-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G3aYNzGfYLk7blz8dUslC9n29fmTG3ZsdHwlPk2Erpk1PBRhtgCVov3uXQanpgYW ak5HLvNIe40VZpxvIyY0NA== 0001019687-05-003306.txt : 20051130 0001019687-05-003306.hdr.sgml : 20051130 20051130172220 ACCESSION NUMBER: 0001019687-05-003306 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040531 FILED AS OF DATE: 20051130 DATE AS OF CHANGE: 20051130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ingen Technologies, Inc. CENTRAL INDEX KEY: 0000861058 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 880429044 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28704 FILM NUMBER: 051235410 BUSINESS ADDRESS: STREET 1: 35193 AVENUE A, SUITE C CITY: YUCAIPA STATE: CA ZIP: 92399 BUSINESS PHONE: 800-259-9622 MAIL ADDRESS: STREET 1: 35193 AVENUE A, SUITE C CITY: YUCAIPA STATE: CA ZIP: 92399 FORMER COMPANY: FORMER CONFORMED NAME: CREATIVE RECYCLING TECHNOLOGIES INC DATE OF NAME CHANGE: 19980505 FORMER COMPANY: FORMER CONFORMED NAME: CLASSIC RESTAURANTS INTERNATIONAL INC /CO/ DATE OF NAME CHANGE: 19960619 FORMER COMPANY: FORMER CONFORMED NAME: CLASSIC RESTAURANTS INC/CO DATE OF NAME CHANGE: 19960604 10KSB 1 ingen_10ksb-053104.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 2004 Commission File Number ___________ INGEN TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Georgia 88-0429044 ------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 35193 Avenue "A", Suite-C, Yucaipa, California 92399 ---------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (800) 259-9622 -------------- (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, no par value -------------------------- (Title of Class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [x] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [x] The Registrant had revenues of $901,542 for its most recent fiscal year. As of May 31, 2004, the aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant was $797,605.* The number of shares of Common Stock, no par value, outstanding on May 31, 2004, was 12,864,593. * Excludes the Common Stock held by executive officers, directors and stockholders whose ownership exceeds 5% of the Common Stock outstanding on May 31, 2004. The calculation does not reflect a determination that such persons are affiliates for any other purposes. ================================================================================ TABLE OF CONTENTS Page PART I ITEM 1. Business 3 ITEM 2. Properties 15 ITEM 3. Legal Proceedings 15 ITEM 4. Submission of Matters to a Vote of Security Holders 15 PART II ITEM 5. Market for Common Equity and Related Stockholder Matters 16 ITEM 6. Management's Discussion and Analysis 17 ITEM 7. Financial Statements 24, F-1 ITEM 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 25 ITEM 8A. Controls and Procedures 25 PART III ITEM 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act 26 ITEM 10 Executive Compensation 28 ITEM 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 29 ITEM 12. Certain Relationships and Related Transactions 30 ITEM 13. Exhibits 30 ITEM 14. Independent Auditors' Fees and Services 31 FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-KSB contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect management's current views with respect to future events and financial performance. In this report, the words "anticipates," "believes," "expects," "intends," "future," "may" and similar expressions identify forward-looking statements. These and other forward-looking statements are subject to certain risks and uncertainties, including those discussed in the "Business Risks" section of Item 6 and elsewhere in this Form 10-KSB, that could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances occurring subsequent to the filing of the Form 10-KSB with the Securities and Exchange Commission. 2 PART I ITEM 1. BUSINESS OVERVIEW Ingen Technologies, Inc. is a medical device manufacturer and service provider for medical and consumer markets both domestic and abroad. We have three products, one of which has had sales in at least the last fiscal year. (Secure Balance). The others are oxygen and gas monitoring safety devices that we have developed over the last few years. Increasing revenues are being generated from the Company's Secure Balance program; a medical product line for physicians and hospitals that provides patient services for "balance & fall prevention" programs. The Company's featured medical oxygen monitoring device is OxyAlert, a second-generation design of the Company's BAFI(TM) product line. Both of these products have been issued two US Patents: Patent No. 6,137,417 issued on October 24, 2000 and Patent No. 6,326,896 B1 issued on December 4, 2001. Both of these products are low-oxygen safety warning devices used on remote oxygen cylinders for patients, commercial aircraft, military transport, and fire and safety equipment. OxyAlert technology encompasses the use of digital sensing and RF frequency transfer so that care givers can access a hand-held remote to monitor the actual oxygen level of any oxygen cylinder at a reasonable distance. We expect to begin sales of OxyAlert in calendar year 2006. Using the same patented and proprietary technology, the Company also will offer our GasAlert product; a device that interfaces between any gas line and accessory, such as a water heater, dryer, stove or heater, to detect leaks. This is a mass consumer item expected to go to market in calendar year 2006. I. SECURE BALANCE The Secure Balance product is a private-label product that includes a vestibular function testing system and balance therapy system. The vestibular (referencing organs in the inner ear) function testing system is manufactured by Interacoustics LTD. in Denmark and is referred to as the VNG. The balance therapy system is manufactured by SportKAT(R), Inc. in San Diego, California. SportKAT provides private-label testing and balance therapy systems to others. However, we have our own trademark - Secure Balance. Our Secure Balance program provides equipment, education and training about balance and fall prevention to physicians and clinicians worldwide. All of our company's sales in fiscal year 2004 ($901,542) were sales of Secure Balance. 3 SECURE BALANCE THERAPY TRAINER - ------------------------------ Secure Balance Therapy Trainer is designed to sell to physicians, clinics and hospitals for use with patients suffering from balance problems. It is a patented Kinesthetic Ability Trainer (called "SPORTKAT"), an innovative tool for the evaluation and rehabilitation of neurosensory (or balance) deficits. SportKat focuses on the development of dynamic balance, strength, muscle control, proprioceptive, and vestibular improvement and offers a practically infinite range of adjustable settings to accommodate people with varied body weights and physical activity levels. o Secure Balance Therapy Trainer provides a way to test and train the nerves that control the muscles of the body that enable us to stand, run, jump and otherwise perform day to day functions. These nerves are called proprioceptors. They are an integral part of a complicated system that the body uses to interpret all of the sensory input that it receives from external and internal sources-- including vestibular input from the inner ear, visual input from the eyes and proprioceptive input in order to maintain posture and mobility. Proprioception enables the body to know where it is in space. Performing an oculomotor test and examples of included patterns for the visual stimulus system for oculomotor testing and calibration. SportKat is an advanced Balance Training system primarily for Senior "fall prevention" Programs, correcting vertigo in Pilots and improving the quality of life with those that have severe motor skill diseases. The SportKat system differentiates itself from anything else (known to management) because it applies the Visual, Vestibular and Proprioceptive systems to leverage the redundancies in the brain--thereby improving balance. It is much safer than a "wobble board" for seniors because the air "bladder" can be inflated to match all levels of ability, weight, etc. This product is currently used in Medical Centers, Hospitals, Universities, and Professional Sports Teams. SportKat is effective with those that have the following severe motor skill diseases/challenges: o Post Acoustic Neuroma Resection (Brain Tumors) o Head Trauma o Post Concussion o Meniere's Disease o Vertiginous Migraines o Vestibular Neuronitis o Presbystasis o MS o Parkinson's o Ataxia The SportKat 4000 is our most advanced balance assessment and training equipment. The SportKat software includes provisions for both static and dynamic balance training and assessment through the availability of diversified types of tests, test patterns and difficulty levels. Users may use the built-in training modes with a great deal of ease and flexibility. In addition, the system enables the user (or doctor, trainer, etc.) to design unique, individual training protocols to overcome specific deficits identified during the assessment phase. Designed for multiple applications within the medical and athletic environments, the SportKat 4000 features: 4 o 19" Monitor o Wireless Mouse & keyboard o Printer (Ability to Generate Printed Reports) o Handrails for additional safety o Larger Base for increased stability o Microprocessor-based Pump Control which allows for automated inflation and deflation of the pressure bladder to quickly and easily adjust the pressure based on the user's weight and level of difficulty o Computer Assisted Data System featuring the SPORTKAT WIN software (see Technology below) o Thermal Accelerometer o Provisions for Both Static and Dynamic Balance Assessment o Multiple Built-in Training Programs o Diversified Difficulty Levels for Testing and Training o Automatically Stored Test Data for each user by date, time and type of test, allowing for progress analysis o Tracking Software capable of maintaining data for multiple users, including personal data, medical data and a test editor o Ability to Transfer Files for Additional Analysis such as statistical studies using Microsoft's Excel software The SportKat operates using a patented inflatable bladder support system and centrally pivoted platform. Attached to the platform is a thermal accelerometer, which measures the user's displacement from center (balancing ability), producing a quantifiable measurement or balance index score at the conclusion of a balance assessment or training session. This measurement provides a basis on which the user can track improvements by completing increasingly difficult levels of training. The modular nature of the SportKat design allows the company to offer a variety of SportKat models to meet the needs (and budgets) of each customer/user group. In addition, the modular design allows users to upgrade a SportKat machine to meet changing needs, add new features or incorporate increased levels of technology. As discussed below, each SportKat model may be classified into one of three categories: portable, standard or computer assisted. However, every version of the SportKat incorporates the company's technology as well as the following standard features: o Sturdy Construction using a combination of injection molded glass polymers, plastic and steel o Inflatable Support Bladder capable of holding between 0 to 15 PSI of pressure, allowing for a seemingly infinite range of difficulty levels for both testing and training o Easy Stability Adjustment using either a hand held or automated pump system to inflate the support bladder o Centrally Pivoted Platform with up to 20 degrees of deflection in any direction (360 degree range) o Optional Support Harness for increased safety 5 In addition to these basic structural features, the SportKat system is be equipped with the following technological components: Computer Assisted Data System to allow the SportKat to become interactive and facilitate advanced testing and training. This system features: o Thermal Accelerometer to measure the users balancing ability and compute a score between 0 and 5000, with 0 being perfect balance at any given PSI or level of difficulty. o SPORTKAT WIN Interactive Software enabling Static and Dynamic Testing and Training Capabilities to assess and improve angular displacement skills as well as the time and distance from the target. (Static testing measures the ability to maintain balance in a stationary position and dynamic testing measures the ability to maintain balance while in motion.) o Desktop Computer with Monitor, featuring the Company's proprietary SportKat WIN interactive software (factory installed) o Optional Computer Stand o Ability to Create Original Training Programs to accommodate unique or specific training goals. For instance, if the user has a balancing deficiency on the left side of the body, he/she can create a program or draw a picture directly on the monitor with an erasable marker; select a dynamic (tracing) mode; and move the cursor back within the picture until it is filled in with the trace. o Increased Performance Analysis including multiple levels of training difficulty and a variety of scoring calculations that will enable performance to be tracked and reported using both raw numbers and various charts. SECURE BALANCE VIDEO ENG VESTIBULAR FUNCTION TESTING The Secure Balance VNG Modules offer complete function analysis that is easy to administer and comfortable for the patient. The lightweight goggle is designed with patient comfort in mind and versatility in fitting on a variety of patient populations. The Secure Balance Video ENG improves upon limitations of previous measurement techniques. Video images of the eyes are obtained without direct contact using high resolution cameras with infrared illumination. The eyes are visualized, enabling simultaneous subjective evaluation, while eye position is analyzed by digital image processing to obtain vertical and horizontal eye position. The Examination Designer program within the goggle allows the creation of a patient's own test protocol. During the examination the test view provides the patient with graphical data and immediate analysis while simultaneously displaying the eye images for subjective control during the exam. The examiner can even type in comments while the test is in progress. These features greatly reduce the number of time consuming steps often involved in generating test data. The Secure Balance can produce clear and detailed color reports suitable for hardcopy storage. Reports collate patient details, traces, analysis and display diagrams in an easy-to-read-format. The integrated extensive database provides a practically unlimited storage capability. The database works with both the Secure Balance/Alternate Systems. The Secure Balance / Alternate Systems are integrated into the Interacoustics Medical PC platform. This is designed for convenient transportation around a clinic and the amount of extraneous equipment required is kept to a minimum. 6 Included Parts: o Combi Mask or Goggle o One Camera module for Combi Mask o Two Camera modules for Combi Mask and 2-channel software o Installation CD o Computer System with Tracking Interface Controller o Footswitch o Full-Field Projector (dimensions 2"X6"x6": Weight 1.2lbs) o Null-modem cable o VisualLab Operation Disk o Flashcard Mobile Storage o Operational Manual COMPLIANCE SERVICES We plan to contract with a compliance services company to assist Secure Balance customers in billing, claims processing, testing qualifications, supervision requirements and other matters. We expect to enter into such a contract during fiscal year 2005. EDUCATIONAL SERVICES AND SEMINARS As part of our ongoing provision of services for Secure Balance purchasers, we offer periodic seminars and classes in all aspects of the operation of Secure Balance. These seminars feature nationally recognized experts in our field. II. BAFI(TM); OXYALERT); GASALERT The company invented, patented, and produced the world's first (as known to management) wireless, digital, low gas warning system for pressurized gas cylinders, known as BAFI(TM). Applicable markets include medical, safety & protection (Fire & Police), aircraft (commercial & private), recreation vehicle & outdoor (propane), home & residential, construction (welding), military & many others. The company's first product, a medical low oxygen warning system for pressurized oxygen cylinders referred to as BAFI(TM), has been issued 2 United States patents. The BAFI(TM) product met or exceeded regulatory compliance of this type of product. We built 200 BAFI(TM) prototypes. Our prototypes were used in clinical trials administered by Richard Shelton, MD, of Loma Linda (California) University Medical Center during 2002. The tests proved our the viability BAFI(TM) and enabled us to determine the design of OxyAlert. We are now developing our new product lines, OxyAlert and GasAlert, based on our patented BAFI(TM) technology. OxyAlert's application will continue BAFI(TM)'s mission of providing a medical low- oxygen warning system for oxygen cylinders. GasAlert will have a broader application to many industries and businesses desiring to monitor pressurized gas cylinders. We plan to trademark OxyAlert and GasAlert in fiscal year 2005. BAFI(TM) (and its progeny OxyAlert and GasAlert; referred to hereinafter as our "BAFI(TM) product line") is a product that offers technological innovations for various types of applications. Portable pressurized gas systems are categorized as Diameter Index Safety Systems (D.I.S.S.) and are used for various applications. For example, oxygen gas is provided to patients for use in remote locations. This delivery system is a standard medical application used in providing oxygen to patients suffering from various respiratory and pulmonary diseases that result in oxygen deficiency within their blood stream. Oxygen systems are prescribed by physicians and made available through various manufacturers and oxygen suppliers. Our clinical tests have shown that BAFI(TM) is reliable, user-friendly and interfaces with most of the regulators available in the market today. The BAFI(TM) interfaced with all oxygen cylinders. The BAFI(TM) product line is unique in its ability to interface with most of the regulators and all of the pressurized gas cylinders. The use of BAFI(TM) product line provides reliability and safety for the patients and other users. The user is periodically unaware of the pressure levels and for the first time they can experience assurance through this real-time audio and visual warning system. BUSINESS OPPORTUNITY The company intends to market OxyAlert within the Medical Industry. According to the American Academy of Pulmonology and the New England Journal of Medicine, Pulmonology Publication, the patient market alone is vast and includes 8,000,000 patients in the United States and 22,000,000 world wide, who use oxygen. There are multiple oxygen cylinders used per patient. 7 With the elderly population doubling in 7 years and tripling in 15 years, the market continues to substantially increase. Other markets for GasAlert include millions of homes, barbeques, recreation vehicles, construction, military bases, commercial and private aircraft's, and government facilities. There is no recognized competition. PROFESSIONAL PRODUCTS The Company has ceased the production stage of BAFI(TM) itself, but will soon have the ability to deliver our BAFI(TM) product line to our various markets (anticipated for fiscal year 2006). The Company has established direct sales and marketing programs with manufacturer reps, and medical product distributors. Our direct marketing efforts will focus on a direct marketing campaign, infomercials, television advertising and Internet marketing. The Company has contract agreements with independent rep-organizations for a regional sales network throughout North America, Asia and Pacific Rim. The Company is prepared to promote sales of our product in certain international markets. The BAFI(TM) product has been issued United States Patents. We do not have international patents. Company management will prepare for an international market research report on the potential of its product lines overseas. With this report, the Company can evaluate its position to pursue compliance of ISO-9000 and CE certification for European countries. In order to sell our products in Europe, we need to comply with the "ISO" standards which all United States manufacturers must adhere to. The CE certification is given upon the meeting the applicable ISO standard. It is anticipated that the overseas market represents 50% of the world market for pressurized gas cylinders. Our clinical trials with Dr. Sheldon's patients have shown that the BAFI(TM) system is an accurate and cost effective, real-time, pressurized gas warning system that will alert the user when the gas levels are approaching empty. It offers a convenient method in warning users before the cylinders are empty without the physical need to view the gauge. The BAFI(TM) components are water resistant, salt spray resistant, heat resistant, durable and FDA approved. INDUSTRY AND MARKETPLACE The Company's BAFI(TM) product line falls into several categories including the health care industry, building supplies industry, recreation vehicles industry and aircraft industry. We are establishing distribution avenues in the medical device industry, hospital and medical supplies, and the consumer and institutional health care supplies market. THE HEALTH CARE INDUSTRY Since the mid-1960's, the costs of health care have risen in gross disproportion to the general cost of living index. The United States alone spends almost $1 trillion annually on health care (from the United States Department of Health and Human services web site). These expenditures are forecast to increase into the foreseeable future, posing a serious threat to the economy as well as financial health of families across the United States. A general consensus exists that decisive action needs to be taken to strengthen existing control measures and implement effective new proposals. It is our mission to provide these solutions for today by developing a cost effective product line for all applicable markets. A significant contributing factor to the health care crisis has been the escalating costs of new medical technologies and the resulting higher costs of in-hospital patient care. One cost containment strategy that is clearly gaining momentum is a reduction of technology costs, as well as an increase in outpatient services. We believe our BAFI(TM) product line will contribute to safety and cost containment within the medical market and further that our BAFI(TM) product line will provide convenience and assurance while traveling with the patient. 8 The prohibitive costs of medical facilities have engendered the appearance of a wide spectrum of consumer based home health care products and managed care services. Such consumer activity reduces the economic burden of necessary health care. The managed care industry has structured its primary care providers to act as the "gate keeper". The BAFI(TM) product line will be targeted for the oxygen supplier with referrals from a primary care provider and pulmonary specialist through a manufacturing representative distribution network. Government agencies and employer insurance liability carriers have incentive to reduce bottom-line expenditures, thereby creating huge target markets for the BAFI(TM) product line. We believe the BAFI(TM) product line will offer a more cost-effective approach to decreasing the number of empty tanks as compared to costs associated with accidental injuries from oxygen depletion and/or having to re-prime empty tanks. THE MARKET THE GAS INDUSTRY IN GENERAL According to discussions our management has had with officials of Allied Health and Puritan Bennett, among the largest suppliers/manufacturers of gas regulators and cylinders, the gas supply business represents annual revenues of $30 billion and is mainly comprised of tank manufacturers, gauge & regulator manufacturers, and gas suppliers. The Company's research has shown that the identified markets would be interested in acquiring the BAFI(TM) system for their applications. The physician market continues to have an interest in providing BAFI(TM) units to their patients by means of assurance and safety. The BAFI(TM) technology was designed as a compliment to the current method of monitoring the pressure within gas cylinders. The BAFI(TM) unit is adjustable and calibrated at 500PSI (pounds per square inch) in order to warn the user of pressure levels that fall below 500 PSI. Most pressurized oxygen cylinders can hold 3000 PSI of gas. The BAFI(TM) will not be activated until the pressure reaches 500 PSI. This calibrated setting is coherent with the existing gauges that are red-lined at 500PSI and is the current method for reading pressure. BAFI(TM) works simultaneously with the gauge and provides the additional warning system that is now necessary in today's market. There are many instances when the user is not attentive to the pressure reading. There are both cost factors and safety issues that result from having an empty cylinder. When tanks are returned empty there are additional costs for priming the tank and replacing parts. The assurance BAFI(TM) provides for the user is greatly enhanced. OxyAlert improves the BAFI(TM) gauge methodology by allowing a digital read-out with remote data transmission to other caregivers, as well as a safety gauge, with additional visual and audio aids, that warns the user of low oxygen levels. GasAlert applies the OxyAlert/BAFI(TM) technology to other types of pressurized gas containers. PRICING The company plans to price the medical devices so that a 45-50% gross margin is generated. The distributor price may likely be discounted from time to time depending upon high volume commitments. We anticipate the retail cost of OxyAlert will be in the $300-$400 range. GasAlert's price has yet to be determined, but will be considerably lower. SALES AND MARKETING We have chosen to provide an in-house direct marketing program to support distribution. The Company management believes that the sales & marketing for these systems could be achieved with a direct factory sales force. However, with the implementation of our sales & marketing program, the increase of sales will decrease production costs. The goal is to reduce the system manufacturing cost and maintain margins. The Company has established relationships and contracts with distribution and sales of its' products and services through various experienced distribution and marketing channels, including primarily medical device marketing, government marketing and supplier outlets. The Company has recently introduced the BAFI(TM) product line through the medium of direct Internet marketing and advertising, which is gaining wide recognition as an effective method of introducing products and driving customers to retail distribution channels. An integral part of the Company's marketing strategy, and a common theme to the marketing plan, is its complete proprietary product offering. By offering a proprietary line of products and services, and promoting cost-effective and leading-edge identity, the Company can establish permanent residency in major national and international medical supply outlets. This will afford the Company less resistance to new products, which it seeks to introduce on an ongoing basis in the future. 9 BAFI(TM) PRODUCT LINE MARKETING PROGRAM The Company will have an initial national distribution plan. The plan will entail the expansion of development and distribution of its products and services, and the development of wholesale and retail distribution through an experienced marketing network, medical supply outlets, government agencies and managed care organizations. The plan will also seek to garner the support of the medical community through the sponsorship of ongoing research of oxygen delivery programs and devices. The Company continues to negotiate distribution programs with large and experienced distributors. 1. Institutional Health Care Distribution The Company's management has developed active relationships with physicians, hospitals and various suppliers in the United States and has established a direct sales channel designed to build a network of health care institutional distribution to actively purchase the BAFI(TM) product line. The Company is preparing to significantly expand its direct sales program to government agencies, institutions, health care providers, hospitals, managed care organizations, urgent care centers, skilled nursing facilities and private industry. In doing so, management intends to appoint regional sales managers in target regions throughout the United States. These regional sales managers will be charged with executing the Company's direct sales efforts in their respective territories, specifically establishing new, active accounts. The Company has focused the early thrust of its expanded marketing program within the United States. Management believes that this is the best current practical opportunity. 2. Retail Distribution The Company has appointed independent representatives to represent our products on a regional basis throughout the United States. Management will continue to appoint other firms that have extensive physician/medical penetration and experience with medical products and continue to gain distribution through the vast and growing network of independent medical device chain outlets. 3. International Marketing Program The Company intends to expand our product line in certain international markets. Management believes that the product is expected to be issued various Foreign Patents and the regulatory approval to market in other countries. 4. Direct Response Marketing Program An integral part of the Company's sales and marketing strategy is the use of direct medical response advertising ("infomercials") within physician waiting rooms and internet web site exposure, to introduce our products to the marketplace, achieve significant sales, and develop brand name recognition. An infomercial can be described simply as a televised commercial or web site of up to 6 minutes in length, which demonstrates a product or services and attempts to motivate the viewer to call a toll free telephone number and order the product or service. We are utilizing an infomercial for our Secure Balance products and services and intend to produce infomercials for OxyAlert and GasAlert as soon as we can. The infomercial has proven itself to be capable of literally revitalizing entire product categories. Because of its unique ability to provide for live demonstration of a product to (up to) millions of people simultaneously; the infomercial has transformed several previously small, sleepy product categories into industry leading growth segments. 10 Unique to the infomercial marketing technique, products can generally be sold at relatively high prices (compared to traditional retail) because the product's usefulness and value can be established through demonstration. The higher price of an infomercial product actually pays for the higher selling costs associated with the purchase of media time. Through our sales & marketing division, the Company has established a relationship with several web site developers to establish a joint infomercial marketing venture for the BAFI(TM) product line and services. The Company intends to explore the advisability of establishing such an arrangement regarding future products, as well as the prospects of developing our own infomercial marketing program. 5. Independent Representative Network A principal component of the BAFI(TM) marketing strategy involves distribution of its product line through major national and regional medical marketing networks. Company management, together with key senior consultants, has extensive contacts and relationships with independent representative firms throughout the United States. Ultimately, management intends to secure distribution contracts with 400 or more brokers, marketing consultants, and special instrument dealers (SID's) to spearhead the Company's sales campaign in acceptable market areas in the United States. At such time as BAFI(TM) has achieved adequate market penetration in the initial markets, and as production, logistics, financing, and operational capabilities increase, the Company intends to expand our market representation and continue to expand in new markets. The Company has allocated a substantial portion of our distribution network, advertising and promotion, including the production of 10 minute (and longer) "infomercials", and web sites designed to promote viewer ship of the infomercial and product lines. The Company has approached major medical supplies direct mail catalog houses, and other magazine supply catalog operators for representation and sales through such publications. The Company may choose to market through catalogs under a special brand name. 6. Advertising & Promotion The primary objective of the Company's planned advertising and promotional endeavors is to establish the BAFI(TM) product line name and image as the top manufacturer of leading-edge & cost effective gas warning alert system products and services within the industry. The Company's initial architecture for our advertising campaign is being built around the perceived cost advantages of the BAFI(TM) product lines' systems, including its applications and importance. The message will also seek to project the preparedness and peace of mind that comes from owning the product dedicated to their clinical and corporate liabilities. Concurrently, management is of the opinion that these same efforts will reinforce the Company's wholesale program by increasing brand name awareness among chain and independent buyers. To accomplish these objectives, the Company will employ a variety of proven marketing communications techniques, to include but not be limited to, on-site demonstrations of the product, national & regional exhibits, regional and local institutional advertising, and co-op advertising and promotions. COMPETITION The BAFI(TM) product line constitutes unique warning devices. The audio and visual warning system enhances the safety and assurance of all portable pressurized gas delivery systems and continues to be compatible with all portable pressurized gas cylinders as a compliment to their existing paradigm. Our competition, as outlined in our patent search, comprises basically two United States companies. However, neither company currently has a product for the pressurized gas tank market, nor have they been able to deliver the designed product they have claimed in an expired patent. Therefore, management believes there are currently no competitors and that the market is wide open. 11 BAFI(TM) PRODUCT LINE PATENTS AND TRADEMARKS The Company was notified by the US Patents and Trademarks Office that the patent was issued on 10/24/2000 (Patent Number 6,137,417) and that the examiner had approved all 20 claims. A second patent has been filed and approved. The name BAFI(TM) has been trademarked. A patent search has revealed that there are no similar devices like BAFI(TM) for portable oxygen gas cylinders. PRODUCT LIABILITY Beginning with the design phase of product development, the Company has incorporated preventive measures aimed at reducing its potential exposure to liability risk. The Company's product development and manufacturing program includes high product reliability standards meant to result in high mean times between failures (MTBF). The company plans to achieve a high MTBF factor by pursuing strict quality control procedures and by holding its manufacturing partners to such high standards by written contract. By designing and manufacturing a reliable, high quality product, the Company will minimize, but not eliminate, the possibility and occurrence of defective products. The manufacturing and marketing of the Company's products, incorporating new and unproved technology, has inherent risk. No one can be sure how each product will operate over time and under various conditions of actual use. Even if the products are successfully manufactured and marketed, the occurrence of warranty or product liability, or retraction of market acceptance due to product failure or failure of the product to meet expectations could prevent the Company from ever becoming profitable. Development of new technologies for manufacture is frequently subject to unforeseen expenses, difficulties and complications, and in some cases such development cannot be accomplished. In the opinion of management, the products, and services, as designed, has many positive attributes, but such attributes must be balanced against limited field operating experience and unknown technological changes. GOVERNMENT REGULATION MEDICAL DEVICE APPROVAL PROCESS. Medical devices are regulated by the Food and Drug Administration ("FDA") according to their classification. The FDA classifies a medical device into one of three categories based on the device's risk and what is known about the device. The three categories are as follows: o Class I devices are generally lower risk products for which sufficient information exists establishing that general regulatory controls provide reasonable assurance of safety and effectiveness. Most class I devices are exempt from the requirement for pre-market notification under section 510(k) of the Federal Food, Drug, and Cosmetic Act. FDA clearance of a pre-market notification is necessary prior to marketing a non-exempt class I device in the United States. o Class II devices are devices for which general regulatory controls are insufficient to provide a reasonable assurance of safety and effectiveness and for which there is sufficient information to establish special controls, such as guidance documents or performance standards, to provide a reasonable assurance of safety and effectiveness. A 510(k) clearance is necessary prior to marketing a non-exempt class II device in the United States. o Class III devices are devices for which there is insufficient information demonstrating that general and special controls will provide a reasonable assurance of safety and effectiveness and which are life-sustaining, life-supporting or implantable devices, or devices posing substantial risk. Unless a device is a preamendments device that is not subject to a regulation requiring a Premarket Approval ("PMA"), the FDA generally must approve a PMA prior to the marketing of a class III device in the United States. The company's BAFI(TM) product line and Secure Balance(TM) are "Class-II" devices. LABELING AND ADVERTISING. The nature of marketing claims that the FDA will permit us to make in the labeling and advertising of our medical devices will be limited to those specified in our FDA 510(k)s. Should be make claims exceeding those that are warranted, such claims will constitute a violation of the Federal Food, Drug, and Cosmetics Act. Violations of the Federal Food, Drug, and 12 Cosmetics Act, Public Health Service Act, or regulatory requirements at any time during the product development process, approval process, or after approval may result in agency enforcement actions, including voluntary or mandatory recall, license suspension or revocation, 510(k) withdrawal, seizure of products, fines, injunctions and/or civil or criminal penalties. Any agency enforcement action could have a material adverse effect on us. The advertising of our products will also be subject to regulation by the Federal Trade Commission, under the FTC Act. The FTC Act prohibits unfair methods of competition and unfair or deceptive acts in or affecting commerce. Violations of the FTC Act, such as failure to have substantiation for product claims, would subject us to a variety of enforcement actions, including compulsory process, cease and desist orders, and injunctions. FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, and restitution. Violations of FTC enforcement orders can result in substantial fines or other penalties. FOREIGN REGULATION. Outside the United States, our ability to market our products will also depend on receiving marketing authorizations from the appropriate regulatory authorities. The foreign regulatory approval process includes all of the risks associated with FDA procedures described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country. INTELLECTUAL PROPERTY Patents, trademarks and trade secrets are essential to the profitability of our products, and our company policy is to pursue intellectual property protection aggressively for all our products. We have 2 patents and one trademark for our BAFI(TM) product line. We will be seeking trademarks for our other products, including GasAlert, OxyAlert and Secure Balance. A summary of the patents is provided in the following table: UNITED STATES TRADEMARK 1. Mark BAFI Ser./App. No. 75-873947 Registration No. 2406214 Int'l Class 9 - Electrical and Scientific Apparatus Goods/Services 13 ELECTRONIC MONITORING AND ALARM SYSTEMS FOR PRESSURE LEVELS IN GAS CYLINDERS Filing date: December 18, 1999 Registration date: November 21, 2000 UNITED STATES PATENTS ABSTRACT Patent No. 6,137,417 A warning device configured for removable mounting in combination with a high Date issued: October 24, 2000 pressure gas cylinder and a regulator used to regulate the high pressure gas supplied Date expires: May 24, 2019 by the cylinder. The device compression mounts between the regulator and tank outlet on conventional portable oxygen and gas supply systems using a specially configured manifold. The device features one or a combination of alarms, from a group including audio, visual, electronic and remotely transmitted alarms. These alarms are activated by a pressure switch monitoring the remaining supply in the gas cylinder through a conduit in the manifold. The alarm signal from the device alerts the user, or a third party monitoring the user, of current tank pressure or will sound an alarm when remaining high pressure gas inside the gas cylinder drops below a predetermined level. Patent No. 6,326,896 B1 A warning device configured for removable mounting in combination with a high Date issued: December 4, 2001 pressure gas cylinder and a regulator used to regulate the high pressure gas supplied Date expires: October 24, 2020 by the cylinder. The device compression mounts between the regulator and tank outlet on conventional portable oxygen and gas supply systems using a specially configured manifold. The device features one or a combination of alarms, from a group including audio, visual, electronic and remotely transmitted alarms. These alarms are activated by a pressure switch monitoring the remaining supply in the gas cylinder through a conduit in the manifold. The alarm signal from the device alerts the user, or a third party monitoring the user, of current tank pressure or will sound an alarm when remaining high pressure gas inside the gas cylinder drops below a predetermined level. MANUFACTURING We do not manufacture our products in-house. We have or will have contracts for the manufacture of our products (depending on the product). EMPLOYEES We have no employees. Our company is basically a holding company (formed in Georgia) that owns or has rights to certain proprietary products and operates our business through another company with our same name, Ingen Technologies, Inc., a Nevada company. As of May 31, 2004, Ingen Technologies, Inc., the Nevada company, has one full time employee, Mr. Scott R. Sand, our CEO, Founder and Chairman. Mr. Sand is due a monthly draw (when funds allow; see Item 10. - Executive 14 Compensation); when paid, the company does not withhold taxes from his draw. Our Secure Balance systems (the equipment) are sold to us for re-sale on a "private label" basis, we have no part in the design or manufacture of the systems. We hire sales reps to sell Secure Balance. These reps are paid on a contractual basis and are not technically our employees. We will out-source the manufacturing of our OxyAlert and GasAlert products and will sell these products utilizing a distribution network that will not include the use of company employees. HISTORY Our company was incorporated under the laws of the state of Georgia in 1995 under the name Classic Restaurants International, Inc. We changed our name in 1998 to Creative Recycling Technologies, Inc. Our business plan changed from the restaurant business to recycling along with our name change. We had little business activity and no sales. Our business was dormant from the late 1990's into the first calendar quarter of 2004. In March of 2004, we merged with (purchased all the stock of) a Nevada company, Ingen Technologies, Inc. Ingen Technologies, Inc. survived as a Nevada company for the sole purpose of operating our new business. However, we remained a Georgia company, with completely new management and an active business plan in the medical devices industry (operated by the Nevada company with the same name). Shortly thereafter, we changed our name to Ingen Technologies, Inc. Ingen Technologies, Inc., the Nevada company, was founded by Scott R. Sand in 1999. Upon the merger with our Georgia company, Mr. Sand came on board as Chief Executive Officer and Chairman of the Board of Directors, positions he maintains today. Mr. Sand owns a portion of our outstanding common shares (13 million shares; 14.89% of the approximately 87 million common shares outstanding after our merger). Prior to the merger in March of 2004, Mr. Sand financed the research and development of our product lines and operation of the business within Ingen Technologies, Inc, of Nevada. From its inception in 1999 up through and into our fiscal year 2004, Mr. Sand supplied cash loans of $72,000 and deferred management compensation of $306,000. Mr. Jeffrey Gleckman, our other preferred shareholder, contributed approximately $300,000 to the company (in exchange for his preferred shares issued in fiscal year 2005). ITEM 2. PROPERTIES We do not own real property. We rent, on an oral month-to-month basis, a portion of Scott R. Sand's personal residence as an office for Mr. Sand and for storage space. The rental on this facility is $1400 per month for about 1200 square feet of office and storage space. We anticipate leasing a second office space in fiscal year 2005. ITEM 3. LEGAL PROCEEDINGS We are not currently a party to any material pending litigation or other material legal proceeding. We may from time to time become a party to legal proceedings arising in the ordinary course of our business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 15 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION Our common stock trades on the "Pink Sheets." The following table was supplied to us by Pink Sheets management and sets forth the high and low prices for our common stock as reported from June of 2003 to May 31 of 2004 (our last two fiscal years). The quotations reflect inter-dealer prices and may not reflect adjustments for retail markups, markdowns, or commissions and may not reflect actual transactions. TRADING INFORMATION AS REPORTED BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS COMPOSITE FEED OR OTHER QUALIFIED INTER-DEALER QUOTATION MEDIUM. THE PRIMARY STOCK MARKET LISTING IS NOTED. ISSUE: INGEN TECHNOLOGIES, INC. ( GA. ) COMMON ( FORMERLY: CREATIVE RECYCLING TECHNOLOGIES, INC. ) - -------------------------------------------------------------------------------- NON-NASDAQ OTC: BID QUOTATIONS CLOSING BID 2002 HIGH LOW - ---- -------------------------------------------------- JUNE 3 THRU .003 .003 AUG. 30 SEPT. 3 THRU .003 .002 NOV. 29 DEC. 2 THRU .002 .001 FEB. 28, 2003 2003 MAR. 3 THRU .002 .002 MAY 30 JUNE 2 THRU .008 .002 AUG. 29 SEPT. 2 THRU .005 .005 NOV. 28 DEC. 1 THRU .285 .005 FEB. 27, 2004 2004 MAR. 1 THRU .27 .06 MAY 28 16 On May 31, 2004, there were approximately 455 stockholders of record of our common stock. This number does not include beneficial owners of the common stock whose shares may be held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries. We did not pay dividends during our fiscal year 2004. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS THE DISCUSSION IN THIS SECTION CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING NATURE RELATING TO FUTURE EVENTS OR OUR FUTURE PERFORMANCE. WORDS SUCH AS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FUTURE," "MAY" AND SIMILAR EXPRESSIONS OR VARIATIONS OF SUCH WORDS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY MEANS OF IDENTIFYING FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE ONLY PREDICTIONS AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS, YOU SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH UNDER THE CAPTION "BUSINESS RISKS," WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. OVERVIEW We are a medical device manufacturer and service provider for medical and consumer markets both domestic and (planned for) abroad. We have three products, one of which has had sales in the last fiscal year (Secure Balance). The others are oxygen and gas monitoring safety devices that we have developed over the last few years and expect to begin selling in calendar year 2006. We had sales revenues of $901,542 in 2004 and no sales in fiscal year 2003. We expect sales to continue for our current fiscal year and beyond as we build our Secure Balance brand recognition in the market and intensify our efforts for market penetration. We have had significant losses since inception. Our net loss in fiscal year 2004 was $951,101 and in 2003 was $537,863. We anticipate that we will incur substantial additional operating losses in our fiscal year 2005 as we continue our research and development of our BAFI(TM) product line and continue to seek an increase in Secure Balance sales. As of May 31, 2004, we had an accumulated deficit of approximately $6,258,136. We expect to narrow the amount of increase in our accumulated deficit in 2005. Our reverse merger was completed in March of 2004. We issued new shares of common stock to those incoming shareholders from Ingen Technologies, Inc. of Nevada. After the merger (as finally calculated in June of 2004; after the close of our 2004 fiscal year), there were 87,332,593 common shares outstanding. The Nevada company remains in existence as our wholly owned subsidiary and as previously mentioned, we operate our businesses through the Nevada "Ingen" (meaning our operations banking accounts and federal EIN numbers are held by our Nevada subsidiary). For accounting purposes, our audited financial statements are consolidated and represent the results of both our Georgia and Nevada companies of the same name. Our business plan for the next twelve months is to continue our efforts to increase the market share Secure Balance and to continue development of our BAFI(TM) product line. CRITICAL ACCOUNTING POLICIES Our significant accounting policies are disclosed in Note 2 to our consolidated financial statements. Certain of our policies require the application of management judgment in making estimates and assumptions that affect the amounts reported in the consolidated financial statements and disclosures made in the accompanying notes. Those estimates and assumptions are based on historical 17 experience and various other factors deemed to be applicable and reasonable under the circumstances. The use of judgment in determining such estimates and assumptions is by nature, subject to a degree of uncertainty. Accordingly, actual results could differ from the estimates made. Our significant accounting policies include: ALLOCATION OF COSTS We allocate certain indirect costs associated with support activities such as the rent and utilities for facilities. These costs are allocated between research and development expense and general and administrative expense based on headcount and/or square footage. OFF-BALANCE SHEET ARRANGEMENTS We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs). RESULTS OF OPERATIONS We had $901,542 in sales and $491,033 cost of sales in fiscal year 2004. We had no sales in fiscal year 2003 and operating expenses of $148,415. Our research and development costs for our BAFI(TM) product line will continue to take precedence into fiscal year 2005. Taking into account amortization of intangible assets ($9964 in 2004), our operating loss was $937,943. We expect our operating costs to diminish in fiscal year 2005 as we scale down our BAFI(TM) research and development costs We have not generated profits to date and therefore have not paid any federal income taxes since inception. We paid $800 minimum franchise tax in California in 2004. As of May 31, 2004, our federal tax net operating loss carryforward was $1,099,516, which will begin to expire in 2019, if not utilized. Our ability to utilize our net operating loss and tax credit carryforwards may become subject to limitation in the event of a change in ownership. LIQUIDITY AND CAPITAL RESOURCES We financed our operations in fiscal year 2004 through $901,542 of sales of Secure Balance. In years past, prior to the commencement of Secure Balance sales, we relied on loans and deferments from our CEO and Chairman Scott R. Sand and the aforementioned approximate $300,000 investment of Mr. Gleckman. From June 10, 1999 to March 31, 2004, Mr. Sand provided "Ingen Nevada," and then "Ingen Georgia" (after our reverse merger; for a short period of time) with a total of $72,000 in cash loans and $360,000 in deferred executive compensation. Mr. Sand drew $54,000 in compensation over this time period. We repaid Mr. Sand $33,649 in 2004. 18 Our future cash requirements will depend on many factors, including finishing our research and development programs for our BAFI(TM) product line (largely completed), the costs involved in filing, prosecuting and enforcing patents, competing technological and market developments and the cost of product commercialization, as well as our ongoing Secure Balance sales effort. We do not expect to generate a positive cash flow from operations at least until the commercial launch of our BAFI(TM) product line (planned for calendar year 2006) and possibly later given the expected cost of commercializing our products. We intend to seek additional funding through public or private financing transactions. Successful future operations are subject to a number of technical and business risks, including our continued ability to obtain future funding, satisfactory product development and market acceptance for our products. See "Business Risks" below. TRENDS THAT MAY IMPACT OUR LIQUIDITY Positive Trends: The United States has an increasingly elderly population. Our Secure Balance and BAFI(TM) product line (except GasAlert which targets the entire adult population) are made to meet some of the challenges and circumstances experienced by our senior citizens. As a result, we expect our sales to increase in time in reflection of this positive trend. Management also believes that our products provide increasing protection in relation to medical malpractice issues. Use of our Secure Balance system and OxyAlert products enhance the safety of patients, and therefore, we believe, lessen the chances of medical malpractice exposure to our physician clients. We have been developing our BAFI(TM) product line since 1999. Now, some 5 years later, we still have not identified competition in the marketplace for our BAFI(TM) product line. The lack of competition is expected to enhance our planned marketing campaign. We believe that Secure Balance is now among the leaders in the balance and fall prevention industry. We expect to be able to capitalize on this notoriety and increase our Secure Balance sales in fiscal year 2005 and beyond. Negative Trends: Our product sales are impacted by Medicare, and are Medicare dependent. Adverse economic conditions, federal budgetary concerns and politics can affect Medicare regulations and could negatively impact our product sales. SEASONAL ASPECTS THAT EFFECT MAY IMPACT OUR MEDICAL MARKET Traditionally, the medical market experiences an economic decrease in purchasing during the summer months. Peak months are usually October through February, followed by a decrease from March to May. This is the common "bell curve" that has been consistent for several decades and will affect our sales during the course of a year. OUR SECURE BALANCE LEASING AND FINANCING PROGRAMS Our Secure Balance Leasing and Financing Programs are offered to allow our physician and medical facility clients a variety of affordable leasing and financing options. Our financing option includes a 90 deferral program, giving clients a chance to earn revenues from Secure Balance before payments are due. Please see our website to see the particulars of these financing options. NEW EMPLOYEES We do note anticipate hiring employees over the next twelve months. NEW ACCOUNTING PRONOUNCEMENTS The possible effect on our financial statements of new accounting pronouncements that have been issued for future implementation is discussed in the footnotes to our audited financial statements (see Note 2). 19 BUSINESS RISKS The following is a summary of the many risks and uncertainties we face in our business. You should carefully read these risks and uncertainties as well as the other information in this report in evaluating our business and its prospects. WE HAVE A HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT, AND WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE. We have experienced significant operating losses in each period since our inception. As of May 31, 2004, we have incurred total accumulated losses of $6,258,136. We expect these losses to continue and it is uncertain when, if ever, we will become profitable. These losses have resulted principally from costs incurred in research and development and from general and administrative costs associated with operations. We expect to incur increasing operating losses in the future as a result of expenses associated with research and product development as well as general and administrative costs. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE TO SUPPORT OUR GROWTH, AND RAISING SUCH CAPITAL WILL LIKELY CAUSE SUBSTANTIAL DILUTION TO EXISTING STOCKHOLDERS. IF ADDITIONAL CAPITAL IS NOT AVAILABLE, WE MAY HAVE TO CURTAIL OR CEASE OPERATIONS. Our current plans indicate we will need significant additional capital for research and development and market penetration before we have any anticipated revenue generated from our BAFI(TM) product line. The actual amount of funds that we will need will be determined by many factors, some of which are beyond our control, and we may need funds sooner than currently anticipated. These factors include: o the extent to which we enter into licensing arrangements, collaborations or joint ventures; o our progress with research and development; o the costs and timing of obtaining new patent rights (if any); o cost of continuing operations and sales; o the extent to which we acquire or license other technologies; and o regulatory changes and competition and technological developments in the market. We will be relying on future securities sales to enable us to grow and reach profitability. There is no guarantee we will be able to sell our securities. WE HAVE RELIED ON CAPITAL CONTRIBUTED BY RELATED PARTIES, AND SUCH CAPITAL MAY NOT BE AVAILABLE IN THE FUTURE. 20 We have relied on loans and compensation deferrals from our CEO and Chairman, Scott R. Sand, and investment from Jeffrey Gleckman, to sustain us from 1999 into fiscal year 2004. Although we have paid some of these loans from Mr. Sand back, we may be unable to repay the remainder as planned and may have to look again to Mr. Sand for assistance in financing if our securities sales don't go as planned. There is no guarantee that Mr. Sand will have financial resources available to assist in our funding. WE ARE SUBJECT TO NEW CORPORATE GOVERNANCE AND INTERNAL CONTROLS REPORTING REQUIREMENTS, AND OUR COSTS RELATED TO COMPLIANCE WITH, OR OUR FAILURE TO COMPLY WITH EXISTING AND FUTURE REQUIREMENTS COULD ADVERSELY AFFECT OUR BUSINESS. We face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently adopted by the SEC. These laws, rules and regulations continue to evolve and may become increasingly stringent in the future. In particular, we will be required to include management and auditor reports on internal controls as part of our annual report for the year ended December 31, 2006 pursuant to Section 404 of the Sarbanes-Oxley Act. We cannot assure you that we will be able to fully comply with these laws, rules and regulations that address corporate governance, internal control reporting and similar matters. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition and the value of our securities. OUR PRODUCTS MAY NOT BE SUCCESSFULLY DEVELOPED OR COMMERCIALIZED, WHICH WOULD HARM US AND FORCE US TO CURTAIL OR CEASE OPERATIONS. We are a relatively new company and our BAFI(TM) product line in particular is still in the late stages of development (we still need manufacturing prototypes). These products, once marketing commences, may not be successfully developed or commercialized on a timely basis, or at all. If we are unable, for technological or other reasons, to complete the development, introduction or scale-up of manufacturing of these products or other potential products, or if our products do not achieve a significant level of market acceptance, we would be forced to curtail or cease operations. Even if we develop our products for commercial use, we may not be able to develop products that: o are accepted by, and marketed successfully to, the medical marketplace; o are safe and effective; o are protected from competition by others; o do not infringe the intellectual property rights of others; o are developed prior to the successful marketing of similar products by competitors; or o can be manufactured in sufficient quantities or at a reasonable cost. WE MAY NOT BE ABLE TO FORM AND MAINTAIN THE COLLABORATIVE RELATIONSHIPS THAT OUR BUSINESS STRATEGY REQUIRES, AND IF WE CANNOT DO SO, OUR ABILITY TO DEVELOP PRODUCTS AND REVENUE WILL SUFFER. We must form research collaborations and licensing arrangements with several partners at the same time to operate our business successfully. To succeed, we will have to maintain our existing relationships and establish additional collaborations. We cannot be sure that we will be able to establish any additional research collaborations or licensing arrangements necessary to develop and commercialize products using our technology or that we can do so on terms favorable to us. If our collaborations are not successful or we are not able to manage multiple collaborations successfully, our programs may suffer. Collaborative agreements generally pose the following risks: o collaborators may not pursue further development and commercialization of products resulting from collaborations or may elect not to continue or renew research and development programs; o collaborators may delay clinical trials, under-fund a clinical trial program, stop a clinical trial or abandon a product, repeat or conduct new clinical trials or require a new formulation of a product for clinical testing; 21 o collaborators could independently develop, or develop with third parties, products that could compete with our future products; o the terms of our agreements with our current or future collaborators may not be favorable to us; o a collaborator with marketing and distribution rights to one or more products may not commit enough resources to the marketing and distribution of our products, limiting our potential revenues from the commercialization of a product; o disputes may arise delaying or terminating the research, development or commercialization of our products, or result in significant litigation or arbitration; and o collaborations may be terminated and, if terminated, we would experience increased capital requirements if we elected to pursue further development of the product. SECURE BALANCE IS A PRIVATE LABEL PRODUCT THAT IS NOT EXCLUSIVE TO US. We provide education, training and services related to the SportKat product lines that all constitute what we call "Secure Balance." However, the devices themselves are provided to us on a non-exclusive basis, meaning that other companies are marketing the same devices under other names (or using the SportKat name). Only time will tell if the non-exclusive nature of the provision of the devices themselves to us negatively impacts our ability to capture a meaningful market share. If our sales of Secure Balance suffer because of this non-exclusive relationship, our financial prospects and operational results will be negatively impacted. ALTHOUGH WE DO NOT HAVE DIRECT COMPETITION IN RELATION TO OUR BAFI(TM) PRODUCT LINE, WE EXPECT IT IN THE FUTURE. Although we are unaware of any current competition for our BAFI(TM) product line, we expect competition to develop after we begin marketing our products. It is unknown at this time what impact any such competition could have on us. However, we are a "going concern" enterprise and it is certainly foreseeable that more than one competitor could emerge that is much stronger financially than we are and/or could already have significant marketing relationships for other medical devices. WE DO NOT HAVE INTERNATIONAL PATENTS. Although we have stated that we intend to apply for international patents for our BAFI(TM) product line, we have not as yet done so. We do not know when, and if, we will apply for such patents. If we do not apply for these patents, or if there are delays in obtaining the patents, or if we are unable to obtain the patents, we may not be able to adequately protect our technologies in foreign markets. IF WE ARE UNABLE TO PROTECT EFFECTIVELY OUR INTELLECTUAL PROPERTY, THIRD PARTIES MAY USE OUR TECHNOLOGY, WHICH COULD IMPAIR OUR ABILITY TO COMPETE IN OUR MARKETS. Our success will depend on our ability to obtain and protect patents on our technology and to protect our trade secrets. The patents we currently own, may not afford meaningful protection for our technology and products. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or unenforceable. In addition, our current and future patent applications may not result in the issuance of patents in the United States or foreign countries. Competitors might develop products similar to ours that do not infringe on our patents. In order to protect or enforce our patent rights, we may initiate interference proceedings, oppositions, or patent litigation against third parties, such as infringement suits. These lawsuits could be expensive, take significant time and divert management's attention from other business concerns. The patent position of medical firms generally is highly uncertain, involves complex legal and factual questions, and has recently been the subject of much litigation. No consistent policy has emerged from the U.S. Patent and Trademark Office or the courts regarding the breadth of claims allowed or the degree of protection afforded under biotechnology patents. In addition, there is a substantial backlog of applications at the U.S. Patent and Trademark Office, and the approval or rejection of patent applications may take several years. We cannot guarantee that our management and others associated with us will not improperly use our patents, trademarks and trade secrets. Further, others may gain access to our trade secrets or independently develop substantially equivalent proprietary information and techniques. OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS. 22 We may be sued for infringing on the patent rights or misappropriating the proprietary rights of others. Intellectual property litigation is costly, and, even if we prevail, the cost of such litigation could adversely affect our business, financial condition and results of operations. In addition, litigation is time consuming and could divert management attention and resources away from our business. If we do not prevail in any litigation, we could be required to stop the infringing activity and/or pay substantial damages. Under some circumstances in the United States, these damages could be triple the actual damages the patent holder incurs. If we have supplied infringing products to third parties for marketing or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or damages paid to the patent holder. If a third party holding rights under a patent successfully asserts an infringement claim with respect to any of our products, we may be prevented from manufacturing or marketing our infringing product in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. Any required license may not be available to us on acceptable terms, or at all. Some licenses may be non-exclusive, and therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to market some of our anticipated products, which could have a material adverse effect on our business, financial condition and results of operations. IF WE LOSE OUR KEY MANAGEMENT PERSONNEL, OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS WOULD SUFFER. Our performance is substantially dependent on the performance of our current senior management, Board of Directors and key scientific and technical personnel and advisers. The loss of the services of any member of our senior management, in particular Mr. Sand, our CEO and Chairman, Board of Directors, scientific or technical staff or advisory board may significantly delay or prevent the achievement of product development and other business objectives and could have a material adverse effect on our business, operating results and financial condition. WE HAVE NO COMMERCIAL PRODUCTION CAPABILITY YET FOR OUR BAFI(TM) PRODUCT LINE AND WE MAY ENCOUNTER PRODUCTION PROBLEMS OR DELAYS, WHICH COULD RESULT IN LOWER REVENUE. To date, we have not produced a BAFI(TM) product line product for sale. Customers for any potential products and regulatory agencies will require that we comply with current good manufacturing practices that we may not be able to meet. We may not be able to maintain acceptable quality standards if we ramp up production. To achieve anticipated customer demand levels, we will need to scale-up our production capability and maintain adequate levels of inventory. We may not be able to produce sufficient quantities to meet market demand. If we cannot achieve the required level and quality of production, we may need to outsource production or rely on licensing and other arrangements with third parties. This reliance could reduce our gross margins and expose us to the risks inherent in relying on others. We may not be able to successfully outsource our production or enter into licensing or other arrangements under acceptable terms with these third parties, which could adversely affect our business. WE HAVE NO MARKETING OR SALES STAFF, AND IF WE ARE UNABLE TO ENTER INTO COLLABORATIONS WITH MARKETING PARTNERS OR IF WE ARE UNABLE TO DEVELOP OUR OWN SALES AND MARKETING CAPABILITY, WE MAY NOT BE SUCCESSFUL IN COMMERCIALIZING OUR PRODUCTS. We currently have no sales, marketing or distribution capability. As a result, we will depend on collaborations with third parties that have established distribution systems and direct sales forces. To the extent that we enter into co-promotion or other licensing arrangements, our revenues will depend upon the efforts of third parties, over which we may have little or no control. If we are unable to reach and maintain agreement with one or more distribution entities or collaborators under acceptable terms, we may be required to market our products directly (direct marketing is one component of our marketing strategy). We may elect to establish our own specialized sales force and marketing organization to market our products. In order to do this, we would have to develop a marketing and sales force with technical expertise and with supporting distribution capability. Developing a marketing and sales force is expensive and time consuming and could delay a product launch. We may not be able to develop this capacity, which would make us unable to commercialize our products. IF WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS AND HAVE NOT OBTAINED ADEQUATE INSURANCE TO PROTECT AGAINST THESE CLAIMS, OUR FINANCIAL CONDITION WOULD SUFFER. If we are able to launch commercially our BAFI(TM) product line, we will face exposure to product liability claims. We have exposure selling Secure Balance(TM). We have limited product liability insurance coverage, but there is no guarantee that it is adequate coverage. There is also a risk that third parties for which we have agreed to indemnify could incur liability. 23 We cannot predict all of the possible harms or side effects that may result and, therefore, the amount of insurance coverage we obtain may not be adequate to protect us from all liabilities. We may not have sufficient resources to pay for any liabilities resulting from a claim beyond the limit of, or excluded from, our insurance coverage. A SUBSTANTIAL NUMBER OF SHARES WE HAVE ISSUED IN EXEMPT TRANSACTIONS ARE, OR ARE BEING MADE, AVAILABLE FOR SALE ON THE OPEN MARKET. THE RESALE OF THESE SECURITIES MIGHT ADVERSELY AFFECT OUR STOCK PRICE. Most of our common shares have been held by our shareholders for periods of one or two years or longer. Some of these shares have had restrictions lifted. We will undoubtedly have unrestricted shares issued in the future. There is no way to control the sale of these shares on the secondary market (we trade on the Pink Sheets and plan to go to the OTC BB in the near future). The resale of these unrestricted shares might adversely affect our stock price. OUR STOCK IS THINLY TRADED, WHICH CAN LEAD TO PRICE VOLATILITY AND DIFFICULTY LIQUIDATING YOUR INVESTMENT. The trading volume of our stock has been low, which can cause the trading price of our stock to change substantially in response to relatively small orders. In addition, during the last two fiscal years, our common stock has traded as low as .001 and as high as .285. Both volume and price could also be subject to wide fluctuations in response to various factors, many of which are beyond our control, including: o actual or anticipated variations in quarterly and annual operating results; o announcements of technological innovations by us or our competitors; o developments or disputes concerning patent or proprietary rights; and o general market perception of medical device and provider companies. IF THE OWNERSHIP OF OUR COMMON STOCK CONTINUES TO BE SOMEWHAT CONCENTRATED, IT MAY PREVENT YOU AND OTHER STOCKHOLDERS FROM INFLUENCING SIGNIFICANT CORPORATE DECISIONS AND MAY RESULT IN CONFLICTS OF INTEREST THAT COULD CAUSE OUR STOCK PRICE TO DECLINE. As of May 31, 2004, our executive officers, directors and their affiliates beneficially own or control approximately 20% of the outstanding shares of our common stock. Accordingly, our current executive officers, directors and their affiliates will have some control over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions. These stockholders may also delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders. The concentration of stock ownership may adversely affect the trading price of our common stock due to investors' perception that conflicts of interest may exist or arise. WE MAY ISSUE PREFERRED STOCK IN THE FUTURE, AND THE TERMS OF THE PREFERRED STOCK MAY REDUCE THE VALUE OF YOUR COMMON STOCK. We are authorized to issue up to 40,000,000 shares of preferred stock in one or more series. Our Board of Directors will be able to determine the terms of preferred stock without further action by our stockholders. If we issue preferred stock, it could affect your rights or reduce the value of your common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party. These terms may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, and sinking fund provisions. WE HAVE NOT, AND CURRENTLY DO NOT ANTICIPATE, PAYING DIVIDENDS ON OUR COMMON STOCK. We have never paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future. We currently intend to retain future earnings, if any, to finance operations, capital expenditures and the expansion of our business. ITEM 7. FINANCIAL STATEMENTS The financial statements required by this Item 7 begin on page F-1 and are located following the signature page and officer certifications. 24 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 8a. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures designed to ensure that material information related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. (a) As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our CEO and CFO concluded, as of the date of such evaluation, that the design and operation of such disclosure controls and procedures were effective. (b) No significant changes were made in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter. (c) Limitations. Our management, including our CEO and CFO, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 25 PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the names and ages as of management, and business experience of the directors, executive officers and certain other significant employees of our company. Our directors hold their offices for a term of one year or until their successors are elected and qualified. Our officers serve at the discretion of the Board of Directors. Each officer devotes as much of his working time to our business as is required. NAME AGE POSITION HELD AND TENURE - ---- --- ------------------------ Scott R. Sand 45 Chairman, Chief Executive Officer and Director Thomas J. Neavitt 73 Secretary and Chief Financial Officer KHOO Yong Sin 40 Director Christopher A. Wirth 49 Director Curt A. Miedema 47 Director Christopher Evans unknown* Director * Mr. Evans was a Director of the company during fiscal year 2005. He was removed as a Director by resolution of the Board of Directors on September 13, 2005 after it was discovered that Mr. Evans, an attorney, was disbarred by the State of Virginia in 2002. The company has had no contact with Mr. Evans since his removal as a Director and does not know his age. Mr. Evans will not be signing this Form 10-KSB. SIGNIFICANT EMPLOYEES None. OUR OFFICERS AND DIRECTORS: SCOTT SAND, CEO & CHAIRMAN: Scott Sand has a diversity of experience in the health care industry both domestic and abroad which spans more than 25 years. His contributions and accomplishments have been published in the Los Angeles Times and the Sacramento Tribune. He has been the recipient of recognition awards by high honored factions such as the United States Congress and the State Assembly, receiving the highest Commendation in the County of Los Angeles for his contributions to health care. Mr. Sand served as the CEO of Medcentrex, Inc. for 10 years in the 1990's, a medical service provider to more than 600 physicians nationwide. He served as the Director of Sales & Marketing for Eye Dynamics, Inc. for 7 years, a public company and manufacture of Video ENG systems; assisting in their technology upgrades and design for VNG and increasing their sales each quarter during that time. He resigned from Eye Dynamics, Inc. to accept the full-time position as CEO & Chairman of Ingen Technologies, Inc. in 2004. Mr. Sand received a Bachelor of Science Degree in Computer Science from California State University and a MBA from California State University. THOMAS J. NEAVITT, SECRETARY AND CHAIRMAN: Thomas J. Neavitt has held a variety of executive level positions for product and service based corporations over the last 40 years. Mr. Neavitt's experience includes finance, marketing, business development, sales, and collections. Additionally, Mr. Neavitt has experience in real estate as both a broker and developer. Mr. Neavitt served in the U.S. Navy. Mr. Neavitt left the Navy and became President and CEO of Penn-Akron Corporation and its wholly owned subsidiary Eagle Lock Corporation. He was instrumental in the successful acquisition of this company. Mr. Neavitt also served as President of TR-3 Chemical Corporation for nearly 20 years who sold products throughout the U.S. and some foreign countries. Tom now serves as a consultant to various corporations throughout the country. Mr. Neavitt has been President of AmTech Corporation, which manufactures stabilizing systems, for the past 4 years. 26 KHOO YONG SIN, DIRECTOR: KHOO Yong Sin lives in Singapore. He worked as an engineer for 11 years and a further 4 years in managing a portfolio of business assets. He has extensive experience as a logistics systems engineer in the military and retail engineering with the oil major, Shell. In addition, he has significant experience in the area of mergers & acquisitions. In 1984, he was awarded a scholarship by the Singapore government to pursue electrical engineering at the University of Queensland, Australia. In the area of information technology, he was responsible for managing Shell Singapore's y2k project for the marketing function. Another IT pioneering effort was the use of artificial intelligence to develop diagnostic tools for maintenance support for the Army's radar systems. His current business interests are focused in the areas of biomedical and environmental technologies. He has a Bachelor's Degree in Electrical Engineering from the University of Queensland. CHRISTOPHER A. WIRTH, DIRECTOR: Christopher A. Wirth has over 20 years of business consulting, finance, construction and real estate development experience. He brings a working knowledge of finance and the mechanics of syndication's, construction planning and startup business expansion skills. Mr. Wirth has knowledge and experience in SEC, HUD, SBA, USDA, banking and businesses. He attended San Bernardino Valley College and takes continuing education courses. He continues to consult to environmental and renewable energy firms, and has worked as a HUD YouthBuild construction instructor. Mr. Wirth has previous medical background training through his service in the U.S. Navy, from 1973 to 1977, as a Hospital Corpsman. Mr. Wirth has been a director and spokes person for AgriHouse an urban agricultural technology company, since 2000. CURT A. MIEDEMA, DIRECTOR. For the last 5 years, Mr. Miedema has been self-employed with his own investment company called Miedema Investments. Mr. Miedema graduated from Unity Christian High School in 1975 and attended Davenport College for 1 year thereafter. CHRISTOPHER EVANS, DIRECTOR: Has 30 years experience as a licensed attorney specializing in corporate and SEC law. Previously, he was the Program Director for the Office of the Governor, Dept. Of Community Affairs in Texas, and has served as general counsel to a publicly traded electronics and aerospace contractor. During his position as Associate Attorney his focus was on corporate clients until he co-founded and managed a full service real estate development company. Mr. Evans earned his Juris Doctor Degree at the Tulane University School of Law in 1981, received his M.A. at the University of Texas at Austin Texas (Public Affairs, 1975), and his B.A.(Political Science) at Tulane University, New Orleans, Louisiana in 1971. Mr. Evans was partners in a law firm for three years in Washington, D.C. His focus was litigations and claims before the federal courts and agency boards of contract appeals. Since 1993, Mr. Evans has had his law firm in Annandale, Virginia. His practice focuses upon corporate finance, compliance with securities regulations, business acquisitions, and federal tax matters. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act requires our officers, directors and persons who own more than 10% of a class of the our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. We have not filed periodic reporting with the SEC since 1998. We have not received such forms from any such person, however, we expect to receive them within a short period of time after the filing of this Form 10-KSB on EDGAR and intend to file a Form 8-K to notify the public as to when such forms were received. 27 AUDIT COMMITTEE We do not have an Audit Committee and are not required to have one under Section 302 of Sarbanes-Oxley. Our financial matters and relationship with our independent auditors is over-seen by our two officers, the CEO and Secretary-CFO. AUDIT COMMITTEE FINANCIAL EXPERT We do not have an audit committee and therefor do not have an audit committee financial expert. ITEM 10. EXECUTIVE COMPENSATION COMPENSATION OF DIRECTORS Our Directors are paid $500 for each Directors meeting that is actually held (as opposed to actions taken by our Board of Directors by Resolution and Waiver of Notice and Consent to Action Taken at a special Board of Directors' meeting). Our Directors were not paid fees in fiscal year 2004. COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth the annual and other compensation paid by our company to Scott R. Sand, the only member of our management paid monthly compensation since our merger in March of 2004. Summary Compensation Table (1) ------------------------------ Long-Term Annual Compensation Compensation ------------------- ------------ Securities Name and Principal Position Year Draw Bonus Underlying Options - --------------------------- ---- ---- ----- ------------------ Scott R. Sand, Chairman and Chief 2004 -0- -0- -0- Executive Officer (2) 2003 -0- -0-
(1) The columns for "Other Annual Compensation," "Restricted Stock Awards," "LTIP Payouts" and "All Other Compensation" have been omitted because there is no compensation required to be reported. (2) We do not have a written employment agreement with Mr. Sand and he does not have any options or warrants to purchase our stock. There are no management incentive or bonus plans in place. There were no options granted to executive officers or directors during fiscal year 2004. We do not have any stock appreciation rights plans in effect and we have no long-term incentive plans, as those terms are defined in SEC regulations. We have no defined benefit or actuarial plans covering any named executive officer. 28 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS EQUITY COMPENSATION PLAN INFORMATION We do not have any equity compensation plans in effect. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT COMMON SHARES The following table sets forth certain information regarding the ownership of our common stock as of May 31, 2004, by: (i) each director; (ii) each person who is known to us to be the beneficial owner of more than five percent of our outstanding common stock; (iii) each of our executive officers named in the Summary Compensation Table; and (iv) all our current executive officers and directors of as a group. Except as otherwise indicated in the footnotes, all information with respect to share ownership and voting and investment power has been furnished to us by the persons listed. Except as otherwise indicated in the footnotes, each person listed has sole voting power with respect to the shares shown as beneficially owned. Please note that the number of shares beneficially owned in the second column below and percentages listed in the third column below are based on a total number of outstanding common shares of 87,332,593 and not 12,864,593. Although, technically, our transfer agent showed 12,864,593 outstanding common shares of record as of May 31, 2004, the total effect of our merger of March of 2004 on our capital structure was not finally calculated by the transfer agent until June of 2004 (after the end of our fiscal year). At that point in time, there were 87,332,593 common shares outstanding (the figure we've chosen to use as the basis for disclosing the number of shares owned and percent of class below). Name and Address of Number of Shares Beneficial Owner (1) Beneficially Owned (2) Percent of Class (2) - -------------------- ---------------------- -------------------- Scott R. Sand 13,000,000 14.89% Thomas Neavitt 750,000* 0.858% KHOO YONG SIN 200,000* 0.229% Christopher A. Wirth 1,200,000* 1.374% Curt A. Miedema 850,000* 0.973% Christopher Evans 1,500,000 1.718% All officers and directors as a group (6 in number) 17,500,000 20.038% * Less than one percent. (1) The address for each beneficial owner, other than Hope Capital, Inc. is 35193 Avenue "A", Suite-C Yucaipa, California 92399. (2) Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 87,332,593 shares outstanding in June of 2004, rather than the shares outstanding on May 31, 2004 (as explained in the sentence immediately preceding the table above), adjusted as required by rules promulgated by the Commission. 29 CHANGES IN CONTROL We had no changes in control during our fiscal year 2004. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As of the end of our fiscal year (May 31, 2004), our CEO and Chairman, Scott R. Sand, was owed $276,181 by the company. These are amounts loaned to us or deferred compensation by Mr. Sand. There are no written loan agreements, promissory notes or debt obligations evidencing this debt and the terms of repayment to Mr. Sand. Annual interest of 6% is paid on the outstanding loan balance, which is due upon the availability of company funds, but no sooner than June 1, 2006. See Note 8 of the attached audited financial statements for information concerning the debt owed to Mr. Sand by the company. ITEM 13. EXHIBITS (All Exhibits have been properly signed by the parties. Original agreements are filed in our offices) Exhibit No. Document Description ----------- -------------------- 2.1 Plan And Agreement of Merger Relating to the Merger of Ingen Technologies, Inc. into Creative Recycling, Inc., dated March 15, 2004 (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005). 3.1 Certificate of Incorporation filed with the Georgia Secretary of State, effective April 10, 1998; Articles of Incorporation of Creative Recycling Technologies, Inc. and other documents including merger agreement of Creative Recycling Technologies, Inc. and Classic Restaurants, Inc.** 3.2 Bylaws of Ingen Technologies, Inc. (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005). 4.1 Specimen of Ingen Technologies, Inc. common stock certificate (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005). 10.1 Exclusive Licensing Agreements (BAFI patents) between Ingen Technologies, Inc. and Francis and Bettie McDermott, dated June 24, 1999.* 11.1 Statement re: Computation of per share earnings(contained within Note 6 of the within audited financial statements). 23.1 Consent of Spector & Wong, LLP (incorporated by reference to registrant's Form 10-KSB filed November 7, 2005). 24.1 Power of Attorney (included as part of the signature page attached hereto). 31.1 Certification of Scott R. Sand, Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Certification of Thomas J. Neavitt, Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1 Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Scott R. Sand, Principal Executive Officer.* 99.1 United States Patent Number 6,137,417, issued October 24, 2000 (incorporated by reference to registrant's Form 10-KSB filed on November 7, 2005). 99.2 United States Patent Number 6,326,896, issued December 4, 2001 (incorporated by reference to registrant's Form 10-KSB filed on November 7, 2005). * filed herewith ** will be filed by amendment as soon as it is available 30 ITEM 14. INDEPENDENT AUDITOR'S FEES AND SERVICES The following table summarizes the aggregate fees billed to the company by Spector & Wong, LLP, our independent auditor, for the audit of our annual financial statements for the fiscal year ended May 31, 2004 and fees billed for other services rendered by Spector and Wong, LLP during this period. Type of Fee 2004 - ----------- ---- Audit Fees (1) $25,000 Tax Fees (2) $1500 Total $26,500 (1) Fees for audit services billed in 2004 consisted of the aggregate fees paid by us for the fiscal years indicated for professional services rendered by Spector & Wong, LLP for the audit of our annual financial statements and review of financial statements included in our reports on Form 10-KSB. (2) Fees for tax services billed in 2004 consisted of the fiscal year indicated for professional services rendered by Spector & Wong, LLP for tax compliance. Tax compliance services are rendered based on facts already in existence or transactions that have already occurred to document, compute and obtain governmental approval for amounts to be included in tax filings and consisted of: federal and state income tax return assistance. AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES We do not have an audit committee. 31 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INGEN TECHNOLOGIES, INC. By: /s/ Scott R. Sand ------------------------------------ Scott R. Sand Chief Executive Officer and Chairman (Principal Executive Officer) Date: November 30, 2005 KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints Scott R. Sand his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of registrant in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ Scott R. Sand Chief Executive Officer and November 30, 2005 - ---------------------------------- Chairman Scott R. Sand /s/ Thomas J. Neavitt Secretary and Chief Financial November 30, 2005 - ---------------------------------- Officer Thomas J. Neavitt /s/ KHOO Yong Sin Director November 30, 2005 - ---------------------------------- KHOO Yong Sin /s/ Christopher A. Wirth Director November 30, 2005 - ---------------------------------- Christopher A. Wirth /s/ Curt A. Miedema Director November 30, 2005 - ---------------------------------- Curt A. Miedema
32 INGEN TECHNOLOGIES, INC. AUDIT REPORT FOR THE YEARS ENDED MAY 31, 2005 AND 2004 HAROLD Y. SPECTOR, CPA SPECTOR & WONG, LLP 80 SOUTH LAKE AVENUE CAROL S. WONG, CPA Certified Public Accountants SUITE 723 (888) 584-5577 PASADENA, CA 91101 FAX (626) 584-6447 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- To the Board of Directors and stockholders of Ingen Technologies Inc. We have audited the accompanying consolidated balance sheets of Ingen Technologies Inc. and subsidiary, as of May 31, 2005 and 2004, and the related statements of operations, changes in stockholders' deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing 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 consolidated financial statements referred to above present fairly, in all material respects, the financial positions of Ingen Technologies Inc. and subsidiary as of May 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company's operating losses and working capital deficiency raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Harold Spector, CPA Spector and Wong, LLP Pasadena, California November 2, 2005 F-1 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY BALANCE SHEET - ------------------------------------------------------------------------------------------- AS OF MAY 31, 2005 2004 ----------- ----------- ASSETS Current Assets Cash $ 17,727 $ 34,553 ----------- ----------- Total current assets 17,727 34,553 ----------- ----------- Property and equipment, net of accumulated depreciation of $80,411 and $62,414 for 2005 and 2004, respectively 24,927 35,424 Other assets Patents, net of accumulated amortization of $36 and $9,964 for 2005 and 2004, respectively -- 16,941 ----------- ----------- Total other assets -- 16,941 ----------- ----------- TOTAL ASSETS $ 42,654 $ 86,918 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ -- $ 20,000 Accrued expenses 386,530 473,160 Litigation reserve 143,500 143,500 ----------- ----------- Total current liabilities 530,030 636,660 ----------- ----------- Long-term Liabilities Notes Payable 25,000 25,000 Officers' loans 102,802 276,181 ----------- ----------- Total long-term liabilities 127,802 301,181 ----------- ----------- Stockholders' deficit Preferred stock, no par value, 37,000,000 authorized shares, issued and outstanding 36,900,000 and zero for 2005 and 2004, respectively 369,000 -- Series A preferred stock, no par value, 3,000,000 authorized shares, issued and outstanding 3,000,000 and zero for 2005 and 2004, respectively 30,000 -- Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 127,287,593 and 12,864,593 for 2005 and 2004, respectively 5,551,213 5,407,213 Accumulated deficit (6,565,391) (6,258,136) ----------- ----------- Total stockholders deficit (615,178) (850,923) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 42,654 $ 86,918 =========== =========== See notes to financial statements F-2 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- FOR THE YEARS ENDED MAY 31, 2005 2004 ------------ ------------ Sales $ 794,314 $ 901,542 Cost of sales 296,565 491,033 ------------ ------------ GROSS PROFIT 497,749 410,509 Selling, general and administrative expenses 770,692 1,338,488 Amortization of intangible assets 36 9,964 Impairment loss 16,905 -- ------------ ------------ OPERATING LOSS (289,884) (937,943) ------------ ------------ Other (expenses): Interest Expenses (16,571) (12,358) ------------ ------------ NET LOSS BEFORE TAXES (306,455) (950,301) Provision for income taxes 800 800 ------------ ------------ NET LOSS $ (307,255) $ (951,101) ============ ============ Basic and diluted net loss per share $ (0.00) $ (0.06) ============ ============ Weighted average number of common shares 88,212,343 15,011,003 See notes to financial statements F-3 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - ------------------------------------------------------------------------------------------------------------------------------------ Preferred Stock Series A Preferred Stock Common Stock ------------------------ ----------------------- ------------------------- Accumulated Shares Amount Shares Amount Shares Amount Deficit Total ---------- ----------- --------- ----------- ----------- ----------- ----------- ----------- Balance at May 31, 2003 -- -- -- -- 776,000 $ 7,760 $ (539,235) $ (531,475) ---------- ----------- --------- ----------- ----------- ----------- ----------- ----------- Conversion to accrual from cash -- -- -- -- -- -- (4,767,800) (4,767,800) Issuance of common stock for Compensation expense -- -- -- -- 12,088,593 5,399,453 -- 5,399,453 Net loss -- -- -- -- -- -- (951,101) (951,101) ---------- ----------- --------- ----------- ----------- ----------- ----------- ----------- Balance at May 31, 2004 -- -- -- -- 12,864,593 $ 5,407,213 $(6,258,136) $ (850,923) ---------- ----------- --------- ----------- ----------- ----------- ----------- ----------- Issuance of preferred stock Compensation expense 36,900,000 $ 369,000 3,000,000 $ 30,000 -- -- -- 369,000 Issuance of common stock -- -- -- -- 114,423,000 144,000 -- 144,000 Net loss -- -- -- -- -- -- (307,255) (307,255) ---------- ----------- --------- ----------- ----------- ----------- ----------- ----------- BALANCE AT MAY 31, 2005 36,900,000 $ 369,000 3,000,000 $ 30,000 127,287,593 $ 5,551,213 $(6,565,391) $ (645,178) ========== =========== ========= =========== =========== =========== =========== =========== See notes to financial statements F-4 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY STATEMENT OF CASH FLOWS - -------------------------------------------------------------------------------- FOR THE YEARS ENDED MAY 31, 2005 2004 --------- --------- CASH FLOW FROM OPERATING ACTIVITIES: Net Loss $(307,255) $(951,101) Adjustments to Reconcile Net Loss to Net Cash Used in Operations: Stock Issued for Services 399,000 309,412 Depreciation and Amortization 10,533 2,408 Patents, Net -- 2,094 Loss on impairment of patents 16,905 -- Increase (Decrease) in: Accounts Payable (20,000) 20,000 Accrued Expenses (86,630) 473,160 Litigation reserve -- 143,500 --------- --------- NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES 12,553 (527) --------- --------- CASH FLOW FROM INVESTING ACTIVITIES --------- --------- NET CASH USED IN INVESTING ACTIVITIES -- -- --------- --------- CASH FLOW FROM FINANCING ACTIVITIES: Repayment for Officer's loan (173,379) (33,649) Proceeds from Issuance of Common Stock 144,000 50,000 --------- --------- NET CASH FLOW PROVIDED (USED) BY FINANCING ACTIVITIES (29,379) 16,351 --------- --------- NET INCREASE (DECREASE) INCREASE IN CASH (16,826) 15,824 Cash Balance at Beginning of Period 34,553 18,729 --------- --------- CASH BALANCE AT END OF PERIOD $ 17,727 $ 34,553 ========= ========= Supplemental Disclosures of Cash Flow Information Interest Paid $ -- $ -- Taxes Paid $ 800 $ 1,437 See notes to financial statements F-5
INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - NATURE OF BUSINESS Ingen Technologies, Inc., (formerly known as Creative Recycling Technologies Inc., the "Company" or "Ingen Technologies"), is a Public Company trading on the Pink Sheets under: IGTN. Ingen Technologies is a growth-oriented technology company that offers a diverse and progressive services and products. Ingen Technologies, Inc., is a Georgia corporation ("IGTN") and owns 100% of the capital stock of Ingen Technologies, Inc. a Nevada corporation and it has been in business since 1999. The Company's flagship product is its BAFI (TM), the world's first wireless digital low gas warning system for pressurized gas cylinders. On October 24, 2000, the BAFI (TM) received a U.S. Patent with Patent No. 6,137,417. BAFI (TM), now in its second generation, is an accurate and cost-effective, real-time pressurized gas warning system that will alert users when gas levels are approaching empty. The BAFI (TM) line has multiple applications, inclusive but not limited to, the Medical Industry, Home Consumer, Residential Development Industry, Safety & Protection (fire and police), Aircraft Industry, and the Recreational Vehicle Industry. BAFI (TM) meets or exceeds regulatory compliance of this type of product and is completed and in production. The Secure Balance (TM) product is a private-label product that includes a vestibular function testing system and balance therapy system available to physicians throughout the United States. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses. Actual results may differ from these estimates. REVENUE RECOGNITION The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is probable. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company's historical experience. All orders are customized with substantial down payments. Products are released upon receipt of the remaining funds. ACCOUNTS RECEIVABLE Management of the Company considers accounts receivable to be fully collectible, accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. NET LOSS Per Share Basic net loss per share includes no dilution and is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted net loss per share does not differ from basic net loss per share since potential shares of common stock are anti-dilutive for all periods presented. CASH EQUIVALENTS For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the financial instruments have been estimated by management to approximate fair value. F-6 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT Property and equipment are valued at cost. Maintenance and repair costs are charged to expenses as incurred. Depreciation is computed on the straight-line method based on the estimated useful lives of the assets, generally 5 to 39 years. Depreciation expense for year ended May 31, 2005 and 2004 was $80,411 and $62,414, respectively. AMORTIZATION OF PATENT Patents are stated at cost and are amortized using the straight-line method over its estimated useful, which is 15 years. Amortization expense of the Patents for the year ended May 31, 2005 and2004 was $36 and $9,964, respectively. INCOME TAXES Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. NON-EMPLOYEES EQUITY TRANSACTIONS The Company accounts for stock issued to non-employees in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123 and the Emerging Issues Task Force (EITF) Issue No. 00-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." SFAS No. 123 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Under the guidance in Issue 00-18, the measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date). INCOME (LOSS) PER COMMON SHARE The Company accounts for income (loss) per share in accordance with SFAS No. 128, "Earnings Per Share." SFAS No. 128 requires that presentation of basic and diluted earnings per share for entities with complex capital structures. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Diluted net loss per common share does not differ from basic net loss per common share since potential shares of common stock from the conversion of preferred stock are anti-dilutive for the period presented. NEW ACCOUNTING STANDARDS In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51. Interpretation 46 establishes accounting guidance for consolidation of variable interest entities that function to support the activities of the primary beneficiary. Interpretation 46 applies to any business enterprise, both public and private, that has a controlling interest, contractual relationship or other business relationship with a variable interest entity. The Company currently has no contractual relationship or other business relationship with a variable interest entity and therefore the adoption did not have an effect on its financial position or results of operations. However, if the Company enters into any such arrangement with a variable interest entity in the future, its financial position or results of operations may be adversely impacted. F-7 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In April 2003, the FASB issued Statement of SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133, clarifies when a derivative contains a financing component, amends the definition of an "underlying" to conform it to the language used in FASB Interpretation No. 45, "Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" and amends certain other existing pronouncements. The Company does not have any derivative financial instruments. The Company does not anticipate that the adoption of SFAS No. 149 will have an impact on its balance sheets or statements of operations and cash flows. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This Statement requires that certain instruments that were previously classified as equity on the Company's statement of financial position now be classified as liabilities. The Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company currently has no instruments impacted by the adoption of this statement and therefore the adoption did not have an effect on the Company's financial position, results of operations or cash flows. In December 2003, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132 amends SFAS No. 87, 88, and 106, "Employers' Accounting for Pensions," "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and "Employers' Accounting for Postretirement Benefits other than Pensions," to require additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The required information should be provided separately for pension plans and for other postretirement benefit plans. The Company does not have any pensions and other postretirement benefits. The Company does not anticipate that the adoption of SFAS No. 132 will have material impact on its balance sheet or statements of operations and cash flows. In December 2004, the FASB issued SFAS No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion; however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption of this statement will have no impact on the financial statements of the Company. F-8 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In December 2004, the FASB issued a revision to SFAS No. 123R, "Accounting for Stock Based Compensations." This statement supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in SFAS No. 123. This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." The Company has not yet determined the impact to its financial statements from the adoption of this statement. In November 2004, the FASB issued SFAS No. 151, "INVENTORY COSTS -- AN AMENDMENT OF ARB NO. 43, CHAPTER 4." This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . ." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company. NOTE 3 - GOING CONCERN The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities and commitments in the normal course of business. In the near term, the Company expects operating costs to continue to exceed funds generated from operations. As a result, the Company expects to continue to incur operating losses and may not have enough money to grow its business in the future. The Company can give no assurance that it will achieve profitability or be capable of sustaining profitable operations. As a result, operations in the near future are expected to continue to use working capital. To successfully grow the individual segments of the business, the Company must decrease its cash burn rate, improve its cash position and the revenue base of each segment, and succeed in its ability to raise additional capital through a combination of primarily public or private equity offering or strategic alliances. The Company also depends on certain important employees, and the loss of any of those employees may harm the Company's business. The company incurred a loss of $307,255 and $951,101 for the years ended May 31, 2005 and 2004, and as of that date, had an accumulated deficit of $6,565,391 and $6,258,136, respectively. F-9 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 4 - ACCRUED EXPENSES Accrued expenses at May 31, 2005 and 2004 consist of: 2005 2004 -------- -------- Accrued officer's compensation $356,000 $460,000 Accrued interest expense 28,930 12,360 Accrued taxes 1,600 800 -------- -------- Total $386,530 $473,160 ======== ======== NOTE 5 - INCOME TAXES Provision for income tax for the years ended May 31, 2005 and 2004 consisted of $800 minimum state franchise tax per year. As of May 31, 2005 and 2004, the Company has net operating loss carryforwards, approximately, of $1,406,771 and $1,099,516, respectively, to reduce future federal and state taxable income. To the extent not utilized, the carryforwards will begin to expire through 2025. The Company's ability to utilize its net operating loss carryforwards is uncertain and thus a valuation reserve has been provided against the Company's net deferred tax assets. A valuation allowance is recorded for the full amount of deferred tax assets of approximately $602,098and $470,593, for the years ended May 31, 2005 and 2004, respectively, which relates to these loss carryforwards, since future profits are indeterminable. NOTE 6 - NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share: May 31, 2005 MAY 31, 2004 ------------ ------------ Numerator: Net Loss $ (307,255) $ (951,101) ------------ ------------ Denominator: Weighted Average Number of Shares 88,212,343 15,011,003 ------------ ------------ Net loss per share-Basic and Diluted $ (0.00) $ (0.06) F-10 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 7 - SEGMENT INFORMATION SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" requires that a publicly traded company must disclose information about its operating segments when it presents a complete set of financial statements. The Company has only one segment; therefore, the detail information is not presented. NOTE 8 - RELATED PARTY TRANSACTIONS The Company had notes payable to a related party in the amounts of $102,802 and $276,181 as of May 31, 2005 and 2004, respectively. The interest rate on the loan is 6% and due upon working capital availability, but no sooner than June 1, 2006. The related accrued interest is $28,930 and $12,360 as of May 31, 2005 and 2004, respectively. As of May 31, 2005 and 2004, there is a note payable to a related party for the amount of $25,000 with zero interest. As of May 31, 2005, an officer of the Company had 26,600,000 shares of unclassified preferred stock and 3,000,000 shares of Series A preferred stock as compensation. NOTE 9 - LEASE OBLIGATION The Company leases its corporate office under an unsecured lease agreement which expires in April 1, 2008. As of May 31, 2005, the remaining lease obligation is as follows: Year Ending Lease May 31, Obligation ------------------------------------------ 2006 $ 9,300 2007 9,300 2008 7,750 ------------- $ 26,350 ============= NOTE 10 - INTANGIBLE ASSETS The patents were impaired as of May 31, 2005, and the loss for the impairment was $16,905. NOTE 11 - GUARANTEES The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company's businesses or assets; and (ii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising our of their employment relationship. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its balance sheet as of May 31, 2004. F-11 INGEN TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 12 - PENDING LITIGATION The pending litigation is with the previous landlord for breaking a facility lease by the Company. The management estimated and accrued a loss for $143,500 in the year ended May 31, 2004. The litigation regarding the breaking the facility lease was settled for $143,000 in August 2005. NOTE 13 - PREFERRED STOCK The Company is authorized to issue 40,000,000 shares of no par value preferred stock. As of May 31, 2005 and 2004, the Company had zero and 39,900,000 shares of preferred stock issued and outstanding, respectively. No dividends shall accrue or be payable on the preferred stocks. On February 2005, the Company designated 3,000,000 of the shares of preferred stock as "Series A Preferred Stock". As of May 31, 2005, all 3,000,000 shares of Series A preferred stock were issued and outstanding. The Company has the right to redeem each share of Series A preferred stock for $1; however, there is no obligation for this redemption. Each share of Series A preferred stock is entitled to vote on all matters with holders of the common stock; however, each Series A preferred stock is entitled to 15 votes. Each share of Series A preferred stock is convertible, at the option of the holder and subject to a 65 day written notice to the Company, at any time after the date of the issuance into 10 shares of common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series A preferred stock shall be entitle to be paid $1 per share before any payments or distribution of assets of the Company to the holders of the common stock or any other equity securities of the Company. NOTE 14 - SUBSEQUENT EVENTS October 31, 2005, the Company held a special shareholder meeting and approved to reduce the number of authorized common shares to 100 million, 40 to 1 reverse split of all issued common shares, and 3 to 1 reverse split of all preferred shares. F-12 EX-10.1 2 ingen_10ksb-ex1001.txt EXCLUSIVE LICENSING AGREEMENTS EXHIBIT 10.1 EXCLUSIVE LICENSING AGREEMENT This Agreement made effective as of this 24th day of June, 1999, by and between Ingen Technologies, Inc., a Nevada Corporation doing business in the State of California, further referred as the ("Company") whose principal corporate offices are at 576 E. Victoria Court, Lake Arrowhead CA 92352, and Francis & Bettie McDermott, (Husband & Wife), further referred to as the ("Contractor"), located at 11619 Lennox Street, Yucaipa CA 92399, and is made with reference to the following. RECITALS A. The Company is an established business providing an oxygen sensing warning device for the medical, private and government markets. B. The Company exclusively accepts the rights to the BAFI product over the following seventeen years (17 yrs) as such product is described in the attached patent filings referenced as Patent Pending serial, number 09/318651 and attached hereto and under the following terms and conditions. C. The Contractor has the expertise, knowledge and resources for future development and implementation of technology enhancements of said product and grants exclusivity to the Company for a period of seventeen years (17 yrs) the rights of said product and applications as defined in the patent filings. D. The Company agrees to market said product at its own expense and will provide promotional programs, distribution and manufacturing resources to Initial(s) Company /s/ SRS Contractor /s/ initials Page 1 of 8 promote said products and services to be accessed by the distributor(s) and consumers and used to be distributed in accordance to all laws of which govern the Company in this type of industry. E. The Company desires to utilize the Contractor's expertise, knowledge and other resources for developing new products and/or enhancement to existing products as described in the above Recitals for the purpose of increasing sales. The Contractor is willing to provide said expertise, knowledge and other resources to the Company for the same purpose upon terms and conditions hereinafter set forth. NOW, THEREFORE, the Parties mutually agree as follows: 1. In consideration of the Contractor granting an exclusive license for the BAFI product and furnishing the expertise, knowledge and other resources set forth in the above Recitals hereof, the Company agrees to pay the Contractor a royalty in an amount equal to ten percent (10%) of the net profits generated on all BAFI product sales. in addition, the Company will issue 200,000 shares of common stock upon execution of this Agreement as well as an employment contract. 2. The Company agrees to pay for all expenses necessary to manufacture, maintain patents, and promote said product. 3. As part of the services specified herein, the Contractor agrees to provide technical support in an advisory capacity and maintain a professional relationship with the Company. Initial(s) Company /s/ SRS Contractor /s/ initials Page 2 of 8 4. Except for the amounts paid to the Contractor as stated in paragraph-1 and in the Recitals herein, the Contractor shall not be entitled to any other payment and/or reimbursement for services rendered and/or expenses incurred pursuant to this Agreement by the Company. All costs and expenses incurred by either party in rendering said services shall be the sole obligation and responsibility of the individual party and not that of the other. However, the Company may decide at its own discretion to reimburse other expenses to the Contractor only upon written authorization to the Contractor by the Company. 5. The Company agrees to provide all administrative support, technical support, and professional support to the Contractor at all times in accordance to regulatory guidelines and laws set forth for providing said products and services for the Company, and without penalty to the Contractor. 6. The Contractor and Company agrees to provide the other with all signed and completed tax documentation and identification upon the signing of this Agreement in accordance to State and Federal tax laws. 7. The relationship between both parties created by this Agreement is that of principal ("the Company") and independent contractor ("the Contractor") in that the time spent and the professional manner in which the services are performed shall solely be the responsibility of the Contractor. However, the Contractor agrees to use its best and most diligent efforts, within all laws, to provide the resources and expertise for the promotion and/or project development services provided for the Company. Initial(s) Company /s/ SRS Contractor /s/ initials Page 3 of 8 8. During the term of this Agreement the Contractor shall not promote services, either directly and/or indirectly, to any entity that has similar services as provided by the Company, and pursuant to Paragraph 9. 9. In consideration of the importance of confidentiality, non-disclosure and trade secrets, the Contractor acknowledges that during the course of this Agreement between the Company and the Contractor, the Contractor has had access to and will continue to have access to various confidential information and trade secrets consisting of compilations of information, records, specifications and trade lists, which are owned by the Company and which are regularly used in the operation of the Company's business. In consideration of continued engagement through this Agreement during the period of the Agreement by the Company, the Contractor shall not disclose any of the aforesaid confidential information or trade secrets, directly or indirectly, nor use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the Contractor's engagement with the Company, but does not include information already within the public domain at the time the information is acquired by the Contractor, or information that subsequently becomes public through no act or omission of the Contractor. In further consideration of continued engagement and during the period of the Agreement, all files, records, documents, drawings, specifications, equipment and similar items relating to the business of the Company, whether prepared by the Contractors or otherwise, coming into the Contractor's possession shall remain the exclusive property of the Company and shall not be removed from Initial(s) Company /s/ SRS Contractor /s/ initials Page 4 of 8 the Company's premises under any circumstances whatsoever without prior written consent of the Company. During the term of this Agreement, Contractor shall not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any individual and/or representative capacity engage or participate in any business that is in competition in any manner whatsoever with the business of the Company. 10. This Agreement shall continue in effect for a period of seventeen years (17 yrs) and may be continued thereafter only by the express mutual agreement of both parties. This agreement may be terminated at any time by either party with cause or breech provided that it is in writing with a thirty day (30-day) written notice. Upon termination, the Company agrees to pay all outstanding payments prior to the date of termination. 11. This document contains the entire Agreement of the parties relating to this Agreement and correctly sets forth the rights, duties and obligations of all parties hereto. Any prior agreements, promises, negotiations and/or representations not expressly set forth in this Agreement are of no force and effect. 12. No waiver of any term or condition of this Agreement shall be deemed or construed to be a waiver of such term or condition in the future, or of any preceding or subsequent breach of the same or any other term or condition of this or any other agreement. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them Initial(s) Company /s/ SRS Contractor /s/ initials Page 5 of 8 shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either party hereto. 13. No amendment or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. Unless otherwise specifically set forth under a particular provision, any amendment or modification shall require the overall consent of both parties. 14. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is a conflict between any provision of this Agreement and any statute, law, ordinance, rule, order or regulation, the later shall prevail, but in such event any such provision of this Agreement shall be curtailed and limited only to the extent necessary to bring it within the legal requirements. 15. This Agreement, and all rights and obligations contained herein shall be binding on and inure to the benefit of the parties hereto and their respective heirs, executors, legal and personal representatives, successors and assigns. It is also specifically agreed and understood that this Agreement shall be binding upon any successor-in-interest to the Company by way of merger, consolidation or otherwise. 16. Any controversy arising out of or in connection with this Agreement, or any amendment thereof, shall be determined and settled by arbitration in accordance with the rules of the American Arbitration Association. The venue for such arbitration shall be exclusively the State of California, San Bernardino County, Initial(s) Company /s/ SRS Contractor /s/ initials Page 6 of 8 and any award rendered shall be final and binding on each and all of the parties thereto and their successor-in-interest, and judgment may be entered thereon in any court having jurisdiction thereon. In any such proceeding, the Arbitrator shall be and hereby is empowered to render an award directing specific performance. Each individual party shall take responsibility for obligations pertaining to costs associated with their own legal representation. 17. All notices among the parties hereto shall be in writing and shall be deemed duly. served when personally delivered to another party or, in lieu of such personal service, when deposited in the United States mail, certified and return receipt requested, with first class postage prepaid thereon, addressed as set forth above, or in such other place as may be specified in any written notice given pursuant to this paragraph as the address for service of notice. All notices shall be delivered to the parties addresses as witnessed below. Company: Scott R. Sand, CEO Ingen Technologies, Inc. P.O. Box 367 576 East Victoria Court Lake Arrowhead CA 92352-0367 Contractor: Francis & Bettie McDermott 11619 Lennox Street Yucaipa CA 92399 Initial(s) Company /s/ SRS Contractor /s/ initials Page 7 of 8 18. This Agreement shall be governed and construed in accordance with laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above and agree to all of the terms and conditions of this Agreement set forth herein. The Company: /s/ Scott R. Sand 6/24/99 - ----------------------------------------- ----------------------- Scott R. Sand, CEO Date The Contractor: /s/ Francis McDermott 6-24-99 - ----------------------------------------- ----------------------- Francis McDermott Date /s/ Bettie McDermott 6-24-99 - ----------------------------------------- ----------------------- Bettie McDermott Date Notarized Required: Initial(s) Company /s/ SRS Contractor /s/ initials Page 8 of 8 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of San Bernadino On June 24, 1999 before me, Danya Graham, Notary Public, personally appeared Francis McDermott - and - Betty McDermott only. [ ] personally known to me - OR - [X] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. /s/ Tanya Graham - -------------------------------- Signature of Notary Public [Notary stamp here] - -------------------------------------------------------------------------------- EX-31.1 3 ingen_10ksb-ex3101.txt Exhibit 31.1 CERTIFICATION I, Scott R. Sand, certify that: 1. I have reviewed this annual report on Form 10-KSB of Ingen Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's Board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 30, 2005 /s/ Scott R. Sand Scott R. Sand Chief Executive Officer and Chairman EX-31.2 4 ingen_10ksb-ex3102.txt Exhibit 31.2 CERTIFICATION I, Thomas J. Neavitt, certify that: 1. I have reviewed this annual report on Form 10-KSB of Ingen Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's Board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 30, 2005 /s/ Thomas J. Neavitt Thomas J. Neavitt Secretary and Chief Financial Officer EX-32.1 5 ingen_10ksb-ex3201.txt Exhibit 32.1 Section 906 of the Sarbanes-Oxley Act of 2002 Certification To Whom It May Concern, In connection with the Annual Report of Ingen Technologies Inc. ("Ingen") on Form 10-KSB for the fiscal year ended May 31st, 2004 as filed with the Securities and Exchange Commission on or very near the date hereof ("the Report"), I, Scott R. Sand, Chief Executive Officer and Chairman of Ingen, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and (2) The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of Ingen. /s/ Scott R. Sand Scott R. Sand Chief Executive Officer and Chairman November 30, 2005 -----END PRIVACY-ENHANCED MESSAGE-----