10QSB 1 ingen_10qsb-113003.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED November 30, 2003 Commission File Number ___________ INGEN TECHNOLOGIES, INC. ------------------------ f/k/a CREATIVE RECYCLING 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] At November 30, 2003, 16,084,208 shares of the registrant's common stock (no par value) were outstanding. Transitional Small Business Disclosure Format (check one): YES / / NO /X/ CREATIVE RECYCLING TECHNOLOGIES, INC. PART I. - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (UNAUDITED) ------------------------------------------------------------------------------------------------ As of November 30, 2003 2002 ----------- ----------- TOTAL ASSETS $ -- $ -- =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 35,000 $ 28,202 ----------- ----------- Total current liabilities 35,000 28,202 ----------- ----------- Long-term Liabilities Officer's loan -- 3,791 ----------- ----------- Total long-term liabilities -- 3,791 ----------- ----------- Stockholders' Deficit Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 3,221,524 for 2003 and 3,221,524 for 2002 5,758,406 5,758,406 Accumulated deficit (5,793,406) (5,790,399) ----------- ----------- Total stockholders deficit (35,000) (31,993) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -- $ -- =========== =========== See notes to interim unaudited consolidated financial statements 3 CREATIVE RECYCLING TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ----------------------------------------------------------------------------------------------------- For three months ended For six months ended November 30, November 30, 2003 2002 2003 2002 ----------------------------------------------------------------------------------------------------- Revenues $ -- $ -- Cost of Revenues -- -- ----------- ----------- ----------- ----------- Gross Profit -- -- -- -- Selling, General and Administrative Expenses -- 2,843 -- 3,791 Operating Loss -- (2,843) -- (3,791) Net Loss $ -- $ (2,843) $ -- $ (3,791) =========== =========== =========== =========== Basic and diluted net loss per share NIL NIL NIL NIL Weighted Average Number of Shares 3,221,524 3,221,524 3,221,524 3,221,524 See notes to interim unaudited consolidated financial statements 4 CREATIVE RECYCLING TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ------------------------------------------------------------------------------- For the six months ended November 30, 2003 2002 ------------------------------------------------------------------------------- Cash Flow from Operating Activities: Net Loss $ -- $ (3,791) ---------- ---------- Net Cash Used in Operating Activities -- (3,791) ---------- ---------- Cash Flow from Investing Activities: -- -- Cash Flow from Financing Activities: Advance from officers -- 3,791 ---------- ---------- ---------- ---------- Net Cash Provided by Financing Activities -- 3,791 ---------- ---------- Net Increase in Cash -- -- Cash Balance at Beginning of Period -- -- ---------- ---------- Cash Balance at End of Period $ -- $ -- ========== ========== See notes to interim unaudited consolidated financial statements 5
CREATIVE RECYCLING TECHNOLOGIES, INC. NOTE 1 - NATURE OF BUSINESS Creative Recycling Technologies Inc., the "Company", is a Public Company trading under "CRT" trading symbol. The Company is no longer operating, and will attempt to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering. Presentation of Interim Information: The accompanying consolidated financial statements as of November 30, 2003 and 2002, for the three and six months ended November 30, 2003 and 2002 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended May 31, 2003. In the opinion of Management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of November 30, 2003 and 2002, for the three and six months ended November 30, 2003 and 2002 have been made. The results of operations for the three and six months ended November 30, 2003 and 2002 are not necessarily indicative of the operating results for the full year. The company had no activity during the six months ended November 30, 2003. Use of Estimates: 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. 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 as the Company did not have dilutive items during the audit period. Principle of Consolidation and Presentation: The accompanying consolidated financial statements include the accounts of Ingen Technologies, Inc. and its subsidiaries after elimination of all intercompany accounts and transaction. Certain prior period balances have been recalculated to conform to the current period presentation. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using accounting principles generally accepted in the United Stated of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. Until that time, the stockholders have committed to covering the operating costs of the Company. The Company is not operating, and will attempt to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering. The company incurred a loss of none and $3,791 for the six months ended November 30, 2003 and 2002, and as of that date, had an accumulated deficit of $5,793,406 and $5,790,399, respectively. 6 NOTE 3 - NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share for the six months ended: Three months ended Nine months ended September 30, September 30, 2004 2003 2004 2003 ------------------------------------------------------ Numerator: Net Loss $ -- $ (2,843) $ -- $ (3,791) ----------- ----------- ----------- ----------- Denominator: Weighted Average Number of Shares 3,221,524 3,221,524 3,221,524 3,221,524
NOTE 4 - SEGMENT INFORMATION SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" requires that a publicly traded company must disclose information about its operating segments when it presents a complete set of financial statements. Since the Company is not operating, it has no reportable segment. NOTE 5 - RELATED PARTY TRANSACTIONS The Company had notes payable to a related party in the amounts of none and $3,791 as of November 30, 2003 and 2002, respectively. The amount is non-interest bearing and has no repayment terms. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS This Quarterly Report on Form 10-QSB 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 Risk Factors section of this Item 2 and elsewhere in this Form 10-QSB, that could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances occurring subsequent to the filing of the Form 10-QSB with the Securities and Exchange Commission. OVERVIEW Ingen Technologies, Inc., (formerly known as Creative Recycling Technologies Inc., the "company") is a Georgia corporation. Creative Recycling Technologies, Inc. merged with Ingen Technologies, Inc. in March of 2004 and changed its name to Ingen Technologies, Inc. Prior to that, Creative Recycling Technologies, Inc. traded under the symbol "CRTZ." The company discontinued its periodic reporting under the Securities Act of 1934 in 1998. The company began reporting on EDGAR again in November of 2005. This Form 10-QSB is for a period of time prior to the merger of Ingen Technologies, Inc. and Creative Recycling Technologies, Inc. During the quarter reported on, to the best of current management's knowledge and belief, the company was not actively engaged in a business and may or may not have been actively seeking a merger candidate (depending on the particular period of time). The information contained herein is compiled from a limited amount of source material and may be subject to amendment if we are able to uncover more information (our effort to do so is ongoing as of the date of the certification of this Form 10-QSB by current company management). As stated, we were not operational in fiscal year 2004 (June 1, 2003 to May 31, 2004). Therefore, we had no sales revenues in the fiscal quarter ending November 30, 2003 and no sales revenues in the fiscal quarter ending November 30, 2002. 7 We have had significant losses since inception. Our net loss was $2843 in the first quarter of fiscal year 2003, compared with no loss in the first quarter of fiscal year 2004 (this quarter). We had a net loss of $3791 for the first two quarters ending November 30, 2002 and no net loss for the first two quarters ending November 30, 2003. We anticipate that we will not incur substantial additional operating losses until such time, and if, we actively engage in a business enterprise. As of November 30, 2003, we had an accumulated deficit of $5,793,406 (up from $5,790,399 in the first quarter of fiscal year 2003). We do not have a business plan for the remainder of fiscal year 2004. We may attempt to find a merger candidate (with an active business enterprise). Records currently available to company management do not indicate that any of our securities were sold during this fiscal quarter. 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 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: STOCK-BASED COMPENSATION SFAS No. 123, "Accounting for Stock-Based Compensation," establishes the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. The statement also permits companies to elect to continue using the intrinsic value accounting method specified in Accounting Principles Bulletin Opinion No. 25, "Accounting for Stock Issued to Employees," to account for stock-based compensation issued to employees. Through May 31, 2005, we have elected to use the intrinsic value based method and have disclosed the pro forma effect of using the fair value based method to account for our stock-based compensation. We plan to continue using the intrinsic value based method and providing disclosure for the pro forma effect of using the fair value based method to account for our stock-based compensation through our fiscal quarter ending in November, 2005. As a result of the recent adoption by the Financial Accounting Standards Board of SFAS No. 123 (revised 2004) "Share-Based Payment," or SFAS No. 123(R), we will be required, beginning in our fiscal quarter ending February of 2006, to apply the fair value method as prescribed in SFAS No. 123(R). Although our adoption of SFAS No. 123(R) could have a material impact on our financial position and results of operations, we are still evaluating the potential impact from adopting this statement. 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 were not operating in the first quarter of fiscal year 2004 and in the first quarter of fiscal year 2003, and did not have sales revenues, costs of sales or a gross profit or loss. We had no selling, general and administrative expenses recorded for the quarter ending November 30, 2003 and have a record of $2843 in such expenses during the quarter ending November 30, 2002. 8 Our selling, general and administrative expenses for the two quarters ending November 30, 2002 were $3791. Our operating and net losses for the first quarter of fiscal year 2003 were $2843; $3791 for the two quarters ending November 30, 2002. We had no such losses in the first quarter or first two quarters of fiscal year 2004. We do not anticipate profits or losses to accumulate until such time as we engage in a business activity or merge with a company so engaged. We have not generated profits to date and therefore have not paid any federal income taxes since inception. LIQUIDITY AND CAPITAL RESOURCES We were not operational during the first quarter of fiscal year 2003, had no sales revenues, securities sales or cash on hand. Our future cash requirements will depend on whether we engage in a business enterprise or merge with an active entity. Until then, we will have minimal costs of staying in good standing as a corporation in Georgia. We have no current plan in place, nor did we have the financial resources available in this first quarter of fiscal year 2003 to resume periodic reporting on EDGAR or to catch up on filing delinquent reports. PLAN OF OPERATION We had no plan in place in the first quarter of fiscal year 2003 to actively engage in a business enterprise and no plan to do so during the rest of this fiscal year. TRENDS THAT MAY IMPACT OUR LIQUIDITY Not applicable. NEW EMPLOYEES We do not anticipate hiring employees over the next twelve months. 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 November 30, 2003, we have incurred total accumulated losses of $5,793,406. We expect these losses to continue when we re-engage in an active business enterprise or merge with an active entity; 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. If operational again, we expect to incur 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 MAY BE LIABLE FOR DEBTS AND OBLIGATIONS FROM PRIOR OPERATIONS As stated, we are not currently engaged in a business activity. However, given the length of the statute of limitations for written contracts in many jurisdictions (as well as the discovery of civil fraud), we may be liable in the future for debts or claimed damages arising from our former operations. WE ARE NOT CURRENT IN SECURITIES ACT OF 1934 PERIODIC REPORTING We have not filed periodic reporting on the SEC's EDGAR system since 1998. We have not filed a Form 15 that would end our prospective reporting obligation. The filing of a Form 15 does eliminate the need to file past due EDGAR filings. There is a risk the SEC could take steps to prevent our shareholders and the public from trading in our securities because of our failure to file required periodic reporting. There may be other risks associated with a failure to keep up with periodic reporting to the SEC such as shareholder claims against the company. If the company does attempt to catch up our SEC filings, there will be substantial cost involved that may drain needed resources from the company's operations (if any). 9 THERE ARE RISKS INVOLVED IN MERGING WITH ANOTHER COMPANY If we choose to merge with another company, we may not be able to do so under terms that are favorable to the company and our shareholders. The operations of the other company may not be adequate or sustainable, resulting in a loss of value of company stock. The company may sustain additional losses and ultimately have to go out of business because of the intervening lack of success of the company's business after a merger. There may be claims against the company or past management filed by management, shareholders and/or creditors of the new company after the merger if there is evidence of past acts or omissions that have not be disclosed in the merger process or otherwise become matters of material concern. Those currently in control of the company on a management level, or on a stockholder voting level, will likely have no control over the affairs of the company after a merger. IF WE ENGAGE IN AN ACTIVE BUSINESS AGAIN, WE WILL LIKELY 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 (AGAIN). Our current plans do not include starting up active business operations. However, we may do so in the future or we may merge with a company that is engaged in a business. If and when we do, it is likely the business will be in a research and development phase, with or without sales revenues. We may have the following considerations to manage while seeking and then utilizing additional capital: 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 may 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 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. If we merge with an active company or start into business ourselves, it is likely our product(s) will be relatively new in its or their development. These products, once, and if, 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; 10 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. If we become active, we may 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; 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. IF WE HAVE AND ARE UNABLE TO PROTECT EFFECTIVELY OUR INTELLECTUAL PROPERTY, THIRD PARTIES MAY USE OUR TECHNOLOGY, WHICH COULD IMPAIR OUR ABILITY TO COMPETE IN OUR MARKETS. If we become active, our success will likely depend on our ability to obtain and protect patents on our technology and to protect our trade secrets. The patents 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 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. 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. 11 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. If we become operational, 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. If we become operational, our performance will likely be substantially dependent on the performance of our senior management, Board of Directors and key technical personnel and advisers. The loss of the services of any member of our senior management, Board of Directors, technical staff or advisory personnel (if any) 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. 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. 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 IS 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. It is likely our executive officers, directors and their affiliates own a substantial, if not controlling, interest in our common stock. Accordingly, our 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. 12 WE MAY ISSUE PREFERRED STOCK IN THE FUTURE, AND THE TERMS OF THE PREFERRED STOCK MAY REDUCE THE VALUE OF YOUR COMMON STOCK. Our Board of Directors will be able to determine the terms of preferred stock attributes and issuances 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. If operational in the future, we intend to retain future earnings, if any, to finance operations, capital expenditures and the expansion of our business. ITEM 3. 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. 13 PART II. - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We may from time to time become a party to legal proceedings arising in the ordinary course of our existence or business (if and when we have one again). We are not currently a party to any material pending litigation or other material legal proceeding. ITEM 6. EXHIBITS Exhibit No. Document Description ----------- -------------------- 31.1 Certification of Chief Executive Officer as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 31.2 Certification of Chief Financial Officer as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 32 Certification of Chief Executive Officer and Chief Financial Officer as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* --------------- * Filed herewith. 14 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INGEN TECHNOLOGIES, INC. March 2, 2006 /s/ Scott R. Sand ------------------------------------- Scott R. Sand Chief Executive Officer and Chairman March 2, 2006 /s/ Thomas J. Neavitt ------------------------------------- Thomas J. Neavitt Secretary and Chief Financial Officer 15