanding Principal Amount shall become due and payable on the 48 month anniversary of the Issue Date (the “Maturity Date”). “Issue Date” means the later of the date of first issuance of this Note as set forth above or the date of signature hereof.

All other provisions of the Note shall remain unchanged.

Agreed to and accepted:

By:   /s/Julian T. Ross	By: /s/Don Reed
Mr. Julian Ross	Mr. Don Reed,
President, JTR Management, LLC	Director, and on Behalf of the Board of Directors
General Partner, JTR Investments, Ltd.	OxySure Systems, Inc.
Date:  8/30/10	Date: 8/30/10

EX-10.8.1

EXHIBIT 10.8.1

EXHIBIT A

ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

METHOD AND APPARATUS FOR GENERATING OXYGEN

BACKGROUND OF THE INVENTION

Field of the Invention

The invention relates generally to oxygen generation and, more particularly, to robust oxygen generation from a solid or liquid.

Description of the Related Art

Highly pure oxygen gas is used within a variety of applications.  More particularly, medical devices use highly pure oxygen for patient care.  However, production or generation, transportation, delivering, usage and storage of oxygen can be both cumbersome and dangerous.

Typical devices today utilize a variety of means to store and produce oxygen.  Far and above, the most common apparatus is a compressed gas tank.  The compressed gas tank, though, is heavy, requires a regulator, and can be quite dangerous.  Oxygen is a very reactive element that can be explosive.  Therefore, compressed tanks of pure Oxygen gas can pose a very realistic fire or explosive hazard.

There are a variety of other Oxygen generation devices that utilize chemical reactions.  For example, Oxygen generation canisters are used in passenger aircraft for supplying Oxygen to passengers if the aircraft depressurizes.  These canisters, though, can be very unstable devices, especially once the canisters have been deemed to have outlived their respective shelf-lives.  In addition, these canisters typically require a spark to initiate the chemical reaction.

Moreover, with both compressed gas and chemical generators, each type typically requires metal containers and safety equipment.  These metal containers are highly subjected to corrosion, which could render the container useless. These metal containers may also require ongoing maintenance, and have moving parts.  Also, utilization of metal containers can be quite heavy.  As a consequence, they can limit the range of applications for usage, or they may not be well-suited to a broad range of applications.

Therefore, there is a need for a method and/or apparatus for generating Oxygen that is more robust and less hazardous and that addresses at least some of the problems associated with conventional methods and apparatuses for producing or generating, transporting, using, delivering or storing Oxygen.

SUMMARY OF THE INVENTION

The present invention provides an apparatus for generating Oxygen.  The apparatus comprises a vessel.  Also, the apparatus comprises an aqueous, Oxygen producing solution contained in the vessel, wherein the resulting waste solution is at least configured to be non-toxic and wherein the resulting waste solution is at least configured to not be an environmental hazard.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

BRIEF DESCRIPTION OF THE DRAWINGS

For a more complete understanding of the present invention and the advantages thereof, reference is now made to the following descriptions taken in conjunction with the accompanying drawings, in which:

FIGURE 1 is a block diagram depicting an Oxygen generator;

FIGURE 2 is a flow chart depicting a first method of producing Oxygen;

FIGURE 3 is a flow chart depicting a second method of producing Oxygen; and

FIGURE 4 is a flow chart depicting a third method of producing Oxygen.

DETAILED DESCRIPTION

In the following discussion, numerous specific details are set forth to provide a thorough understanding of the present invention.  However, those skilled in the art will appreciate that the present invention may be practiced without such specific details.  In other instances, well-known elements have been illustrated in schematic or block diagram form in order not to obscure the present invention in unnecessary detail.  Additionally, for the most part, details concerning mechanical connections, simple inorganic chemistry, and the like, have been omitted inasmuch as such details are not considered necessary to obtain a complete understanding of the present invention, and are considered to be within the understanding of persons of ordinary skill in the relevant art.

Referring to FIGURE 1 of the drawings, the reference numeral 100 generally designates an Oxygen generator.  The Oxygen generator comprises a vessel 102, a humidifier 104, output line 106, and a usage device 108.

The vessel 102 contains the compartment where a chemical reaction that produces the Oxygen takes place.  The vessel 102 can be composed of a variety of materials.  For example, the vessel can be composed of polypropylene.  However, the Oxygen generator 100 only requires that the vessel 102 be composed of a material that can withstand, or which has a conductivity to withstand, the heat generated inside the vessel 102 during the chemical reaction.  Typically, the walls of the vessel can vary in thickness.  However, the Oxygen generator 100 only requires that the walls of the vessel 102 have a thickness that can withstand the internal pressures that result from aqueous solutions and gas pressure.

The oxygen generated within the vessel 102 is a result of a chemical reaction.  The chemical reaction takes place in an aqueous environment so, that upon complete depletion of a limiting reactant, the remaining waste solution can be discarded into conventional waste disposal systems.  The waste solution is also not an environmental hazard as defined by generally accepted systems for measuring material properties, such as the Environmental Protection Agency’s (EPA) Risk Screening Environmental Indicators Model.  For example, the waste solution can be soda ash dissolved in water.

In order to achieve the desired Oxygen generation and environmental acceptability, there are several chemicals that can be utilized.  The limiting reactant should be a water-soluble powder or liquid that is non-toxic, not an environmental hazard, not an explosive, not a fire hazard, and have a long shelf-life.  Non-toxic, not a fire hazard, and not an explosive can be defined as compounds that are not deemed to be, respectively, non-toxic, a fire hazard, or an explosive, by a generally accepted system for measuring material properties, such as the Hazardous Materials Information System (HMIS). Also, a long shelf-life can be defined as a material that can be stored for an indefinite period of time when stored below the standard temperature of 86° Fahrenheit (F).  For example, Sodium Percarbonate (2Na2CO3·3H2O2) powder can be an acceptable material that can be dissolved in water.  The resulting waste liquid from using Sodium Percarbonate (2Na2CO3·3H2O2) in an Oxygen generation reaction is an aqueous solution of Soda Ash.  There are also a variety of other chemicals that can be used as the limiting reactant, such as Sodium Perborate (NaBHO3).

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

These powders or liquids, though, can also require the use of a catalyst.  The catalysts, too, should be water-soluble, non-toxic, not an environmental hazard, not an explosive, not a fire hazard, and have a long shelf-life.  Typically, a metal-based catalyst can be used to initiate the chemical reaction, combined with a hydrated salt to absorb the heat generated during the reaction.  For example, a combination of a Manganese compound and a Sodium-based compound or similar hydrated salt can be used.  There are also a variety of catalysts that can be used, such as compounds containing Iron or Iron Oxides and Copper or Copper Oxides.

Intuitively, the flow rate from the generators can be varied.  Depending on the amount of the limiting reactant and the amount of the catalyst, the flow rate varies.  Generation of Oxygen could occur continuously or for predetermined periods of time depending on the amount of the limiting reactant and the catalyst.

Once a limiting reactant and, possibly, a catalyst have been added to water contained within the vessel 102, then a humidifier 104 allows for the humidification and/or cooling of Oxygen generated within the vessel 102.  Typically, the humidifier 104 humidifies, or adds water vapor, to the volume of Oxygen gas being generated.  The various configurations of the humidifier can also vary the amount of humidity that can be added to the flow of Oxygen.  For example, the humidifier 104 can be configured for use by an individual where the relative humidity of the Oxygen gas is 65%. The humidifier can have a variety of configurations that can also vary the temperature of the Oxygen out of the vessel 102.

Attached to the humidifier 104 is a carrying tube 106.  The carrying tube carries to a usage device 108.  The tube may be a variety of configurations.  For example, the carrying tube can be standard medical tubing.  Also, the carrying tube can be omitted in order to provide Oxygen to a room or compartment.  The usage device can also be a variety of configurations.  For example, the usage device can be a standard medical breathing mask.

Referring to FIGURE 2 of the drawings, the reference numeral 200 generally designates a flow chart depicting a first method of producing oxygen.

Steps 202, 204, 206, and 208 provide a first method for generating Oxygen that utilizes the Oxygen generator of FIGURE 1.  In step 202, water is added to the vessel 102 of FIG. 1.  In step 204, the limiting reactant powder is added to the water and dissolved.  In step 206, the catalyst, if any, is added to the aqueous solution containing the limiting reactant.  In step 208, the vessel 102 of FIG. 1 is sealed.  The Oxygen generated from the Oxygen generator of FIG. 1 can then be used for a variety of purposes.

Referring to FIGURE 3 of the drawings, the reference numeral 300 generally designates a flow chart depicting a second method of producing oxygen.

Steps 302, 304, and 306 provide a second method for generating Oxygen that utilizes the Oxygen generator of FIGURE 1.  In step 302, water is added to the vessel 102 of FIG. 1.  In step 304, the limiting reactant powder and the catalyst, if any, are simultaneously added to the water.  In step 306, the vessel 102 of FIG. 1 is sealed.  The Oxygen generated from the Oxygen generator of FIG. 1 can then be used for a variety of purposes.

Referring to FIGURE 4 of the drawings, the reference numeral 400 generally designates a flow chart depicting a third method of producing oxygen.

Steps 402, 404, and 406 provide a third method for generating Oxygen that utilizes the Oxygen generator of FIGURE 1.  In step 402, a liquid limiting reactant dissolved in water is added to the vessel 102 of FIG. 1.  In step 404, the catalyst, if any, is added to the liquid limiting reactant.  In step 406, the vessel 102 of FIG. 1 is sealed.  The Oxygen generated from the Oxygen generator of FIG. 1 can then be used for a variety of purposes.

It will further be understood from the foregoing description that various modifications and changes may be made in the preferred embodiment of the present invention without departing from its true spirit.  This description is intended for purposes of illustration only and should not be construed in a limiting sense.  The scope of this invention should be limited only by the language of the following claims.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

CLAIMS

1.    An apparatus for generating Oxygen, comprising:

a vessel; and

an aqueous, Oxygen producing solution contained in the vessel, wherein a resulting waste solution is at least non-toxic and wherein the resulting waste solution is at least not an environmental hazard.

2.    The apparatus of Claim 1, wherein the aqueous, Oxygen producing solution further comprises a reactant selected from the group consisting of Sodium Percarbonate (2Na2CO3·3H2O2) or Sodium Perborate (NaBHO3) dissolved in water.

3.    The apparatus of Claim 1 or 2, wherein the aqueous, Oxygen producing solution further comprises a water-soluble catalyst, wherein the water-soluble catalyst is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least  having a long shelf-life.

4.    The apparatus of Claims 1, wherein the aqueous, Oxygen producing solution further comprises a catalyst of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

5.    The apparatus of Claims 3, wherein the water-soluble catalyst further comprises a mixture of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

6.    The apparatus of Claims 1, wherein the aqueous, Oxygen producing solution further comprises a catalyst of metal oxide.

7.    The apparatus of Claims 3, wherein the water-soluble catalyst further comprises a metal oxide.

8.    The apparatus of Claim 1, wherein the apparatus further comprises a humidifier at least configured to be coupled to the vessel.

9.    The apparatus of Claim 8, wherein the apparatus further comprises a carrier tube at least configured to be attached the humidifier.

10.   An apparatus for generating Oxygen, comprising:

a vessel to at least contain an aqueous reaction; and

a water-soluble reactant to at least be used as an Oxygen producing reactant in the aqueous reaction, wherein the water-soluble reactant is at least be non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having long shelf-life.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

 

11.   The apparatus of Claim 10, wherein the water-soluble reactant further comprises a reactant selected from the group consisting of Sodium Percarbonate (2Na2CO3·3H2O2) or Sodium Perborate (NaBHO3) dissolved in water.

12.   The apparatus of Claim 10 or 11, wherein apparatus further comprises a water-soluble catalyst, wherein the water-soluble catalyst is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having long shelf-life.

13.   The apparatus of Claims 10, wherein apparatus further comprises a catalyst of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

14.   The apparatus of Claims 12, wherein the water-soluble catalyst further comprises a mixture of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

15.   The apparatus of Claims 10, wherein apparatus further comprises a catalyst of metal oxide.

16.   The apparatus of Claims 12, wherein the water-soluble catalyst further comprises a metal oxide.

17.   The apparatus of Claim 10, wherein the apparatus further comprises a humidifier at least configured to be coupled to the vessel.

18.   The apparatus of Claim 17, wherein the apparatus further comprises a carrier tube at least configured to be attached the humidifier.

19.   An apparatus for generating Oxygen, comprising:

a vessel to at least contain an aqueous reaction;

a water-soluble powder or liquid at least to be used as a reactant in the aqueous reaction, wherein the water-soluble powder is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having a long shelf-life; and

a water-soluble catalyst, wherein the water-soluble powder is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having a long shelf-life.

20.   The apparatus of Claim 19, wherein the water-soluble powder or liquid further comprises a reactant selected from the group consisting of Sodium Percarbonate (2Na2CO3·3H2O2) or Sodium Perborate (NaBHO3) dissolved in water.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

21.   The apparatus of Claim 19 or 20, wherein the water-soluble powder or liquid further comprises a water-soluble catalyst, wherein the water-soluble catalyst is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having a long shelf-life.

22.   The apparatus of Claims 19, wherein the water- soluble catalyst further comprises a catalyst of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

23.   The apparatus of Claims 21, wherein the water-soluble catalyst further comprises a mixture of Manganese Dioxide (MnO2) and Sodium Carbonate (Na2CO3).

24.   The apparatus of Claims 19, wherein water-soluble catalyst further comprises a catalyst of metal oxide.

25.   The apparatus of Claims 21, wherein the water-soluble catalyst further comprises a metal oxide.

26.   The apparatus of Claim 19, wherein the apparatus further comprises a humidifier at least configured to be coupled to the vessel.

27.   The apparatus of Claim 26, wherein the apparatus further comprises a carrier tube at least configured to be attached the humidifier.

28.   A method for operating an Oxygen producing generator, comprising:

filling a vessel with water;

dissolving a water-soluble powder or liquid at least  used as a Oxygen producing reactant, wherein the water-soluble powder is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having a long shelf-life.

29.   The method of Claim 28, wherein a the method further comprises:

dissolving a water-soluble catalyst after the water-soluble powder is dissolved, wherein the water-soluble powder is at least non-toxic, at least not an environmental hazard, at least not an explosive hazard, at least not a fire hazard, and at least having a long shelf-life.

30.   The method of Claim 28, wherein a the method further comprises:

dissolving a water-soluble catalyst simultaneously with the water-soluble powder, wherein the water-soluble powder is at least non-toxic, at least not an environmental hazard, at least configured not an explosive hazard, at least not a fire hazard, and at least having long shelf-life.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

METHOD AND APPARATUS FOR GENERATING OXYGEN

ABSTRACT

A method and apparatus are provided for generating Oxygen.  Water-soluble chemicals are mixed in water, and the result is medically pure Oxygen.  The water-soluble chemicals have long shelf-lives and are non-toxic, not an environmental hazard, not a fire hazard, and not an explosive hazard.  Once the reaction is complete, the remaining waste solution can be disposed of in a conventional waste disposal system with no adverse affects.  All of these attributes contribute to a safe, compact, and easily usable Oxygen generation system.

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

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ATTORNEY DOCKET NO	PATENT APPLICATION
ROSS 2864000

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EXHIBIT B

Word Mark	OXYSURE PURE OXYGEN
Goods and Services	IC 010. US 026 039 044. G & S: Medical devices, namely, oxygen generating apparatus, parts and fittings for such apparatus, namely, oxygen masks for medical use and refill packs. FIRST USE: 20080812. FIRST USE IN COMMERCE: 20080812
Mark Drawing Code	(3) DESIGN PLUS WORDS, LETTERS, AND/OR NUMBERS
Design Search Code	26.01.02 - Circles, plain single line; Plain single line circles 26.01.11 - Circles comprised of animals; Circles comprised of geometric figures; Circles comprised of humans; Circles comprised of letters or numerals; Circles comprised of plants; Circles comprised of punctuation; Letters, numerals, punctuation, geometric figures, objects, humans, plants or animals comprising a circle 26.01.21 - Circles that are totally or partially shaded.
Trademark Search Facility Classification Code	SHAPES-CIRCLE Circle figures or designs including semi-circles and incomplete circles SHAPES-COLORS-3-OR-MORE Design listing or lined for three or more colors SHAPES-OVALS Oval figures or designs including incomplete ovals and one or more ovals
Serial Number	78336372
Filing Date	December 4, 2003
Current Filing Basis	1A
Original Filing Basis	1A
Published for Opposition	May 24, 2005
Registration Number	3528998
International Registration Number	0837544
Registration Date	November 4, 2008
Owner	(REGISTRANT) OXYSURE SYSTEMS, INC. CORPORATION DELAWARE 10880 John W. Elliott Drive., STE. 600 FRISCO TEXAS 75034
Assignment Recorded	ASSIGNMENT RECORDED
Attorney of Record	Matthew C. Lipton
Disclaimer	NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE "PURE OXYGEN" APART FROM THE MARK AS SHOWN
Description of Mark	The color(s) blue and green is/are claimed as a feature of the mark. The mark consists of The word "OXYSURE" in green with a stylized letter "O". The words "PURE OXYGEN" in dark blue. All the words "OXYSURE" and "PURE OXYGEN" are substantially encircled by a dark blue oval shaped circle. The color green appears in the stylized letter "O" and the color dark blue appears in the oval.
Type of Mark	TRADEMARK
Register	PRINCIPAL
Live/Dead Indicator	LIVE

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EXHIBIT C

Word Mark	OXYSURE
Goods and Services	IC 010. US 026 039 044. G & S: Medical devices, namely, oxygen generating apparatus, parts and fittings for such apparatus, oxygen masks and refill packs or refill cartridges. FIRST USE: 20070625. FIRST USE IN COMMERCE: 20070625
Standard Characters Claimed
Mark Drawing Code	(4) STANDARD CHARACTER MARK
Serial Number	78350924
Filing Date	January 12, 2004
Current Filing Basis	1A
Original Filing Basis	1A
Published for Opposition	November 2, 2004
Registration Number	3330496
International Registration Number	0837626
Registration Date	November 6, 2007
Owner	(REGISTRANT) OXYSURE SYSTEMS, INC. CORPORATION DELAWARE 2611 INTERNET BLVD., STE. 109 FRISCO TEXAS 75034
Assignment Recorded	ASSIGNMENT RECORDED
Attorney of Record	Matthew Lipton
Type of Mark	TRADEMARK
Register	PRINCIPAL
Live/Dead Indicator	LIVE

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EXHIBIT D

Word Mark	PURE OXYGEN FROM POWDER
Goods and Services	(ABANDONED) IC 010. US 026 039 044. G & S: Medical devices, namely, oxygen generating apparatus, parts and fittings for such apparatus, oxygen masks and refill packs or refill cartridges
Standard Characters Claimed
Mark Drawing Code	(4) STANDARD CHARACTER MARK
Serial Number	78376654
Filing Date	March 1, 2004
Current Filing Basis	1B
Original Filing Basis	1A
Owner	(APPLICANT) ROSS GLOBAL, INC. CORPORATION NEVADA 5100 Eldorado Parkway Suite 102-801 McKinney TEXAS 75070
Assignment Recorded	ASSIGNMENT RECORDED
Attorney of Record	GREGORY W CARR
Type of Mark	TRADEMARK
Register	PRINCIPAL
Live/Dead Indicator	DEAD
Abandonment Date	November 21, 2006

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EX-10.10.1

EXHIBIT 10.10.1

OxySure Systems, Inc.

VOTING STOCK OPTION PLAN

As Amended and Restated July 19, 2004

Scope and Purpose of Plan

The purpose of the Plan is to is to strengthen OxySure Systems, Inc. (the “Company”) and its affiliates, by providing to participating employees, consultants, advisors and directors added incentive for high levels of performance and for unusual efforts to increase the earnings of the Company. The Plan seeks to accomplish these purposes and results by providing a means whereby such individuals may purchase shares of the common stock of the Company pursuant to (a) options granted pursuant to the Incentive Stock Option Plan (the "Incentive Plan") (Division A hereof) which will qualify as incentive stock options under Section 422 of the Code ("Incentive Options"), or (b) options granted pursuant to the Non-Qualified Stock Option Plan (the "Non-Qualified Plan") (Division B hereof) which are intended to be non-qualified stock options described in Treas. Reg. §1.83-7 to which Section 421 of the Code does not apply ("Non-Qualified Options").  (Hereinafter, the term "Options" shall collectively refer to Incentive Options and Non-Qualified Options.)

PARAGRAPH 1.  Definitions.

1.1.          “Act” shall mean the Securities Exchange Act of 1934, as amended or any similar or superseding statute or statutes.

1.2.          “Administrator” shall mean the Board of Directors, or, if a committee is appointed pursuant to Paragraph 3 of the Plan by the Board of Directors to administer this Plan, such committee.

1.3.          “Affiliates” shall mean (a) any entity, other than the Company, in an unbroken chain of entities ending with the Company if each of the entities, other than the Company, owns stock or other equity interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity interests in any of the other entities in such chain and (b) any entity, other than the Company, in an unbroken chain of entities beginning with the Company if each of the entities, other than the last entity in the unbroken chain, owns stock or other equity interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity interests in one of the other entities in such chain.

1.4.          “Agreement” shall mean the written agreement between the Company and an Optionee evidencing the Options granted by the Company.

1.5.          “Board of Directors” shall mean the Board of Directors of the Company.

1.6.          “Shares” shall mean the Voting Common Stock of the Company, as more particularly described in the current Bylaws and Articles of Incorporation of the Company or any other securities that are substituted therefor as provided in Paragraph 6.5. hereof.

1.7.          “Code” shall mean the Internal Revenue Code of 1986, as amended.

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1.8.          “Company” shall mean OxySure Systems, Inc., a Delaware corporation.

1.9.          “Disability” shall mean a total and permanent disability as defined in the Company’s current long term disability plan or, if the Company has no long term disability plan in effect at the time of the Optionee’s disability, as determined by the Administrator in its sole discretion.

1.10.        “Eligible Individuals” shall mean: (a) As to the Incentive Plan (Division A), all officers and employees of the Company and its affiliates shall be eligible for selection to participate in the Incentive Plan.  Notwithstanding any other provisions of the Plan to the contrary, no director of the Company or an affiliate who is not an employee of the Company or an affiliate may be granted options under the Incentive Plan. (b) As to the Non-Qualified Plan (Division B), all officers, employees, directors, advisors and consultants of the Company and its affiliates shall be eligible for selection to participate in the Non-Qualified Plan.

1.11.        “Fair Market Value” of a Shares on a particular date shall be the closing price for such Shares on such date (or, if the date is not a business day, then on the next preceding business day), which shall be:  (i) if the Shares are listed or admitted for trading on any United States national securities exchange, the last reported sale price for the Shares on such exchange as reported in any newspaper of general circulation; (ii) if the Shares are quoted on NASDAQ or any similar system of automated dissemination of quotations of securities prices in common use, the mean between the closing high bid and low asked quotations for such day of the Shares on such system; or (iii) if neither clause (i) nor (ii) is applicable, a value determined by any fair and reasonable means prescribed by the Board of Directors.

1.12.        “Optionee” shall mean an Eligible Individual to whom an Option has been granted.

1.13.        “Options” shall mean voting common stock options granted under this Plan;

1.14.        “Plan” shall mean the Oxysure Systems, Inc. Voting Stock Option Plan.

1.15.        “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar or superseding statute or statutes.

PARAGRAPH 2.  Shares and Maximum Number of Shares Subject to the Plan.

2.1.          Description of Shares and Maximum Shares Allocated.  The Shares which may be issued upon the exercise of an Option may either be unissued or reacquired Shares, as the Board of Directors may, in its sole and absolute discretion, from time to time determine.

Subject to the adjustments provided in Paragraph 6.5 hereof, the aggregate number of Shares to be issued pursuant to the exercise of all Options granted under the Plan may equal but shall not exceed 5,000,000 Shares.

2.2.          Restoration of Unpurchased Shares.  If an Option granted under the Plan expires or terminates for any reason during the term of this Plan and prior to the exercise of the Option in full, the Shares subject to, but not issued under, such Option shall again be available for future Options granted under the Plan after such Shares become available again.

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PARAGRAPH 3.  Administration of the Plan.

3.1.         Committee.  The Plan shall be administered by the Administrator.  If a committee is appointed, the committee shall consist of not less than three individuals appointed by the Board of Directors.

3.2.         Duration, Removal, Etc.  If a committee has been appointed pursuant to Paragraph 3.1. hereof, the members of the committee shall serve at the pleasure of the Board of Directors, which shall have the power, at any time and from time to time, to remove members from the committee, or to add members to the committee.  Vacancies on the committee, however caused, shall be filled by action of the Board of Directors.

3.3.         Meetings and Actions of Administrator.  The Administrator, if a committee, shall elect one of its members as its chairman and shall hold its meetings at such times and places as it may determine.  All decisions and determinations of the committee shall be made by the majority vote or decision of all of its members present at a meeting; provided, however, that any decision or determination reduced to writing and signed by all of the members of the Administrator shall be as fully effective as if it had been made at a  meeting duly called and held. The committee may make any rules and regulations for the conduct of its business that are not inconsistent with the provisions of this Plan and with the Company's Bylaws, as may be amended from time to time, as the committee may deem advisable.

3.4.         Administrator’s Powers.  Subject to the express provisions of this Plan, the Administrator shall have the authority, in its sole and absolute discretion, (a) to adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Plan; (b) to determine the terms and provisions of the respective Agreements (which need not be identical), including provisions defining or otherwise relating to (i) subject to Paragraph 6 hereof, the term and the period or periods and extent of exercisability of the Options, (ii) the extent to which the transferability of Shares issued upon exercise of Options is restricted, (iii) the effect of termination of employment upon the exercisability of the Options, and (iv) the effect of approved leaves of absence; (c) to accelerate the time of exercisability of any Option that has been granted; (d) to construe the terms of any Agreement and the Plan; and (e) to make all other determinations and perform all other acts necessary or advisable for administering the Plan, including the delegation of such ministerial acts and responsibilities as the Administrator deems appropriate.  The Administrator may correct any defect, supply any terms that were previously omitted, or reconcile any inconsistency in the Plan or in any Agreement in the manner and to the extent the Administrator shall deem it expedient to carry the Plan into effect, and the Administrator shall be the sole and final judge of such expediency.  The Administrator shall have full discretion to make all determinations on the matters referred to in this Paragraph, and such determinations shall be final, binding, and conclusive.

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PARAGRAPH 4.  Eligibility and Participation.

4.1.          Eligible Individuals.  Options may be granted under the Plan only to persons who are Eligible Individuals at the time of grant of the Options.

4.2.          No Right to Option.  The adoption of the Plan shall not be deemed to give any person a right to be granted an Option.

PARAGRAPH 5.  Grant of Options and Certain Terms of the Agreements.

5.1           Award Criteria.  The Board of Directors shall determine, in its sole discretion, which Eligible Individuals shall be granted Options under the Plan from time to time.  The Board of Directors shall also determine the exercise price and the number of Shares subject to each of such Options and shall authorize and cause the Company to grant Options in accordance with such determinations.

5.2           Grant.  The date on which the Board of Directors completes all action constituting an offer of an Option to an individual, including the specification of the exercise price, vesting schedule, and the number of Shares to be subject to the Option, shall be the date on which the Option covered by an Agreement is granted, even though certain terms of the Agreement may not be at such time determined and even though the Agreement may not be executed until a later time. In no event, however, shall an Optionee gain any rights in addition to those specified by the Board of Directors in its grant, regardless of the time that may pass between the grant of the Option and the actual execution of the Agreement by the Company and the Optionee.

Each Option granted under the Plan shall be evidenced by an Agreement, executed by the Company and the Eligible Individual to whom the Option is granted, incorporating such terms as the Administrator shall deem necessary or desirable.  More than one Option may be granted to the same Eligible Individual and be outstanding concurrently.  In the event an Eligible Individual is granted more than one Option, such grants shall be evidenced by separate Agreements.

5.3           Forfeiture and Transferability Restrictions.  Each Agreement may contain or otherwise provide for conditions giving rise to the forfeiture of the Shares acquired pursuant to an Option granted under the Plan and for such restrictions on the transferability of  Shares acquired pursuant to an Option as the Board of Directors or Administrator, in their sole and absolute discretion, shall deem proper or advisable.  Such conditions giving rise to forfeiture may include, but need not be limited to, the requirement that the Optionee render substantial services to the Company for a specified period of time.  Such restrictions on transferability may include, but need not be limited to, options and rights of first refusal in favor of the Company and members of the Company.

PARAGRAPH 6.  Terms and Conditions of Options.

All Options granted under the Plan shall comply with, be deemed to include, and shall be subject to the following terms and conditions:

6.1.          Number of Shares.  Each Agreement shall state the number of Shares to which it relates.

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6.2.          Exercise Price.  Each Agreement shall state the exercise price per Share.  Subject to the adjustments provided in Paragraph 6.5. hereof, the exercise price per Share subject to any Option shall be determined by the Board of Directors as provided in Paragraph 5.1. hereof

6.3.         Medium and Time of Payment, Method of Exercise, and Withholding Taxes.  The exercise price of an Option shall be payable upon the exercise of the Option

(a)  in cash, or

(b) by certified or cashier’s check payable to the order of the Company.

Exercise of an Option shall not be effective until the Company has received written notice of exercise. Such notice must specify the number of whole Shares to be purchased and be accompanied by payment in full of the aggregate exercise price of the number of shares purchased.  The Company shall not in any case be required to sell, issue, or deliver a fractional Share with respect to any Option.

The Administrator may, in its discretion, require an Optionee to pay to the Company at the time of exercise of an Option (or portion of an Option) the amount that the Company deems necessary to satisfy its obligation to withhold federal, state, or local income or other taxes incurred by reason of the exercise.  If the exercise of an Option does not give rise to an obligation to withhold federal income or other taxes on the date of exercise, the Administrator may, in its discretion, require an Optionee to place Shares purchased under the Option in escrow for the benefit of the Company until such time as federal income or other tax withholding is no longer required with respect to such Shares or until such withholding is required on amounts included in the gross income of the Optionee as a result of the exercise of an Option or the disposition of Shares acquired pursuant to the exercise.  At such later time, the Administrator, in its discretion, may require an Optionee to pay to the Company the amount that the Company deems necessary to satisfy its obligation to withhold federal, state, or local income or other taxes incurred by reason of the exercise of the Option or the disposition of Shares.  Upon receipt of such payment by the Company, such Shares shall be released from escrow to the Optionee.

6.4.          Term, Time of Exercise, and Transferability of Options.  In addition to such other terms and conditions as may be included in a particular Agreement granting an Option, an Option shall be exercisable during an Optionee’s lifetime only by the Optionee or by the Optionee’s guardian or legal representative.

The Administrator shall have the authority to prescribe in any Agreement a vesting schedule that governs when the Option becomes exercisable, except that all Options shall become fully vested and exercisable immediately upon the occurrence of a Change in Control as defined in Paragraph 6.5.  The Optionee’s Voting Stock Option Agreement shall prescribe a vesting and exercise schedule.

An Option shall not be transferrable other than by will or the laws of descent and distribution.

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The provisions of the remainder of this Paragraph shall apply to the extent an Optionee’s Agreement does not expressly provide otherwise.  If an Optionee ceases to be an Eligible Individual for any reason other than death or Disability, the Option shall terminate ninety (90) days after such Optionee ceases to be an Eligible Individual.  If an Optionee ceases to be an Eligible Individual by reason of Disability, the Optionee shall have the right for six (6) months after the date of Disability to exercise an Option to the extent such Option is exercisable on the date of his Disability.  If an Optionee ceases to be an Eligible Individual by reason of death, Optionee’s designated beneficiary shall have the right for six (6) months after the date of death to exercise the Option, to the extent such Option is exercisable on the date of death.  At the end of such ninety (90) day or six (6) month period, as applicable, the Option shall terminate and cease to be exercisable.  Each Optionee shall have the right to designate a beneficiary on the form provided by the Administrator.  If no beneficiary is designated, Optionee’s estate shall have the rights of a beneficiary.  No Option shall be exercisable after the expiration of ten (10) years from the date it is vested (the “Maximum Term”).  Notwithstanding any other provision of this Plan or in any Agreement, all Options shall become fully vested and exercisable in accord with the schedule prescribed in the Optionee’s Voting Stock Option Agreement.

The portion of the Option that is not exercisable on the date the Optionee ceases to be an Eligible Individual shall terminate and be forfeited to the Company on the date of such cessation. Notwithstanding the previous sentence, if the Optionee ceases to be an Eligible Individual by reason of death, any Options held by such Optionee shall be exercisable in full on the date such Optionee ceases to be an Eligible Individual, and no portion of an Option held by such deceased Optionee shall terminate or forfeit on the date such Optionee ceases to be an Eligible Individual.

The Administrator shall have the authority to prescribe in any Agreement that the Option evidenced by the Agreement may be exercised in full or in part as to any number of Shares subject to the Option at any time or from time to time during the term of the Option, or in such installments at such times during said term as the Administrator may prescribe.  Except as provided above and unless otherwise provided in any Agreement, the vested portion of an Option may be exercised at any time or from time to time during the term of the Option.  Such exercise may be as to any or all whole (but no fractional) Shares which have become purchasable under the Option.

Within a reasonable time (or such time as may be permitted by law) after the Company receives written notice that the Optionee has elected to exercise all or a portion of an Option, such notice to be accompanied by payment in full of the aggregate Option exercise price of the number of Shares purchased, the Company shall issue and deliver a certificate representing the Shares acquired in consequence of the exercise and any other amounts payable in consequence of such exercise.  The number of Shares transferrable due to an exercise of an Option under this Plan shall not be increased due to the passage of time, except as may be provided in an Agreement; provided, however, the number of such Shares which are transferrable may increase due to the occurrence of certain events which are fully described in Paragraph 6.5. hereof.

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Nothing in the Plan or in any Option granted under the Plan shall require the Company to issue any Shares upon exercise of any Option if such issuance would, in the reasonable judgment of the Administrator based upon the advice of counsel for the Company, constitute a violation of the Securities Act, or any other applicable statute or regulation, as then in effect.  At the time of any exercise of an Option, the Company may, as a condition precedent to the exercise of such Option, require from the Optionee (or in the event of his death, his legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning his intentions with regard to the retention or disposition of the Shares being acquired by exercise of such Option and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by such Optionee (or in the event of his death, his legal representatives, heirs, legatees, or distributees), will not involve a violation of the Securities Act or any other applicable state or federal statute or regulation, as then in effect.  Certificates for Shares, when issued, may have the following or similar legend, or statements of other applicable restrictions, endorsed on them, and may not be immediately transferable:

The Shares evidenced by this certificate have been issued to the registered owner in reliance upon written representations that these Shares have been purchased for investment.  These Shares have not been registered under the Securities Act of 1933, as amended, or any applicable state securities laws, in reliance upon an exemption from registration.  Without such registration, these Shares may not be sold, transferred, assigned or otherwise disposed of unless, in the opinion of the Company and its legal counsel, such sale, transfer, assignment, or disposition will not be in violation of the Securities Act of 1933, as amended, applicable rules and regulations of the Securities and Exchange Commission, and any applicable state securities laws.

6.5.          Adjustments Upon Changes in Capitalization, Merger, Etc.  Notwithstanding any other provision in the Plan to the contrary, in the event of any change in the number of outstanding Shares:

(a)  effected without receipt of consideration by the Company by reason of a Share dividend, split, combination, exchange of Shares or other ownership interests, merger, or other recapitalization, in which the Company is the surviving entity, or

(b)  by reason of a spin-off of a part of the Company into a separate entity, or assumptions and conversions of outstanding grants due to an acquisition by the Company of a separate entity,

(1) the aggregate number of the reserved Shares, (2) the number of Shares subject to each outstanding Option, and (3) the exercise price of each outstanding Option, shall be automatically adjusted to accurately and equitably reflect the effect of such change.  In the event of a dispute concerning such adjustment, the Administrator has full discretion to determine the resolution of the dispute.  Such determination shall be final, binding, and conclusive.  Furthermore, the number of reserved Shares or the number of Shares subject to any outstanding Option shall be automatically reduced to the extent necessary to eliminate any fractional shares.

The following provisions of this Paragraph shall apply unless an Optionee’s Agreement provides otherwise.  In the event of:

(a)  a change in the ownership of the common stockholders of the Company where an entity, person, or group acting in concert (a “Person”) as described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), holds or acquires, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of such portion of Common Stockholders of the Company as constitutes fifty percent (50%) or more of the combined voting power of the Company’s then outstanding common stockholders then entitled to vote generally in the election of directors,

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(b)  a change in the Board of Directors such that the persons who were members of the Board of Directors of the Company immediately prior to a tender offer, exchange offer, contested election, or any combination of the foregoing, cease to constitute a majority of the Board of Directors,

(c)  the adoption by the Board of Directors of the Company of a merger, consolidation, or reorganization plan involving the Company in which the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company.  For purposes of this Plan, a sale of all or substantially all of the assets of the Company shall be deemed to occur if any Person acquires (or during the 12-month period ending on the date of the most recent acquisition by such Person, has acquired) gross assets of the Company that have an aggregate fair market value equal to fifty percent (50%) of the fair market value of all of the gross assets of the Company immediately prior to such acquisition or acquisitions,

(d)  a tender offer or exchange offer  made by any Person which, if successfully completed, would result in such Person beneficially owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act) either fifty percent (50%) or more of the Company’s outstanding shares of common stockholders or shares of common stockholders having fifty percent (50%) or more of the combined voting power of the Company’s then outstanding common stockholders (other than an offer made by the Company), and sufficient shares are acquired under the offer to cause such person to own fifty percent (50%) or more of the voting power, or

(e)  any other transactions or series of related transactions occurring which have substantially the same effect as the transactions specified in any of the preceding clauses of this Paragraph,

(a “Change in Control”), all options shall fully vest and the Board of Directors, in its sole discretion, may, as of the effective time of such transaction, either (1) change the  Shares subject to the Options to another kind of common stockholders (including substitution of shares or shares of another entity) and exercise price in the manner it deems appropriate, or (2) purchase the Options from each Optionee by tendering cash equal to the Fair Market Value of the Shares represented by the Options less the exercise price of the Option specified in each Agreement, without regard to the determination as to the periods and installments of exercisability made pursuant to an Optionee’s Agreement, if (and only if) such Options have not at that time expired or been terminated.

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6.6.          Rights as a Stockholder.  An Optionee shall have no right as a stockholder with respect to any Shares covered by his Option until a certificate representing such Shares is issued to him. Upon issuance of one or more certificates representing any such Shares upon exercise of an Option, the Optionee shall become a stockholder but shall only be vested with the limited rights accorded to a shareholder pursuant to the current Bylaws of the Company. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash or other property), distributions, or other rights for which the record date is prior to the date such certificate is issued, except as provided in Paragraph 6.5. hereof.

6.7.          Modification, Extension, and Renewal of Options.  Subject to the terms and conditions of, and within the limitations of, the Plan, the Administrator may modify, extend, or renew outstanding Options granted under the Plan or accept the surrender of Options outstanding under the Plan (to the extent not previously exercised) and authorize the granting of substitute Options (to the extent not previously exercised).  The Administrator may not, however, without the consent of the Optionee, modify any outstanding Options so as to specify a higher or lower exercise price or number of Shares.  In addition, no modification of an Option granted under the Plan shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option previously granted under the Plan to such Optionee under the Plan.

6.8.          Furnish Information.  Each Optionee shall furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.

6.9.          Obligation to Exercise; Termination of Employment.  The granting of an Option under the Plan shall impose no obligation upon the Optionee to exercise it or any part of it.  In the event of an Optionee’s termination of employment with the Company or an Affiliate, the unexercised portion of an Option granted under the Plan shall terminate in accordance with Paragraph 6.4.hereof.

6.10.        Agreement Provisions.  The Agreements authorized under the Plan shall contain such provisions in addition to those required by the Plan (including, without limitation, restrictions or the removal of restrictions upon the exercise of the Option and the retention or transfer of shares thereby acquired) as the Administrator shall deem advisable.

PARAGRAPH 7.  Remedies and Specific Performance.

7.1.          Remedies.  The Company shall be entitled to recover from an Optionee reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of the Plan and any Agreement, whether by an action to enforce specific performance, or an action for damages for its breach or otherwise.

7.2.          Specific Performance.  The Company shall be entitled to enforce the terms and provisions of this Paragraph, including the remedy of specific performance, in Collin County, Texas.

PARAGRAPH 8.  Duration of Plan.

No Options may be granted under the Plan more than ten (10) years after the date the Plan is adopted.

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PARAGRAPH 9.  Amendment and Termination of Plan.

The Board of Directors may at any time terminate or from time to time amend or suspend the Plan.  No Option may be granted during any suspension of the Plan or after the Plan has been terminated.

PARAGRAPH 10.  General.

10.1.        Application of Funds.  The proceeds received by the Company from the sale of Shares pursuant to Options shall be used for general Company purposes.

10.2.        Right of the Company and Affiliates to Terminate Employment.  Nothing contained in the Plan, or in any agreement, shall confer upon any Optionee the right to continue in the employ of the Company, or interfere in any way with the rights of the Company to terminate his employment any time.

10.3.        Liability of the Company.  Neither the Company, nor any of its Affiliates,  directors, officers, or employees, nor any member of the Administrator, shall be liable for any act, omission, or determination taken or made in good faith with respect to the Plan or any Option granted under it, and members of the Board of Directors and the Administrator shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage, or expense (including attorneys’ fees, the costs of settling any suit (provided such settlement is approved by independent legal counsel selected by the Company), and amounts paid in satisfaction of a judgment, except a judgment based on a finding of bad faith) arising from such claim, loss, etc. to the full extent permitted by law and under any directors’ and officers’ liability or similar insurance coverage that may from time to time be in effect.

10.4.        Information Confidential.  As partial consideration for the granting of each Option under the Plan, the Agreement may, in the Administrator’s sole and absolute discretion, provide that the Optionee shall agree with the Company that he will keep confidential all information and knowledge that he has relating to the manner and amount of his participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Optionee’s spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan.  In the event any breach of this promise comes to the attention of the Administrator, it shall take into consideration such breach, in determining whether to recommend the grant of any future Option to such Optionee, as a factor militating against the advisability of granting any such future Option to such individual.

10.5.        Other Benefits.  Participation in the Plan shall not preclude the Optionee from eligibility in any other common stockholders option or stock option plan of the Company or any Affiliate or any old age benefit, insurance, pension, profit sharing, retirement, bonus, or other extra compensation plans which the Company or any Affiliate has adopted, or may, at any time, adopt for the benefit of its employees.

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10.6.        Execution of Receipts and Releases.  Any payment of cash or any issuance or transfer of Shares to the Optionee, or to his legal representative, heir, legatee, or distributee, in accordance with the provisions of the Plan, shall, to the extent thereof, be in full satisfaction of all claims of such persons under the Plan.  The Administrator may require any Optionee, legal representative, heir, legatee, or distributee, as a condition precedent to such payment, to execute a release and receipt for such payment in such form as it shall determine.

10.7.        No Guarantee of Shares.  Neither the Administrator nor the Company guarantees the Shares from loss or depreciation. In that regard, each Optionee hereby acknowledges that the value of the Shares are extremely speculative and no guarantee whatsoever concerning the financial prospects of the Company can be made.  Each Optionee should consult his advisors concerning the financial and other aspects of the Plan.

10.8.        Payment of Expenses.  All expenses incident to the administration, termination, or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company or its Affiliates; provided, however, the Company or an Affiliate may recover any and all damages, fees, expenses, and costs arising out of any actions taken by the Company or an Affiliate to enforce its rights under the Plan.

10.9.        Company Records.  Records of the Company regarding the Optionee’s period of employment, termination of employment and the reason for such termination, leaves of absence, re-employment, and other matters shall be conclusive for all purposes under the Plan, unless determined by the Administrator to be incorrect.

10.10.      Information.  The Company shall, upon request or as may be specifically required under the Plan, furnish or cause to be furnished all of the information or documentation that is necessary or required by the Administrator to perform its duties and functions under the Plan.

10.11.      Company Action.  Any action required of the Company relating to the Plan shall be by resolution of its Board of Directors or by a person authorized to act by resolution of the Board of Directors.

10.12.      Severability.  If any provision of this Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, but such provision shall be fully severable, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included in the Plan.

10.13.      Notices.  Whenever any notice is required or permitted under the Plan, such notice must be in writing and personally delivered, telecopied (if confirmed), or sent by mail or by a nationally recognized courier service.  Any notice required or permitted to be delivered under this Agreement shall be deemed to be delivered on the date on which it is personally delivered, or, if mailed, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has previously specified by written notice delivered in accordance with this Paragraph or, if by courier, twenty-four (24) hours after it is sent, addressed as described in this Paragraph.  The Company or an Optionee may change, at any time and from time to time, by written notice to the other, the address which it or he had previously specified for receiving notices.  Until changed in accordance with the Plan, the Company and each Optionee shall specify as its and his address for receiving notices the address set forth in the Agreement pertaining to the shares to which such notice relates.

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10.14.      Waiver of Notice.  Any person entitled to notice under the Plan may waive such notice.

10.15.      Successors.  The Plan shall be binding upon the Optionee, his legal representatives, heirs, legatees, and distributees, upon the Company, its successors, and assigns, and upon the Administrator, and its successors.

10.16.      Headings.  The titles and headings of Paragraphs are included for convenience of reference only and are not to be considered in construction of the Plan’s provisions.

10.17.      Governing Law.  All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Texas except to the extent Texas law is preempted by federal law.  Questions arising with respect to the provisions of an Agreement that are matters of contract law shall be governed by the laws of the state specified in the Agreement, except to the extent preempted by federal law and except to the extent that the provisions of Delaware Code Annotated Title 6, Sections 18-101 to 18-1109 conflict with the contract law of such state, in which event the provisions of Delaware Code Annotated Title 6, Sections 18-101 to 18-1109 shall govern.  The obligation of the Company to sell and deliver Shares under the Plan is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stockholders.

10.18.      Word Usage.  Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Plan dictates, the plural shall be read as the singular and the singular as the plural.

PARAGRAPH 11.   Effective Date.

The Plan shall take effect on February 1, 2004, the date it was first adopted by the Board of Directors.

DIVISION A

INCENTIVE STOCK OPTION PLAN

A-1. Eligible Persons.  All officers and employees of the Company and its affiliates shall be eligible for selection to participate in the Incentive Plan.  Notwithstanding any other provisions of the Plan to the contrary, no director of the Company or an affiliate who is not an employee of the Company or an affiliate may be granted options under the Incentive Plan.

A-2. Limit on Exercisability of Options.  The aggregate fair market value (determined as of the time the Option is granted) of the stock for which any officer or employee may be granted Incentive Options which are first exercisable during any one calendar year shall not exceed One Hundred Thousand Dollars ($100,000).

A-3. Interpretation of Plan.  Options granted pursuant to the Incentive Plan are intended to be "incentive stock options" within the meaning of Section 422 of the Code, and the Incentive Plan shall be construed to implement that intent.  If all or any part of an Incentive Option shall not be deemed an "incentive stock option" within the meaning of Section 422 of the Code, said Option shall nevertheless be valid and carried into effect as a Non-Qualified Option.

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DIVISION B

NON-QUALIFIED STOCK OPTION PLAN

B-1. Eligible Persons.  All officers, employees, directors, advisors and consultants of the Company and its affiliates shall be eligible for selection to participate in the Non-Qualified Plan.

B-2. Interpretation of Plan.  Options granted pursuant to the Non-Qualified Plan are intended to be non-qualified stock options described in Treas. Reg. § 1.83-7 to which Section 421 of the Code does not apply, and the Non-Qualified Plan shall be construed to implement that intent.

IN WITNESS WHEREOF, OxySure Systems, Inc., acting by and through its duly authorized officer, has executed this Plan on this the 19th day of July, 2004.

Oxysure Systems, Inc.

By:        /s/Julian Ross                                                                          

Julian Ross, Chairman & CEO

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EX-10.12.1

EXHIBIT 10.12.1

ADDENDUM TO

LOCK-UP AGREEMENTS

THIS ADDENDUM TO LOCK-UP AGREEMENTS (this “Addendum”) is made and entered into effective as of September 8, 2010 by and between OxySure Systems, Inc., a Texas corporation (the “Company”) and all shareholders of the Company (the “Shareholder”).  The Company and Shareholders are sometimes referred to herein individually as “Party” and collectively as the “Parties.”

This Addendum to all lock-up agreements shall allow only the first 25% of the shares owned by each Shareholder to be sold during the period beginning the 1st day subsequent to our shares becoming publicly traded in a nationally recognized market and ending on the 90th day thereafter, and then 25% every 90 day period thereafter.

All other terms and conditions of the Lock-Up Agreements shall remain in full force and effect and said Addendum is hereby confirmed and ratified accordingly.

IN WITNESS WHEREOF, the Chief Executive Officer has caused this Addendum to Lock-up Agreements to be executed as of the date first written above.

COMPANY

___________________________________

By: Julian Ross

Its: Chief Executive Officer

EX-10.28.1

EXHIBIT 10.28.1

MODIFICATION OF AGREEMENT

WHEREAS, OxySure Systems, Inc. (“OxySure”) and the TONY & JUDY ALCEDO FAMILY TRUST (“Alcedo”) (OxySure and Alcedo jointly, the “Parties”) entered into that certain Note Purchase Agreement (“Note”) dated 12/10/09 in the principal amount of $100,000; and

WHEREAS, The Parties have agreed that it is in their best interests to modify the terms of the Note.

NOW, WHEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

Section 1 of Exhibit A to the Note Purchase Agreement shall be amended as follows:

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 360th 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.

All other provisions of the Note shall remain unchanged.

Agreed to and accepted:

By: /s/ Tony Alcedo	By: /s/ Julian Ross
Mr. Anthony M. Alcedo, Trustee	Mr. Julian Ross, CEO
The Tony & Judy Alcedo	OxySure Systems, Inc.
Family Trust
Date: September 1, 2010	Date:  9/01/2010

EX-10.31

EXHIBIT 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                                                       Address1: c/o Nolands, Noland Hse                                                                 Address2: Liesbeeck Pky, Mowbray                                                                 City, State Zip: 7700 Cape, South Africa                                                                 Tel: (01127)82-552-5874

OxySure Systems, Inc. 10880 John W. Elliot Drive Suite 600 Frisco, Texas 75034  (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 Two Hundred Seventy Thousand Dollars ($270,000.00) (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:

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=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.

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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.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:	/s/
	Name: JULIAN ROSS
	Title: CEO

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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

Date	By:	/s/
		(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-10.32

EXHIBIT 10.32

  Department of Veterans Affairs Office of Acquisition and Logistics National Acquisition Center P.O. Box 76 Hines, IL60141

NOV 10,  2008 In Reply Refer To:

Mr. Julian Ross

OxySure Systems, Inc.

10880 John W. Elliott Road, Suite 600

Frisco, TX 75034

Dear Mr. Ross:

Enclosed is a copy of your Federal Supply Schedule Contract V797P-4153b effective November 15, 2008 through November 14, 2013 for items awarded under Solicitation Number RFP 797-FSS-99-0025-R5. This letter outlines the initial requirements of your newly awarded contract and also provides information on several clauses that you should be aware of for future contract actions.

ANNUAL REGISTRATION REQUIREMENTS1

You are required to file a VETS-100 report with the Department of Labor (DOL) by September 30thannually. The contractor is required to contact the Department of Labor by phone at (703) 461-2460 or website http://www.vet.s100.com to obtain the necessary information to complete the VETS-100 report (this website is best viewed using Internet Explorer 6.0 or above).

Contractors must also renew their Central Contractor Registration (CCR) once a year or the CCR database will cancel the registration. It is noted that OxySure Systems, Inc's registration is valid until July 11, 2009.   You may renew and update your CCR registration at: http://www.ccr.gov.

AFFIRMATIVE ACTION PLAN REQUIREMENTS2

As the estimated value of this contract exceeds $50,000 and your firm employs more than 50 your firm is required to develop and maintain a written Affirmative Action Plan (AAP) for each of its establishments within 120 days of contract award. You may seek technical assistance from the Office of Federal Contract Compliance Programs (OFCCP) at http://www.dol.gov/esa/ofccp/: this website provides useful contact information as well as a sample AAP for your reference.

The AAP is to be kept on file and implemented by the contractor - you are not required to submit it to the OFCCP unless they request it for the purpose of a compliance review; however, it is requested that you provide this office with confirmation of your compliance via fax or email.

1  FAR 52.222-37 Employment Reports on Disabled Veterans and Veterans of the Vietnam Era (Title 38 Section 4212)

2  Affirmative Action (AA) Compliance (41 CFR 60-1 & 60-2)(52.212-3(d))

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FSS PRICELIST REQUREMENTS

■      FSS Paper Pricelist

Contract Clause l-FSS-600, Contract Price Lists (pages 58-62 of your contract) requires you to prepare a VA Federal Supply Schedule Contract Price List for approval. Please carefully read and comply with the instructions covering the content and format of the VA FSS contract price list as stipulated in subparagraphs (2) and (3) (page 59) of this clause. Your VA FSS contract price list must contain all the information required and must be presented in the required format. If you choose to use your commercial catalog as your VA FSS contract price list all non-accepted/awarded items must be lined out or deleted and presented in acceptable manner determined by the Contracting officer. Please note that the use of this Government contract to solicit Government business for non-contract products is fraudulent and subject to prosecution.

Carefully read and comply with Clause l-FSS-600, Contract Price Lists subparagraph (5)3. This subparagraph requires that "proof copies of your Federal Supply Schedule Contract Price List, including cover letters, be submitted in duplicate to the Contracting Officer for review and approval prior to its formal printing and distribution. This action must be accomplished within 30 days after the date of award. Upon approval, one "proof copy will be returned to you with further instructions for formal printing and distribution. Failure to follow these instructions may cause you to reprint your FSS price list.

■      NAC-CM Pricelist

The contractor is also responsible for maintaining the NAC-CM database - a blank database template and instructions for completion shall be provided at time of contract award. Note that this database must be completed within 30 days after date of award and must be updated when the contract is modified.

■      GSA Advantage! Pricelist

In partnership with the General Service's Administration (GSA), VA will now maintain product data in GSA's online electronic ordering system, GSA Advantage! (pages 57-58). The VA/GSA Partnership now makes it possible for authorized VA Federal Supply Schedule (FSS) contractors to submit quickly and easily their contract product and pricing information electronically and for Federal government offices to shop and order via the Internet. Creating and submitting electronic catalogs (ECATs) is easy and at near zero cost using GSA's Schedule Input Program (SIP). Likewise, there is no additional charge to contractors or Federal government offices for orders placed through GSA Advantage! You may download the most recent release of the SIP by visiting http://vsc.fss.gsa.gov and linking to the "SIP Vendors" Section (at the top of the page). You have the choice of using SIP and the enclosed Start-up Kit, or you may make the decision to publish your contract information on GSA Advantage through third-party services. These companies charge a fee for their services.

This action must also be completed within 120 days after the date of award. Ordering facilities utilize the GSA Advantage program to search for and purchase products; therefore, it behooves you to complete these actions in a timely manner to make your products available for immediate purchase.

GSA ADVANTAGE! PO PORTAL

The "PO Portal" is a new website developed by GSA that allows you to easily view and print your GSA Advantage purchase orders. This site also allows you to download your orders in a number of formats including XLS, TXT, XML, or PDF. In addition, the PO Portal allows you to track your orders by submitting a status request to your customer via GSA Advantage. The PO Portal is available at https://www.poportal.qsa.gov.

3 I have included this specific text and a sample document for your reference.

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INDUSTRIAL FUNDING FEE AND REPORTING REQUIREMENTS

Contract Clause 552.238-74, Industrial Funding Fee and Sales Reporting (pages 63-64), requires that you submit, on a quarterly basis, the dollar value (in U.S. dollars and rounded to the nearest whole dollar) for all sales under the contract during the preceding 3-month period, to include any partial month. This report is required for each Special Item Number (SIN) under which you have been awarded items. The GSA Form 72, Contractor's Report of Sales provided with the award package, may be reproduced.

Reports are due on or before the 60th day following the completion of each quarter of the contract

(any partial month is to be considered as one month for reporting purposes). Sales for orders that extend beyond the contract period will be reported within 30 days of final payment.

Reports are required for all reporting periods even if no sales occurred; in addition a closeout report is required within 120 days after the expiration of the contract.

The Government reserves the right to inspect, without further notice, such records that pertain to sales under this contract. Further failure or refusal to furnish the required reports or falsification thereof, will constitute cause for terminating the contract for default in accordance with the provisions of your contract.

Contract Clause 552.238-74, Industrial Funding Fee and Sales Reporting, also requires that you pay the Department of Veterans Affairs (DVA) an Industrial Funding Fee (IFF) at the end of each contract quarter. The IFF shall be submitted at the same time as the GSA Form 72, Contractor's Report of Sales. The IFF equals 0.50% (one-half of one percent) of the total sales reported on the GSA Form 72. The IFF reimburses the DVA for the costs of operating portions of the Federal Supply Schedule Program and recoups its operating costs for ordering activities. This fee is included in the awarded price(s) and reflected in the total amount charged to ordering activities. Remittance for the IFF and your GSA Form 72 shall be submitted to our Fiscal Division. Remittance and Contractor's Reports of Sales should be addressed to:

Department of Veterans Affairs

C/O FSS Service (001AL-A2-2)

P.O. Box 76

Hines, IL 60141

The IFF amount due shall be paid by check or electronics funds transfer to the "Department of Veterans Affairs". Where multiple SIN(s) and/or contracts are involved, the IFF may be consolidated into one check. To ensure that the payment is credited properly, the Contractor should identify the check or electronic transmission as an "Industrial Funding Fee" and include the following information: contract number(s), report amount(s), and report period(s).

(1)     If the IFF payment is made by check, it shall be forwarded to the address indicated above.

(2)     If the IFF payment is to be made by electronic funds transfer through the Automated Clearing House (ACH), please refer to Clause 52.232-33 Payment by Electronic Funds Transfer - Central Contractor Registration, paragraph (c) for further instructions.

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IFF Payments shall be made via ACH Electronic Transfer of Funds using the following information:

Receiver Information
Company Name Street Address or P.O. Box City, State, Zip Code Company Contact Contact Phone Federal Taxpayer ID Number	Department of Veterans Affairs P.O. Box 7005 Hines, IL 60141 Annette Crayton 708-786-7523 74 1612229

Receiver Bank/Account Information
Receiving Bank Name Receiving Bank Contact Contact Phone Receiving Bank City, State Receiving Bank Routing/Transit Number Receiving Bank Capability Receiver's Account Number Indicate version of 820 ACH format used by Receiving Bank	Department of Treasury Cash Link ACH Receiver 301-887-6600 Richmond, VA 051036706 CCD+ 220020 Standard
Be sure to annotate the quarter being paid	October - December January - March April - June July -Sept	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Be sure to include the contract number in addenda. Provide the last 5 digits of your contract number (4#s and the alpha)	e.g. V797P-XXXXB

NOTE: A report is required even when no sales occur during the reporting period.

NOTE: Vendor's sales report must include all Prime Vendor, Direct-to-Patient Distribution, and Department of Defense Distribution and Pricing Agreement (DAPA) program sales, as applicable.

If the full amount of the IFF is not paid within 60 calendar days after the end of the applicable reporting period, it shall constitute a contract debt to the United States Government under the terms of FAR 32.6. The Government may exercise all rights under the Debt Collection Act of 1982, including withholding or setting off payments and interest onto the debt (see FAR 52.232-17, Interest). Failure to submit sales reports, falsifications of sales reports and/or failure to pay the IFF in a timely manner may result in termination or cancellation of this contract. Willful failure or refusal to furnish the required reports, falsification of sales reports, or failure to pay the IFF in a timely manner constitutes sufficient cause to terminate this contract under FAR 52.212-4, paragraph (m) "Termination for Cause" (page 16).

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MODIFICATION CLAUSE REQUIREMENTS

In accordance with 552.243-72 Modifications (Multiple Award Schedule) (JUL 2000) (ALT I - SEP 1999) (page 64-66) contract modifications may be requested by the awardee at any time throughout the term of the contract. At a minimum every request shall describe the proposed change(s) and provide the rationale for the requested change(s). The Modification Request Form (a copy of which is enclosed with this award package) provides instructions on how to request, and what is required for the following types of modification actions:

-     Product/SIN Additions

-     Product Deletions

-     Price Reductions

-     Price Increases

-     Administrative Changes

The effective date of the modification will occur on the 1st or 15th of the month.

Contractors are reminded that they must update their electronic pricelists (including the NAC-CM database and GSA Advantage!) and provide the CO with an updated paper pricelist for approval after receiving an executed copy of the requested modification.

ECONOMIC PRICE ADJUSTMENT CLAUSE REQUIREMENTS

Pursuant to 552.216-70 Economic Price Adjustment - FSS Multiple Award Schedule Contracts (SEP 1999) (ALT 1 - SEP 1999) (Local Deviation) (pg 66-67) contractors may request price increases when the following conditions are met:

-     Increases result from a reissue or other modification of the Contractor's commercial catalog/pricelist that was used as the basis for contract award.

-     Increases are requested before the last 60 days of the contract period.

-     At least 30 days elapse between requested price increases.

The tracking customer's price must be disclosed with your request for increase. Note that the awarded tracking customer and the established ratio at the time of award will affect your ability to receive an increase.

The government reserves the right to accept the price increase as requested; negotiate better discount; or refuse the requested increase and remove the product(s) from the contract pursuant to the Cancellation clause of the contract.

PRICE REDUCTIONS CLAUSE REQUIREMENTS

In accordance with 552.238-75 Price Reductions (MAY 2004) (page 63-65) the contractor shall report all price reductions provided to the tracking customer within 15 days after the effective date of the reduction. A price reduction occurs if the contractor:

-     Reduces awarded contract pricing by revising the commercial catalog, pricelist, schedule upon which contract award was predicated.

-     Grants more favorable discounts or terms and conditions to the awarded tracking customer.

-     Grants special discounts to the tracking customer and the change disturbs the price/discount relationship of the government to the tracking customer.

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Contractors are able to offer ad hoc discounts to the government without disturbing the tracking customer ratio. In addition, contractors are not required to pass on price reductions/special discounts provided to commercial customers other than the specified tracking ratio customer.

FSS CONTRACT NUMBER

The FSS contract number or other authorization for supplies delivered or services performed (including order number and contract line number) must be clearly identified on all invoices. In addition, all correspondence and documents pertaining to the contract shall be noted with the contract number.

ORDERING REQUIREMENTS

As appropriate, when goods are shipped to an ordering activity you are required to furnish to that activity, two (2) copies (unless otherwise specified in your contract) of a manual, handbook or brochure containing operation, installation and maintenance instructions (including pictures or illustrations, schematics and complete repair/test guides) as necessary. Where applicable, it will include electrical data and connection diagrams for all utilities. The instructions shall also contain a complete list of all replaceable parts showing parts showing part number, name and quantity required.

Products manufactured to metric dimensions will be considered on an equal basis with those manufactured using inch-pound units, providing they fall within the tolerances specified using conversion tables contained in the latest revision of Federal Standard No. 376 and all other requirements of this document are met.

EEO/FAIR LABOR STANDARDS ACT POSTERS

Finally, you are required to place the enclosed posters describing the Equal Employment Opportunity Act and the Fair Labor Standards Act in a prominent location for the duration of your contract.

The information in this letter and the documents referenced below are available the Medical Equipment & Supplies website: http://www1.va.gov/oamm/oa/nac/fsss/medequipsupfss.cfm.

Thank you in advance for your attention in these matters. If you have any questions, you may contact the undersigned at steen.corr@va.gov or (708) 786-5125.

Sincerely,

Enclosures:

1.Award/Contract (SF 1449)

2.Awarded Price List

3.Sample Paper Pricelist

4.GSA Advantage Start-Up Package

5.GSA Advantage Purchase Order Portal

6.GSA Form 72

7.Modification Request Form

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7 of 44

OxySure Systems, Inc.

Contract Number V797P-4153b

SUMMARY OF AWARD Addenda to SF 1449

The Contract consists of the following documents:

(a)   FAR 52.212-4 Contract Terms and conditions - Commercial Items and Addenda

(b)   GSA 552.212-72 Contract Terms and Conditions Required to Implement Statutes or Executive Orders - Commercial Item

(c)   OxySure Systems, Inc's offer signed May 19, 2008 and Amendment One dated 02/01/2007 signed June 30, 2008.

(d)   Revisions: Solicitation page 116 (7/24/08 & 9/18/08); and Solicitation page 117 (9/18/08).

(e)   Final Proposal Revision (FPR> Letter dated November 6, 2008.

(f)    Awarded discounts are taken from the OxySure Systems, Inc's Product Catalog Prices valid from June 19, 2008 through June 19, 2013 consisting on one (1) page.

A copy of the Discount Relationship (Government's Price vs. Most Favored Customer (MFC) Price) Ratio dated November 6, 2008 consisting of one (1) page, identifying those products accepted for award, is attached hereto and made a part hereof. Identification of awarded items is accomplished by a red "A".

(g)  Incorporated by reference: FAR 52.212-3 Offeror Representations and Certifications – Commercial Items

Terms and Conditions as agreed to are as follows:

(a)   Contract period of: November 15, 2008 through November 14, 2013

(b)   Discounts as identified on above cited Price List by Special Item Number (SIN) and /or Models and Maximum Order:

SIN                                                      Awarded Maximum Order

A-49                                                    $100,000

Product Number                                Basic Discount

615-00                                                    7.8%

615-01                                                  11.5%

615-03                                                  22.0%

615-04                                                  20.0%

615-05                                                    7.2%

(c) Minimum Order:                           None

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OxySure Systems, Inc. Contract Number V797P-4153b

(d)   Quantity Discount: Additional 3% taken off the FSS net price when 100 or more (mix or match) items are purchased.

(e)   Delivery Time: Within 30 days After Receipt of Order (ARO)

(f)    Expedited Delivery: Within 3 days After Receipt of Order (ARO). Government is responsible for the additional shipping charges between the normal surface rate and the expedited rate.

(g)   Prompt Payment: 1% 20 days, net 30

(h)   F.O.B. Destination Point(s): FOB Destination 48 contiguous States and the District of Columbia and point of exportation to destination in Alaska, Hawaii and Puerto Rico.

(i)    Warranty Provision: As stated in the attached Limited Warranty Information dated October 2008 consisting of three (3) pages.

(j)    Return/Exchange Goods Policy:

1.    Before any product may be returned, a Return Materials Authorization (RMA) Number must be secured. The RMA number can only be issued by OxySure's Customer Service. To assist in the return process, the ordering facility is required to provide Customer Service the following information:

(a)   OxySure Product Code and Lot Number

(b)  Quantity Customer wishes to return

(c)   Order Number Associated with the Product(s)

(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, such determination being made is the sole discretion of OxySure. 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 (3) 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 15% Restocking Fee will be assessed on all returns authorized over thirty (30) days after the original invoice date.

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OxySure Systems, Inc.

Contract Number V797P-4153b

(k) Tracking Customer: In accordance with the Price Reduction Clause 552.238-72, the Government and OxySure Systems, Inc agree that City of Frisco is the identified tracking customer for whom the contract award is predicated. During the course of this contract, for any sales under the Maximum Order, the net price for any awarded item is reduced to the identified tracking customers the Government net price will be reduced proportionately.

The established ratios are shown on the attached spreadsheet titled Discount Relationship (Government Price vs. Most Favored Customer (MFC) Price) Ratio dated November 6, 2008 consisting of one (1) page.

(I) Annual Rebate: 1% annual rebate for sales under the contract that exceeds $500,000.00

(m) Exceptions: None

The lettered sections (a), (b), (c), (d), (e), (f), (g), (h),(i), and (j) above under "Terms and Conditions as agreed to" are requiredin the "Information for Ordering Activities" section of your Published Federal Supply Schedule Pricelist.

Your tax I.D. number is requiredto be included on the Published Price List to facilitate payment by ordering activities.

Please be advised, the sole purpose of funds provided by the accounting data in Block 25 of the Standard Form 1449 is to fund the guaranteed minimum of $2,500 as stated in contract clause l-FSS-106. However, the funds obligated at time of award do not constitute an order for supplies or services under this contract.

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Discount Relationship

(Government's Price vs. Most Favored Customer (MFC) Price)

Ratio (Based on Lowest Quantity Pricing)

SECOND AMENDMENT

11/06/08

SIN	Product Number	Product Description
A-49	615-00	Model 615, Portable Emergency Oxygen Generator
A-49	615-01	Model 615, Disposable Replacement Cartridge
A-49	615-05	Surface Mounted Wall Box
A-49	615-03	Replacement Mask, ADULT
A-49	615-04	Replacement Mask, CHILD/PEDIATRIC

List		MFC		MFC			Gov't		Gov't					Net Gov’t
Price*		Price		Discount			Price		Discount			Ratio		Price
$	361.00	$	361.00		0.0	%	$	333.91		7.5	%		0.92	$	333.91
$	161.00	$	161.00		0.0	%	$	143.91		10.6	%		0.92	$	143.91
$	374.00	$	374.00		0.0	%	$	362.03		3.2	%		0.92	$	362.03
$	30.50	$	30.50		0.0	%	$	29.00		4.9	%		0.92	$	29.00
$	32.50	$	32.50		0.0	%	$	32.00		1.5	%		0.92	$	32.00

* List Prices are FOB Frisco (OxySure's Headquarters), and include shipping charges.

Discount Relationship

(Government's Price vs. Most Favored Customer (MFC) Price)

Ratio (Based on Highest Tier/Quantity Pricing)

SIN	Product Number	Product Description
A-49	615-00	Model 615, Portable Emergency Oxygen Generator
A-49	615-01	Model 615, Disposable Replacement Cartridge
A-49	615-05	Surface Mounted Wall Box
A-49	615-03	Replacement Mask, ADULT
A-49	615-04	Replacement Mask, CHILD/PEDIATRIC

List		MFC		MFC			Gov't		Gov't
Price*		Price		Discount			Price		Discount			Ratio
	361.00	$	361.00		0.0	%	$	323.08		10.5	%
	161.00	$	161.00		0.0	%	$	139.08		13.6	%
	374.00	$	374.00		0.0	%	$	350.81		6.2	%
	30.50	$	30.50		0.0	%	$	28.09		7.9	%
	32.50	$	32.50		0.0	%	$	31.03		4.5	%

* List Prices are FOB Frisco (OxySure's Headquarters), and inlcude shipping charges. ** Minimum order quantity per Purchase Order, 100 product units total, mix and match.

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GENERAL SERVICES ADMINISTRATION

Federal Supply Service

Authorized Federal Supply Schedule Price List

On-line access to contract ordering information, terms and conditions, up-to-date pricing, and the option to create an electronic delivery order are available through GSA Advantage!, a menu-driven database system. The INTERNET address GSA Advantage! is: GSAAdvantage.gov

Schedule Title: Medical Equipment and Supplies

Special Item Number (SIN) A-49

FSC Group 65, Part II, Section A

FSC Class(es): 6510, 6515, 6530, 6532

Contract Number: V797P-4153-b

For more information on ordering from Federal Supply Schedules click on the FSS Schedules button at fss.gsa.gov.

Contract period: November 15, 2008 through November 14, 2013

Contractor’s Name: Julian Ross, CEO

Contractor’s Address:              OxySure Systems, Inc.

                                                       10880 John W. Elliott Drive, Suite 600

                                                       Frisco, Texas   75034

Phone Number:                           (972) 294-6450

FAX Number:                              (972) 294-6501

Business Size:                            Small Business

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CUSTOMER INFORMATION

Prices Shown Herein are Net (discount deducted).

1a   Table of Awarded Special Item Numbers:

SIN	Product Number	Product Name
A-49	615-00	Model 615, Portable Emergency Oxygen Generator
A-49	615-01	Model 615, Disposable Replacement Cartridge
A-49	615-03	Replacement Mask, ADULT
A-49	615-04	Replacement Mask, CHILD/PEDIATRIC
A-49	615-05	Surface Mounted Wall Box

1b  Lowest Priced Model Number and Lowest Unit Price:

OxySure® Model 615, Portable Emergency Oxygen System                                                                                     Product No. 615-00

  OxySure® Model 615 Portable Emergency Oxygen System. Using OxySure's patented and revolutionary "oxygen from powder" technology, the OxySure® Model 615 produces medically pure oxygen for use BY A LAYPERSON in any medical emergency, prior to the first responders arriving on the scene. Just like an AED, Model 615 bridges the gap between the onset of an emergency and the time that the first responders arrive on the scene. It is safe for public display/storage and layperson use, requires no training and uses a simple 2-step actuation. Model 615 has been approved by the FDA for over-the-counter sale (no need for prescription or standing orders). The OxySure Model 615 system comes ready to be placed in service and includes a mask and OxySure's custom designed delivery tubing, both neatly stored in a custom plastic tray under the green cover. The system is reusable with Replacement Cartridges. See www.oxysurestore.com

Product Specifications: Height: 12" (30.5 CM) | Width: 10" (25.4 CM) | Depth: 6" (15.2 CM) | Weight: 11 lbs. Exposure Limits: Between 40°F and 160°F | Storage: Between 70°F and 86°F (Room Temperature) Oxygen Volume: 90+ standard liters | Shelf Life: 2 Years Approvals: FDA Clearance for Over-the-Counter Sale (no prescription or standing orders required) $333.91

OxySure® Model 615, Disposable Replacement Cartridge                                                                                        Product No. 615-01

   OxySure® Model 615 Disposable Replacement Cartridge with Mask and Tray. OxySure's Replacement Cartridge is completely and safely disposable and easy to replace. The cartridge easily slides into the reusable outer housing. Its handle flips down when you close the housing lid, or flips up for easy lifting out of the housing. Each cartridge produces in excess of 15 minutes of medically pure (USP) oxygen at a minimum flow rate of 6 liters per minute, and is shipped with our standard Mask/Tray, which allows you to replace both these single-use items after use. The oxygen mask, with an easy quick connect, is stored neatly under the green cover so that it can be quickly accessed in the event of an emergency. Cartridges can be stored/stockpiled for medical or civil emergencies. Medical emergencies include cardiovascular, respiratory or general medical emergencies. For details see www.oxysurestore.com

Product Specifications: Height: 10.00" (25.40 cm) | Width: 9.75” (24.76 cm) | Depth: 5.50" (13.97 cm) | Weight: 7.00 lbs Exposure Limits: Between 40°F and 160°F | Storage: Between 70°F and 86°F (Room Temperature) Oxygen Volume: 90+ standard liters | Shelf Life: 2 years $143.91

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Replacement Mask, ADULT                                                                                                                                            Product No. 615-03

Model 615-03, OxySure® Replacement ADULT Mask with Tray. OxySure's ADULT Replacement Mask/Tray is a high concentration, partial re-breathing mask rated for oxygen flows of 6 to 15 liters per minute (LPM). The mask comes installed in our custom plastic tray that allows it to be stored neatly under the green cover so that it can be quickly accessed in the event of an emergency. The mask tray has a proprietary attachment that allows for a quick connection and guaranteed seal when attached to the system. The mask comes with OxySure's custom designed delivery tubing, which includes a 7 foot, kink-resistant safety tubing. Soft, clear anatomical form provides comfort for even hard-to-fit faces. Adjustable elastic band fits comfortably to hold mask snugly in place. See www.oxysurestore.com for details.

Product Specifications (as installed in the mask tray): Height: 2 50" (6.35 cm) | Width: 9.75” (24.76 cm) | Depth: 5 00" (12.70 cm) | Weight: 0.35 lbs Please note: OxySure's Replacement Mask/Tray is already included with each Model 615 System as well as with each Replacement Cartridge order $29.000

Replacement Mask, CHILD/PEDIATRIC                                                                                                                     Product No. 615-04

  Model 615-04, OxySure® Replacement CHILD/PEDIATRIC Mask with Tray. OxySure's CHILD/PEDIATRIC Replacement Mask is an optional accessory. It is a high concentration, partial re-breathing mask rated for flows of 6 to 15 liters per minute (LPM). The mask comes installed on a plastic tray that is stored neatly under the green cover so that it can be quickly accessed in the event of an emergency. The proprietary attachment allows for a quick connection and guaranteed seal when attached to the system. The CHILD/PEDIATRIC mask must be requested as an add-on accessory, as the System and Replacement Cartridges come standard with an ADULT mask. See www.oxysurestore.com for details.

Product Specifications (as installed in the mask tray): Height: 2.50" (6.35 cm) | Width: 9.75" (24.76 cm) | Depth: 5.00" (12.70 cm) | Weight: 0.35 lbs $32.00

Surface Mounted Wall Box                                                                                                                                              Product No. 615-05

  Model 615-05, OxySure® Surface Mounted Wall Box with Alarm. OxySure's Surface mounted wall box allows for easy access and promotes awareness of the availability of life saving oxygen in medical emergencies. Prominent, well labeled, accessible emergency oxygen could be the key in saving someone's life. Perfect for any public access location such as corporate offices, buildings, gymnasiums, schools, stadiums, and airports. The wall box comes with an Audible Alarm System (9-Volt Battery Operated) that will sound when door is opened. The door alarm can be deactivated by key. The rolled edge trim and white epoxy paint finish complement any décor, while offering excellent protection for the system. Mounting hardware not included. See www.oxysurestore.com for details.

Product Specifications: Height: 17.50" (44.45 cm) | Width: 17.50" (44.45 cm) | Depth: 7.00" (17.78 cm) | Weight: 15 lbs Cabinet Material: Steel $362.03

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1c  Hourly Rates: Not applicable

2.  Maximum order: SIN: A-49              $100,000

3.  Minimum order: None

4.  Geographic coverage: FOB Destination 48 contiguous States and the District of Columbia and point of exportation to destination in Alaska, Hawaii and Puerto Rico.

5.  Point of Production: Frisco, Collin county, Texas, 75034

6.   Discount From List Prices:

Product Number	Product Name	Basic Discount
615-00	Model 615, Portable Emergency Oxygen Generator	7.5%
615-01	Model 615, Disposable Replacement Cartridge	10.6%
615-03	Replacement Mask, ADULT	4.9%
615-04	Replacement Mask, CHILD/PEDIATRIC	1.5%
615-05	Surface Mounted Wall Box	3.2%

7.   Quantity discounts: Additional 3% taken off the FSS new price when 100 or more (mix or match) items are purchased.

Product No.	Product Name	Quantity Discount Net Government Price
615-00	Model 615, Portable Emergency Oxygen Generator	$       323.08
615-01	Model 615, Disposable Replacement Cartridge	$       139.08
615-03	Replacement Mask, ADULT	$         28.09
615-04	Replacement Mask, CHILD/PEDIATRIC	$         31.03
615-05	Surface Mounted Wall Box	$       350.81

8.  Prompt payment terms: 1% 20 days, net 30

9.  Government purchase cards are accepted at or below the micro-purchase threshold.

10.  Government purchase cards are accepted at or above the micro-purchase threshold.

10  Foreign items: None

11a  Time of delivery: Within 30 days After Receipt of Order (ARO)

11b Expedited Delivery: Within 3 days After Receipt of Order (ARO). Government is responsible for the additional shipping charges between the normal surface rate and the expedited rate.

11c  Overnight and 2-day delivery: Within 3 days After Receipt of Order (ARO). Government is responsible for the additional shipping charges between the normal surface rate and the expedited rate.

11d  Urgent Requirements:OxySure Systems, Inc. is a participant in the Federal Government Prime Vendor program. Clause I-FSS-140-B    URGENT REQUIREMENTS (JAN 1994) does not apply.

12  FOB point: Frisco, Texas, 75034

13a  Ordering address:                              OxySure Systems, Inc. 10880 John W. Elliott Drive, Suite 600 Frisco, Texas   75034

13b  Ordering procedures: FAR 8.405-3

14  Payment Address:                               OxySure Systems, Inc. 10880 John W. Elliott Drive, Suite 600 Frisco, Texas   75034

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15.   Warranty Provision:

Return/Exchange Goods Policy:

A. Before any product may be returned, a Return Materials Authorization (RMA) Number must be secured. The RMA number can only be issued by OxySure’s Customer Service. To assist in the return process, the ordering facility is required to provide Customer Service the following information:

(i)   OxySure Product Code and Lot Number

(ii)   Quantity Customer wishes to return

(iii)   Order Number Associated with the Product(s)

(iv)   OxySure’s Original Invoice Number

(v)   Reasons for Return

B. All products returned shall be shipped to OxySure, freight prepaid, unless the return is due to OxySure error, such determination being made is the sole discretion of OxySure. On all international returns, OxySure will specify the method of shipment.

C. Items eligible for full credit:

(i)   Products shipped in error

(ii)   Products ordered in error, if authorized for return within thirty (30) days of receipt

(iii)   Defective Products due to OxySure workmanship

D. Items not eligible for return:

(i)   Custom products or products sold on a “No-return” basis

(ii)   Goods held over ninety (90) days from the original invoice date

(iii)   Partial cases or quantities less than minimum order quantity

(iv)   Products unsalable due to re-design, preprocessing, revision, or obsolescence

(v)   Demonstration products

(vi)   Products no longer in their original packaging, used, or damaged through no fault of OxySure

E. A 15% Restocking Fee will be assessed on all returns authorized over thirty (30) days after the original invoice date.

16. Export packing charges: None

17. Terms and conditions of Government purchase card acceptance: None

18. Terms and conditions of rental, maintenance and repair: None

19. Terms and conditions of installations: None

20. Terms and conditions of repair parts: None

20a   Terms and conditions for any other services: None

21. List of service and distribution points:                            OxySure Systems, Inc. 10880 John W. Elliott Drive Suite 600 Frisco, Texas   75034

22.   List of participating dealers:

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Abatix Corporation

2400 Skyline Drive

Suite 400

Mesquite, TX   75149-1972

Ph: 888.222.8499

Fax: 214.388.0443

www.abatix.com

Banyan International

P.O. Box 1779

Abilene, TX   79604

Ph: 888.782.8548

Fax: 1.325.677.1372

www.statkit.com

Dauterive Medical Inc.

27025 Polo Road

Folsom, LA   70437

Ph: 866.693.2237

Fax: 985.796.8661

www.dauterivemedical.com

Edwards Medical, Inc.

495 Woodcreek Drive

Bolingbrook, IL   60440

Ph: 800.358.2000

Fax: 877.358.2002

www.edwardsmedical.com

eMED America

10800 Financial Center Pkwy

Suite 340

Little Rock, AR   72211

Ph: 866.327.3633

Fax: 877.329.3633

www.emedamerica.com

Emergency Packs, LLC.

316 Mid Valley Center # 177

Carmel, CA   93923

Ph: 888.577.2257

Fax: 831.659.2477

www.emergencypacks.com

Enerspect Medical Solutions

35 E. Horizon Ridge Pkwy #110

PMB 50

Henderson, NV   89002

Ph: 888.522.5574

Fax: 702.586.4910

www.enerspect.com

Hagemeyer North America

1460 Tobias Gadson Blvd.

Charleston, SC   29407

Ph: 843.745.1845

Fax: 843.745.2400

www.hagemeyerna.com

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HeartSafe America

13731 Omega Rd.

Dallas, TX   75244

Ph: 972.248.9477

Fax: 972.248.9417

www.heartsafeam.com

Legend Safety Solutions

400 Rella Blvd.

Suite #120

Suffern, NY   10901

Ph: 866.534.3635

Fax: 845.818.5100

www.legendsafety.com

Life Safety Solutions

725 North A1A

Suite 8102

Jupiter, FL   33477

Ph: 888.748.0004

Fax: 561.575.9937

www.lifesafetysolutions.com

LifeSecure

P.O. Box 2386

Northbrook, IL   60065

Ph: 877.877.5522

www.lifesecure.com

MedSafe

P.O. Box 1929

Marshall, TX   75671

Ph: 800.442.8839

Fax: 903.935.2117

www.gosafe.com

NKH Safety

P.O. Box 30088

Cincinnati, OH   45230

Ph: 888.347.3082

Fax: 513.688.0046

www.nkhaed.com

Safer America

226 East 54th Street

Suite #502

New York, NY   10022

Ph: 866.723.3799

Fax: 425.660.7779

www.saferamerica.com

School Health

865 Muirfield Drive

Hanover Park, IL   60133

Ph: 800.323.1305

Fax: 800.235.1305

www.schoolhealth.com

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USMedeq

3411 Preston Road

Suite #C13-226

Frisco, TX   75034

Ph: 888.231.0350

Fax: 888.236.1008

www.usmedeq.com

Covin Sales

2055 Randolph Street

Huntington Park, CA   90255

Ph: 888.862.6846

Fax: 323.584.6095

www.covinsales.com

StopHeartAttack.com

1572 Montgomery Highway

Suite 202

Birmingham, AL   35216

Ph: 888.823.6967

Fax: 205.823.7817

www.stopheartattack.com

ASD Healthcare, Inc.

3101 Gaylord Pkwy 3S-M175

Frisco, TX   75034

Ph: 800.746.6273

Fax: 800.547.9413

www.asdhealthcare.com

23.   Preventative maintenance: To be able to claim the limited warranty you need to follow the specific instructions for the products, including, but not limited to, the “Instructions for Use”.

If the system requires cleaning after use, we recommend a warm damp cloth to wipe down the exterior and interior of the housing. Do not use lubrication agents with the OxySure® System. The disposable cartridge, tubing and mask are single use items only and should be disposed of after each use. Using a mask or other accessories not specified for use with the OxySure® System may impair its performance and is strongly discouraged. Use only approved OxySure® components.

24a   Special attributes: Non-toxic, Ergonomic Design

24b   Section 508 compliance information: Not Applicable

25   Data Universal Number System (DUNS) number: 615721029

26. OxySure’s Central Contractor Registration (CCR) is valid until July 11, 2009.

19 of 44

OxySure®Model 615

Limited Warranty information

October 2008

© 2008 OxySure® Systems, Inc. All Rights Reserved Worldwide.

Disposable Cartridge: The OxySure® quality limited warranty lasts for 2 years in the case of the disposable cartridge or until it is used, whichever happens sooner.

Reusable Housing: The OxySure quality limited warranty lasts for 3 years in the case of the reusable housing or 25 uses, whichever happens first.

What will OxySure® do to correct the problem?

OxySure® will examine the product and decide, at its sole discretion, if it's covered under this limited warranty. OxySure® will then, at its sole discretion, either repair the defective product or replace it with the same or a comparable product. In these cases, OxySure® will pay for the cost of replacements, repairs, spare parts, labor and shipping costs, if and where applicable. This does not apply to any repair work or replacement not expressly authorized by OxySure® in writing. Replacement parts, if any, become the property of OxySure®. If the item is no longer sold by OxySure®, OxySure® will provide an appropriate replacement. It is OxySure® that, in its sole discretion, determines what constitutes an appropriate replacement. THIS REMEDY SHALL BE YOUR SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF WARRANTY.

Conditions for Limited Warranties:

The limited warranties are valid from original date of acceptance by the end user of the product. The original purchase receipt or purchase order, together with proof of payment (if applicable) is required as proof of purchase.

The limited warranties do not apply to normal wear and tear of products or to products that have been stored or shipped incorrectly, including storage or shipment under environmental conditions outside of those conditions specified by OxySure®. Furthermore, the limited warranties do not apply to products that have been used inappropriately, abused, misused, altered, or cleaned with incorrect cleaning methods or incorrect cleaning products. The limited warranties do not cover normal wear and tear, cuts or scratches, or damage caused by impacts or accidents. The limited warranties do not cover defects in appearance, cosmetic, decorative items or any non-operative parts. The limited warranties do not apply if the product serial number has been removed, defaced or altered. Further, the limited warranties are not applicable if the products have been stored outdoors or in humid environments, or if the products have been otherwise not stored at room temperature.

Warranty coverage terminates if the original purchaser sells or otherwise transfers the product, unless the original purchaser is an authorized distributor of OxySure products; in such event, coverage is transferred to the original customer of such distributor (the"end user"). Warranty coverage also terminates if the end user sells or otherwise transfers the product. No OxySure reseller, agent, or employee is authorized to make any modification, extension, or addition to this warranty.

20 of 44

Some states and provinces do not allow the limitation or exclusion of incidental or consequential damage, so this limitation may not apply to you.

Care instructions:

To be able to claim the limited warranty you need to follow the specific instructions for the products, including, but not limited to, the "Instructions for Use".

How country, provincial and state law applies:

This limited warranty gives you specific legal rights, and you may also have other rights that vary from country to country, state to state or province to province.

Procedure for Claims Under Limited Warranties:

No product may be returned directly to OxySure® without first contacting OxySure® for a Return Material Authorization ("RMA") number. If it is determined that the product may be defective, you will be given an RMA number and instructions for product return. An unauthorized return, i.e. one for which an RMA number has not been issued, may be returned to you at your expense. Authorized returns are to be shipped prepaid and insured to the address on the RMA in an approved shipping container. Your original box and packaging materials should be kept for storing or shipping your product. To obtain warranty service, an original purchase receipt or purchase order, together with proof of payment (if applicable) is required as proof of purchase. OxySure® retains the exclusive right to either repair or replace the unit at its sole discretion.

21 of 44

Please complete these two easy steps:

STEP 1: Contact OxySure® Customer Service to receive a RMA number.

Call or e-mail OxySure® Customer Service to describe the problem you are experiencing and request a RMA number. You will need to provide the product's serial number (if applicable), your return shipping address, and a daytime telephone number.

Phone: 1-888-70XY-SURE

E-mail: service@oxysure.com

STEP 2: Ship the unit, along with the RMA number, to OxySure®.

Once you have received the RMA number, securely package the product and ship it (insured) to the following address:

OxySure Systems, Inc.

Attn: Customer Service

10880 John W. Elliott Road, Suite 600

Frisco, Texas 75034 USA

RMA Number: (insert your RMA number here - see above)

22 of 44

GENERAL SERVICE ADMINISTRATION CONTRACTOR'S REPORT OF SALES

Check one of the blocks to indicate the period (quarter) for which this report is being submitted

1.  FY o 1st Quarter (Oct - Dec) o 2nd Quarter (Jan - Mar) o 3rd Quarter (Apr - Jun) o 4th Quarter (Jul - Sept)

This report is required quarterly regardless of whether orders under the contract were received. See instructions before preparing.		2.	Contract No.: V797P-4153b
TO:	DEPARTMENT OF VETERANS AFFAIRS C/O FEDERAL SUPPLY SERVICES P.O. BOX 76, Bldg 37 HINES, IL 60141	3.	Contractor (Name and Address including Zip Code) OxySure Systems, Inc. 10880 John W. Elliott Road, Suite 600 Frisco, TX 75034

4.	Class No. and Title of Contract:	5.	Total Sales:
	65IIA Medical Equipment & Supplies
6.	SALES RECEIVED annotate in corresponding blocks 6 (a-d), below. (If no sales whatsoever for items awarded under the above contract were received during the months covered by this report, enter $0 in the applicable columns below.

(a) Special Item No.	(b) VA Sales	(c) OGA Sales	(d) Disaster Recovery Sales	(e) Total Sales
A-49

NOTE: This report is due no later than 60 days after the end of the quarter

CERTIFICATION

7.       AS REQUIRED BY THE CONDITIONS OF THE CONTRACT, THERE ARE REPORTED ABOVE ALL GOVERNMENT SALES FOR ITEM(S) UNDER THE CONTRACT IDENTIFIED. THIS REPORT IS ACCURATE TO THE BEST OF OUR KNOWLEDGE AND BELIEF.

AUTHORIZED OFFICIAL (Signature and official title)
	Date: ________
Name and Phone Number for questions or clarifications:	Total Sales:_______
	Dollar Amount IFF: ________
	Date of Electronic Payment Submission: ________

23 of 44

GSA Form 72 (Rev. 2/04) (Adapted for VA Use)

FEDERAL SUPPLY SCHEDULE

65IIA Medical Equipment & Supplies

Request for Modification Form

24 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:
ADDRESS:	VA NATIONAL ACQUISITIONS CENTER PO BOX 26, BLDG 37 MS 001AL-A2-2 1 BLOCK N 22ND STREET HINES, IL 60141
FAX:	(708) 786-4974 (708) 786-4975 (708) 786-5828
EMAIL:	EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

25 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

Provide the following information for PRODUCT ADDITIONS

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	DELIVERY TIME	Within                days after receipt of order (ARO)
o COMPLETE o INCOMPLETE	MANUFACTURING NAME & ADDRESS	NAME
o NA		ADDRESS
		POC
		PHONE
		EMAIL
o COMPLETE o INCOMPLETE o NA	DATED COMMERCIAL PRICELIST	NOTE: If a dated commercial pricelist is not available provide the internal pricing documents that identify the list price of the items proposed and verify that this pricing is true and correct.  This document must be signed and dated by an authorized signatory.
o COMPLETE o INCOMPLETE	ACTUAL ANNUAL COMMERCIAL SALES FOR THE LAST 12 MONTHS	SIN	$
		SIN	$
		SIN	$
		SIN	$
		SIN	$
COMPLETE  INCOMPLETE	ESTIMATED OR ACTUAL ANNUAL GOVERNMENT SALES	SIN	$
		SIN	$
		SIN	$
		SIN	$
YES  NO	PRIME VENDOR	Is/Are the product(s) offered for distribution under the VA Prime Vendor Program?

26 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	MOST FAVORED CUSTOMER (MFC)	MFC:       NOTE: If the MFC differs from the one upon which the contract award was predicated complete the enclosed Commercial Sales Practices Form (CSP-1) o CSP-1 COMPLETE o CSP-1 NOT REQUIRED
o COMPLETE o INCOMPLETE	TRACKING CUSTOMER (TC)	TCTC NAME
		o CURRENT TC
		o PROPOSED TC
o YES o NO	PROPOSED PRICING	Based on your written discounting policies (standard commercial sales practices in the event you do not have written discounting policies), are the discounts and any concessions which you offer the Government equal to or better than your best price (discount and concessions in any combination) offered to any customer acquiring the same items regardless of quantity or terms and conditions? o IF NO, complete the enclosed Commercial Sales Practices Form (CSP-1) and disclose all commercial customers receiving discounts greater than the proposed Government pricing.
o YES o NO	DISCOUNT POLICIES	Do any deviations from your written policies or standard commercial sales practices disclosed in the above chart ever result in better discounts (lower prices) or concessions than indicated? If YES, explain deviations in accordance with the instructions below: Your explanation should include a discussion of situations that lead to deviations from standard practice, an explanation of how often they occur, and the controls you employ to assure the integrity of your pricing.  Examples of typical deviations may include, but are not limited to, one time goodwill discounts to charity organizations or to compensate an otherwise disgruntled customer; a limited sale of obsolete or damaged goods; the sale of sample goods to a new customer; or the sales of prototype goods for testing purposes.

27 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	PRODUCT ADDITIONS PRICE PROPOSAL	Submit a spreadsheet that includes the following information: o SIN# o Item# o Product Description o Quantity/Unit of Measure o Commercial List Price o Proposed Gov’t Discount off Commercial List Price o MFC Discount o MFC Net Price o Proposed NET FSS Price (w/ IFF & Freight)
o COMPLETE o INCOMPLETE	QUANTITY DISCOUNTS	Identify any proposed additional quantity discounts offered to the Government
o COMPLETE o INCOMPLETE	ADDITIONAL DISCOUNTS	Identify any proposed additional discounts/concessions, including prompt payment discounts, annual rebates, etc. provided to your commercial customers.
o COMPLETE o INCOMPLETE	PROPOSED FOB TERMS	FOB DESTINATION o 48 Continental States & DC w/ point of exportation (POE) to AK, HI, PR o 50 States & DC w/ POE to PR o 50 States, DC, & PR

28 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

Column 1—Identify the applicable customer or category of customer.  A "customer" is any entity, except the Federal Government, which acquires supplies or services from the Offeror.  The term customer includes, but is not limited to: original equipment manufacturers, value added resellers, state and local governments, distributors, educational institutions (an elementary, junior high, or degree granting school which maintains a regular faculty and established curriculum and an organized body of students), dealers, national accounts, and end users.  In any instance where the Offeror is asked to disclose information for a customer, the Offeror may disclose information by category of customer if the offeror's discount policies or practices are the same for all customers in the category.  (Use a separate line for each customer or category of customer.)

Column 2—Identify the discount.  The term “discount” is as defined in solicitation clause 552.212-70, Preparation of Offer (Multiple Award Schedule).  Indicate the best discount (based on your written discounting policies or standard commercial discounting practices if you do not have written discounting policies) at which you sell to the customer or category of customer identified in column 1, without regard to quantity; terms and conditions of the agreements under which the discounts are given; and whether the agreements are written or oral.  Net prices or discounts off of other price lists should be expressed as percentage discounts from the price list which is the basis of your offer.  If the discount disclosed is a combination of various discounts (prompt payment, quantity, etc.), the percentage should be broken out for each type of discount.

If the price lists which are the basis of the discounts given to the customers identified in the chart are different than the price list submitted upon which your offer is based, identify the type or title and date of each price list.  The contracting officer may require submission of these price lists.  To expedite evaluation, offerors may provide these price lists at the time of submission.

Column 3—Identify the quantity or volume of sales.  Insert the minimum quantity or sales volume which the identified customer or category of customer must either purchase/order, per order or within a specified period, to earn the discount.  When purchases/orders must be placed within a specified period to earn a discount indicate the time period.

Column 4—Indicate the FOB delivery term for each identified customer.  See FAR 47.3 for an explanation of FOB delivery terms.

Column 5—Indicate concessions regardless of quantity granted to the identified customer or category of customer.  Concessions are defined in solicitation clause 552.212-70, Preparation of Offers (Multiple Award Schedule).  If the space provided is inadequate, the disclosure should be made on a separate sheet by reference.

If deviations from your written policies or standard commercial sales practices disclosed in the chart on the Commercial Sales Practices Format are so significant and/or frequent that the Contracting Officer cannot establish whether the price(s) offered is fair and reasonable, then you may be asked to provide additional information.  The Contracting Officer may ask for information to demonstrate that you have made substantial sales of the item(s) in the commercial market consistent with the information reflected on the chart on the Commercial Sales Practice Format, a description of the conditions surrounding those sales deviations, or other information that may be necessary in order for the Contracting Officer to determine whether your offered price(s) is fair and reasonable.  In cases where additional information is requested, the Contracting Officer will target the request in order to limit the submission of data to that needed to establish the reasonableness of the offered price.

29 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

CSP-1 Commercial Sales Practices Format

Column 1—Customer	Column 2—Discount	Column 3—Quantity/Volume	Column 4—FOB Term (Destination or Origin)	Column 5— Additional Discounts or Concessions (Include PPD & Annual Rebate)

30 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT ADDITION

I, ____________________________________ verify that items offered are not replacements for previously deleted items with a lower cost.

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification

31 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT DELETION

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:

ADDRESS:           VA NATIONAL ACQUISITIONS CENTER

PO BOX 26, BLDG 37

MS 001AL-A2-2

1 BLOCK N 22ND STREET

HINES, IL 60141

FAX:                      (708) 786-4974

(708) 786-4975

(708) 786-5828

EMAIL:                  EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

32 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT DELETION

Provide the following information for PRODUCT DELETIONS

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	PRODUCT DELETIONS	Submit a spreadsheet that includes the following information: o SIN# o Item# o Product Description o Quantity/Unit of Measure o Reason for Deletion

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification

33 of 44

REQUEST FOR MODIFICATION FORM

PRICE INCREASE

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:

ADDRESS:           VA NATIONAL ACQUISITIONS CENTER

PO BOX 26, BLDG 37

MS 001AL-A2-2

1 BLOCK N 22ND STREET

HINES, IL 60141

FAX:                      (708) 786-4974

(708) 786-4975

(708) 786-5828

EMAIL:                  EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

34 of 44

REQUEST FOR MODIFICATION FORM

PRICE INCREASE

Provide the following information for PRICE INCREASE

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	PRICE INCREASE PROPOSAL	Submit a spreadsheet that includes the following information: o SIN# o Item# o Product Description o Quantity/Unit of Measure o Previous Commercial List Price o Current Commercial List Price o Current FSS Pricing o Proposed NET FSS Price o % FSS Change o Previous Tracking Customer Price o Current Tracking Customer Price o % Tracking Customer Change o Awarded FSS Tracking Customer Ratio
o COMPLETE o INCOMPLETE o NA	PRODUCT INFORMATION	Product was added at:    o TIME OF AWARD    o MODIFICATION#            o MODIFICATION EFFECTIVE DATE
o COMPLETE o INCOMPLETE o NA	DATED COMMERCIAL PRICELIST	NOTE: If a dated commercial pricelist is not available provide the internal pricing documents that identify the list price of the items proposed and verify that this pricing is true and correct.  This document must be signed and dated by an authorized signatory.
o YES o NO	PRIME VENDOR	Is/Are the product(s) offered for distribution under the VA Prime Vendor Program?

35 of 44

REQUEST FOR MODIFICATION FORM

PRICE INCREASE

I, ____________________________________ verify that not adverse change has occurred in the ratio between the awarded FSS price and the tracking customer price since the award of the item.

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification

36 of 44

REQUEST FOR MODIFICATION FORM

PRICE DECREASE

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:

ADDRESS:           VA NATIONAL ACQUISITIONS CENTER

PO BOX 26, BLDG 37

MS 001AL-A2-2

1 BLOCK N 22ND STREET

HINES, IL 60141

FAX:                      (708) 786-4974

(708) 786-4975

(708) 786-5828

EMAIL:                  EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

37 of 44

REQUEST FOR MODIFICATION FORM

PRICE DECREASE

Provide the following information for PRICE DECREASE

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	REASON FOR PRICE REDUCTION	o Voluntary, to Government only o Granted more favorable pricing than that contained in the commercial catalog, pricelist, or other document upon which the contract award was predicated o Granted more favorable discounts/terms & conditions than those contained in the catalog, pricelist, or other document upon which the contract award was predicated o Granted special discounts to the tracking that formed the basis of award.  This change disturbs the awarded ratio.
o COMPLETE o INCOMPLETE	PRICE REDUCTION	o PERMANENT Price Reduction o TEMPORARY Price Reduction o Date Price Reduction Expires:
o COMPLETE o INCOMPLETE o NA	DATED COMMERCIAL PRICELIST	Provide a copy of the applicable catalog, pricelist, contractor bulletin, letter, or customer agreement that details the effective date, duration, and terms & conditions of the price reduction.
o COMPLETE o INCOMPLETE	PRICE INCREASE PROPOSAL	Include a spreadsheet including the following information: o SIN# o Item# o Product Description o Quantity/Unit of Measure o Previous Commercial List Price o Current Commercial List Price o Current FSS Pricing o Proposed NET FSS Price o Previous Tracking Customer Price o Current Tracking Customer Price o Awarded FSS Tracking Customer Ratio

38 of 44

REQUEST FOR MODIFICATION FORM

PRICE DECREASE

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification.

39 of 44

REQUEST FOR MODIFICATION FORM

TRACKING CUSTOMER CHANGE

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:

ADDRESS:           VA NATIONAL ACQUISITIONS CENTER

PO BOX 26, BLDG 37

MS 001AL-A2-2

1 BLOCK N 22ND STREET

HINES, IL 60141

FAX:                      (708) 786-4974

(708) 786-4975

(708) 786-5828

EMAIL:                  EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

40 of 44

REQUEST FOR MODIFICATION FORM

TRACKING CUSTOMER CHANGE

Provide the following information for TRACKING CUSTOMER CHANGE

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	COVER LETTER	Explain in detail why the proposed Tracking Customer or Category of Customer (TC) is an appropriate customer in terms of ensuring the Government price/discount remains representative of market prices and will continue to benefit from positive price changes.
o COMPLETE o INCOMPLETE	COMMERCIAL SALES PRACTICE (CSP) INFO	Submit a spreadsheet that includes the following information: o SIN# o Item# o Product Description o Commercial List Price o MFC Name o MFC Discount o MFC Net Price o Proposed Government Discount off List Price o Net FSS Price o Awarded Tracking Customer Ratio o Proposed Tracking Customer o % Discount off List Price o TC Net Price o TC Sales (12 months)
o COMPLETE o INCOMPLETE	QUANTITY DISCOUNTS	Identify any proposed additional quantity discounts offered to the Government
o COMPLETE o INCOMPLETE	ADDITIONAL DISCOUNTS	Identify any proposed additional discounts/concessions, including prompt payment discounts, annual rebates, etc. offered to your commercial customers

41 of 44

REQUEST FOR MODIFICATION FORM

PRODUCT DELETION

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	PRODUCT INFORMATION	Product was added at: o TIME OF AWARD o MODIFICATION#         o MODIFICATION EFFECTIVE DATE
o COMPLETE o INCOMPLETE	COMMENTS

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification.

42 of 44

REQUEST FOR MODIFICATION FORM

ADMINISTRATIVE/OTHER CHANGE

CONTRACTOR NAME
CONTRACT#
ADDRESS1
ADDRESS2
CITY/STATE/ZIP
PHONE
EMAIL
DATE SUBMITTED TO VA-NAC

YOU MAY MAIL, FAX, OR EMAIL YOUR COMPLETED MODIFICATION REQUEST TO:

ADDRESS:           VA NATIONAL ACQUISITIONS CENTER

PO BOX 26, BLDG 37

MS 001AL-A2-2

1 BLOCK N 22ND STREET

HINES, IL 60141

FAX:                      (708) 786-4974

(708) 786-4975

(708) 786-5828

EMAIL:                  EMAIL DIRECTLY TO YOUR ASSIGNED CONTRACTING OFFICER

43 of 44

REQUEST FOR MODIFICATION FORM

ADMINISTRATIVE/OTHER CHANGE

Provide the following information for ADMINSTRATIVE/OTHER CHANGE

CONTRACTOR CHECKLIST	REQUIREMENT	COMMENTS
o COMPLETE o INCOMPLETE	SPECIAL ITEM NUMBER (SIN) CATEGORY(IES)
o COMPLETE o INCOMPLETE	REASON FOR MODIFICATION	o Change of Address o Item Description Change o Item Code Change o Add/Delete Contract Administrator o Warranty Terms o Shipping Lead Times o Add/Delete Distributor o Other
o COMPLETE o INCOMPLETE	DOCUMENTATION	Provide all appropriate documentation related to your request.

_______________________________________________	_______________________________________________
AUTHORIZED REPRESENTATIVE	DATE

o  APPROVED           o  APPROVED AS AMENDED          o   DISAPPROVED

_______________________________________________	_______________________________________________
CONTRACTING OFFICER	DATE

_______________________________________________

EFFECTIVE DATE OF MODIFICATION

NOTE:  The effective date of the modification will be determined at the time of approval of the request by the Contracting Officer.  Effective dates will be assigned as either the 1st or 15th of the month.

Contractors are reminded that they must update their NAC-CM database and GSA Advantage! files and provide the CO with an updated paper pricelist for approval within 30 days of receiving an executed copy of the requested modification.

44 of 44

EX-10.33

EXHIBIT 10.33

DISTRIBUTION AGREEMENT

This agreement (together with its related exhibits, the “Agreement”) is made and executed this __________ Day of _______________ , 2010, (the “Effective Date”) by and between OXYSURE SYSTEMS, INC. (“OxySure”), a Delaware corporation with its primary place of business located at 10880 John W. Elliott Road, Suite 600, Frisco, Texas, 75034 USA and ____________________ (the “Distributor”), located at ________________________________________.

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 a non-exclusive distributor for the Products in the Territory and Channel.  Distributor’s appointment is for an initial term of one (1) year from the Effective Date, renewable thereafter for successive one-year periods unless terminated in 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, and (b) Distributor may not appoint, delegate to, authorize or in any way whatsoever empower any other party to act on Distributor’s behalf under this Agreement without the prior written consent of OxySure.

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 Customer and OxySure.

2.2 Distributor will maintain a reasonable number of demonstration Products for demonstration to prospective and existing Customers.

2.3 OxySure does not authorize Distributor to make, nor will 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.

2.4 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.

2.5 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) any observations concerning recurrent issues with the Products;

(c) any changes in the management or ownership of Distributor; and

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(d) 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.  If necessary, Distributor will abide by all Distributor-specific governmental reporting requirements as imposed by the United States Food and Drug Administration or any other relevant governmental body.

2.6 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.

2.7 Distributor shall furnish to OxySure copies of all proposed advertising, technical, sales, and other materials relating to the Products and refrain from and/or discontinue the use of any such materials which in the opinion of OxySure are false or misleading or may subject OxySure to liability.

2.8 Distributor agrees to carry out all of its obligations to OxySure promptly and in good faith.

2.9 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.

2.10 In performing its obligations hereunder, Distributor shall comply with all relevant laws, rules and regulations.

2.11 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 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 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 in every respect support Distributor’s authorized sales efforts in the Territory and Channel.

4.         Minimum Net Sales

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. After that, an annual minimum sales requirement is to be maintained as set out in Exhibit C.

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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 of Exhibit A, provided, that with respect to any material change (e.g., amending the Products of Exhibit A) OxySure shall provide Distributor with thirty (30) 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 if (a) the orders are submitted to fill quotes outstanding on the removal date, 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 in OxySure’s online price list (“Product Price List”).

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, provided that Distributor may not publish or display a price lower than the resale prices 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 if 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, except in the instance of short shipments.  For credit, Distributor will submit a written credit request within one (1) month 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 one (1) month 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 with thirty (30) days written notice to Distributor.

7.         Limited Warranty and Warranty Service

7.1 OxySure provides an end user limited warranty for the Products.  The terms of the end user 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.

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8.         Reports and Audits

Intentionally omitted.

9.         Distributor’s Financial Condition

9.1 OxySure may withhold shipments due to Distributor’s general financial condition and/or conditions of Distributor’s account with OxySure.  In the event Distributor is in arrears per Exhibit D, OxySure may elect to place Distributor on credit hold, meaning no shipments may be made from OxySure to Distributor until such arrearages are satisfied.  In the event Distributor is in arrears for more than 60 days, or if Distributor is placed on credit hold more than two times in any twelve month period, OxySure may declare Distributor in default under this Agreement.

9.2 Wherein 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 option.

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 that which 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 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 Intentionally omitted.

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, including but not limited to the Health Insurance Portability and Accountability Act (HIPAA), and shall ensure that each employee, director, officer, and consultant of Distributor complies with such privacy laws at all times.

10.5 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.

10.6 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 19.8.

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 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.

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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 Both OxySure and Distributor are independent contractors, and no agency or other joint relationship is created.

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.

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 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 This Agreement may be terminated by the mutual agreement of OxySure and the Distributor.

14.3 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, the breaching party shall be deemed to be in default hereunder.

 (a) 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 in addition to Distributor’s accounts and payment history with OxySure.

14.5 Either party may terminate this Agreement at any time prior to the expiration of the then-applicable term, without cause, by sending written notice to the other party at least ninety (90) days prior to the termination date.

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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 option, to be exercised in OxySure’s sole discretion, to purchase any or all inventory of OxySure’s Products then held by Distributor.

(b) The price of the Product being bought back, if at all, will be negotiated and mutually agreed on.

(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.

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), 14 (Term; Remedies; and Termination); 15 (Indemnity and Insurance), 16 (Limitation of Liability), 17 (Intellectual Property Indemnity), 19.7 (Governing Law), and 19.8 (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 a 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 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 warranty or guarantee of the Products 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

OxySure shall not be liable to Distributor for any indirect, punitive, consequential, special, incidental or loss of profit damages.

17. Intellectual Property Indemnification

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17.1 Distributor agrees that OxySure has the right to, and OxySure agrees that it will at its 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 must 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 so long as OxySure had 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 promptly, in writing, of such action 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.

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. Compliance.

(a) Government Regulations.  Distributor and OxySure shall use their best efforts to ensure compliance with the requirements of any statute, ordinance, law, rule or regulation concerning, or order of any governmental or regulatory body having jurisdiction over, this Agreement.

(b) Compliance.  The parties agree and represent and warrant to each other that nothing in this Agreement is intended to constitute remuneration of any kind whatsoever for referrals of patients and nothing in this Agreement is intended in any manner to violate any federal or state law, rule or regulation, including, without limitation, the federal Anti-Kickback Law (42 U.S.C. § 1320a-7b(b)), the Ethics in Patient Referrals law (42 U.S.C. § 1395nn) the “Stark Law”, the Texas Medical Practice Act (Texas Occupations Code Chapters 151 to 165), and Texas Occupations Code § 102.001.

(c) Confidentiality of Records.  This Agreement shall comply with the Health Insurance Portability and Accountability Act of 1996, as amended from time to time (“HIPAA”) (45 C.F.R. Parts 160 and 164).

(iii) Nothing in this Section 18 will constitute the waiver of the attorney-client or any similar privilege under applicable laws.

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19. General Provisions

19.1 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	Description of Products
B	Description of Territory and Channel
C	Minimum Net Sales
D	Payment Terms
E	Return Goods Policy
F	Limited Product Warranty
G	Pricing & Discount Schedule
H	Internet Distribution Attachment

19.2 Assignment.  Distributor may not assign or transfer its right under this Agreement without the prior written consent of OxySure.

19.3 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.

19.4 Headings.  The headings of this Agreement are for convenience of reference only, and are not intended to be part of nor to affect the meaning or interpretation of this Agreement.

19.5 Notice.  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 hereinabove, 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.

19.6 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.

19.7 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.

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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:
Name:	OxySure Systems, Inc..
Company:	10880 John W. Elliott Road, Suite 600
Address:	Frisco, Texas, 75034 USA
	PH: 972-294-6555
PH:	FAX:
FAX:
By:     _______________________________	By:     _________________________________
	Julian T. Ross
Title:     President_____________________	Chairman & CEO
Date:     _______________________________	Date:     _________________________________

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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):

□ The following areas within the United States:

The State of Florida

________________________________________

________________________________________

□ The following countries (requires Attachment B-1, International Terms, to be attached):

None

________________________________________

________________________________________

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 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.

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: Lifesaving Products, LLC.	OxySure® Systems, Inc.:
By:      _________________________	By:      _________________________
	Julian Ross
Title:   _________________________	CEO
Date:	Date:

12

EXHIBIT C

Minimum Net Purchases

Upfront commitment: The equivalent of $25,000 in Product. Purchase Order and payment must accompany distribution agreement.  Must be drawn down within 3 months if OxySure drop ships.

Annual commitment: The equivalent of $100,000 in Product.

13

EXHIBIT D

Payment Terms

OxySure shall send the Distributor an invoice with respect to a shipment of Products no later than ten (10) days after the end of the month in which the shipment occurred.  The invoice shall set forth the Products, quantities, prices of the Products charged to the Distributor and the amount of any shipping, handling or insurance charges incurred by OxySure on behalf of Distributor.

PREPAID ON INITIAL QUALIFICATION ORDER. THEREAFTER, COD OR, IF APPROVED FOR CREDIT, WITHIN FOURTEEN (14) DAYS AFTER THE DATE OF INVOICE, THE DISTRIBUTOR SHALL PAY THE AMOUNTS DUE THEREUNDER TO OXYSURE AT THE ADDRESS FOR OXYSURE SET FORTH ON THE FIRST PAGE OF THIS AGREEMENT.

All payments to OxySure shall be in cash and in United States dollars.

14

EXHIBIT E

Return Goods Policy

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.  An RMA# can only be issued by OxySure Customer Service.

To assist in the return process, the Customer/Distributor is asked 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, such determination being made in OxySure’s sole discretion.  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 forty five (45) days after the original Invoice Date.

15

EXHIBIT F

Limited Product Warranty

Refer to the Product literature packaged with each Product, such being incorporated by reference herein, for any applicable end user limited warranty.

16

EXHIBIT G

Pricing Schedule - Commercial

		Volume Range Min		Volume Range Max		Unit Price, Authorized
	MSRP	#Units		#Units		Distributors Only
Model 615, Base Systems (SKU 615-00)1:			1		+
Model 615, Cartridges (SKU 615-01)1:			1		+

Model 615, Mask/Tray (SKU 615-03):		1	499
Model 615, Pediatric Mask/Tray (SKU 615-04):		1	499
Custom (Emergency Oxygen) Wall-mounted Display Cabinet (SKU 615-05):		1	50
OxySure Wall Sign (SKU 615-07):		1	+
OxySure Thermal Bag (SKU 615-09):		1	+
Resuscitator Bag, Adult (SKU 615-10):		1	+
Resuscitator Bag, Pediatric (SKU 615-11):		1	+
Pulse Oximeter – Standard (SKU 615-12):	Min order qty=12		+
Pulse Oximeter – Premium (SKU 615-13):	Min order qty=12		+
Notes: (1) Cartridges come with standard Adult masks.

Volume refers to purchase order volume. All Prices are FOB Frisco.

17

EXHIBIT H

Internet Distribution Attachment

To be effective, this Internet Distribution Attachment must be signed by both OXYSURE SYSTEMS, INC. (“OxySure”), and [DISTRIBUTOR] (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.  Intentionally omitted.

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.

18

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:
By:      _________________________	By:      _________________________
	Julian Ross
Title:   _________________________	CEO
Date:	Date:

19

EX-15.1

EXHIBIT 15

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

OxySure Systems, Inc.

Frisco, Texas

We have reviewed the accompanying balance sheets of OxySure Systems, Inc. as of June 30, 2010 and December 31, 2009, and the related statements of operation, stockholders' equity, and cash flows for the three-month periods ended June 30, 2010 and 2009. These interim financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with United States generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the financial statements, the Company has suffered recurring losses and has experienced negative cash flows from operations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note 15 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

EX-16.1

EXHIBIT 16.1

THE BLACKWING GROUP, LLC

18921G E VALLEY VIEW PARKWAY #325

INDEPENDENCE, MO 64055

816-813-0098

August 16, 2010

Securities and Exchange Commission

100 F. Street, N.E.

Washington, DC 20549

RE: Oxysure Systems, Inc.

We have read the statements that we understand Oxysure Systems, Inc. will include under Item 23.4 of the Form

 S-1/A filing. We agree with such statements made regarding our firm.

Regards,

/s/ The Blackwing Group, LLC

Certified Public Accountants

EX-23.2

EXHIBIT 23.2

We hereby consent to the inclusion of our report in this Form S-1 of OxySure Systems, Inc. for the years ended December 31, 2009 and December 31, 2008 of our report dated September 20, 2010 included in its Registration Statement on Form S-1 dated October 4, 2010 relating to the financial statements for the years ended December 31, 2009 and December 31, 2008.

/s/ Sam Kan & Company

Firm’s Manual Signature

Alameda, CA

City, State

October 4, 2010

Date

CORRESP

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