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                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                               FORM 10-KSB

                                (Mark One)
    |X| Annual Report Pursuant To Section 13 Or 15(D) Of The Securities
                           Exchange Act Of 1934

                For the fiscal year ended September 30, 2005

    |_| Transition Report Under Section 13 Or 15(D) Of The Securities
                           Exchange Act Of 1934

               For the transition period from _____ to _____

                      COMMISSION FILE NUMBER 0-11-50

                              MED GEN, INC.
               --------------------------------------------
              (Name of small business issuer in its charter)

             NEVADA                                 65-0703559
  -----------------------------         ---------------------------------
 (State or other jurisdiction of       (I.R.S. Employer Identification No.)
 incorporation or organization)


  7284 W. Palmetto Park Road, Suite 207
          Boca Raton, Florida                                33434
 --------------------------------------                     --------
(Address of principal executive offices)                   (Zip Code)


                   Issuer's telephone number: (561) 750-1100
                                              ---------------

Securities registered under Section 12(b) of the Exchange Act: NOT APPLICABLE

Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 |X| No |_|

     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. |_|

        State issuer's revenues for its most recent fiscal year: $802,127

     State the aggregate market value of the company's common stock held by
non-affiliates as of September 30, 2005, was (See definition of affiliate in
Rule 12b-2 of the Exchange Act.) $176,376.13 as of September 30, 2005.

     State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date 10,506,777 Shares of
Common Stock as of January 17, 2006.

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes |_| No |X|

  Transitional Small Business Disclosure Format (check one): Yes |_| No |X|





                                                                     1
<PAGE>


TABLE OF CONTENTS
-----------------
                              INDEX

                                                                        PAGE

PART I

Item 1.    Description Of Business.                                         3
-------

Item 2.    Description Of Property.                                        11
-------

Item 3.    Legal Proceedings.                                              11
-------

Item 4.    Submission Of Matters To A Vote Of Security Holders.            12
-------

PART II

Item 5.    Market For Common Equity And Related Stockholder  Matters.      12
-------

Item 6.    Management's Discussion And Analysis Or Plan Of Operation.      14
-------

Item 7.    Financial Statements.
-------

Item 8.    Changes In And Disagreements With Accountants On
-------    Accounting And Financial Disclosure.                            17

Item 8A.   Controls And Procedures                                         17

Item 8B   Other Information                                                17

PART III

Item 9.    Directors, Executive Officers, Promoters And Control
-------    Persons; Compliance With Section 16(A) Of The Exchange Act      18

Item 10.   Executive Compensation                                          19
--------

Item 11.   Security Ownership Of Certain Beneficial Owners And Management  20
--------

Item 12.   Certain Relationships And Related Transactions                  20
--------

Item 13.   Exhibits And Reports On Form 8-K                                21
--------

Item 14.  Principal Accountant and Services.                               22
--------

Signatures                                                                 23
----------


                                                                     2

<PAGE>


PART I

FORWARD LOOKING STATEMENTS

The information in this Annual Report on Form 10-KSB contains
forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-
looking statements involve risks and uncertainties, including
statements regarding Med Gen, Inc. capital needs, business
strategy and expectations. Any statements contained herein that
are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will",
"should", "expect", "plan", "intend", "anticipate", "believe",
"estimate", "predict", "potential" or "continue", the negative of
such terms or other comparable terminology. Actual events or
results may differ materially. In evaluating these statements,
you should consider various factors, including the risks outlined
below, and, from time to time, in other reports Med Gen, Inc.
files with the SEC. These factors may cause Med Gen, Inc actual
results to differ materially from any forward-looking statement.
Med Gen,Inc disclaims any obligation to publicly update these
statements, or disclose any difference between its actual results
and those reflected in these statements. The information
constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.

CURRENCY

All dollar amounts in this Annual Report on Form 10-KSB are
presented in United States dollars unless otherwise indicated.


ITEM 1  --  DESCRIPTION OF BUSINESS

Company Background
------------------

Med Gen, Inc. (the "Company") was established under the laws of
the State of Nevada in October 1996.  Executive offices are
located at 7284 W. Palmetto Park Road, Suite 207, Boca  Raton,
Florida 33433. The Company's phone number is (561) 750-1100.  The
Company currently operates four Web sites: www.medgen.com,
www.snorenz.com, www.pain-enz.com,  and www.4goodnight'sleep.com

The Company's common stock trades on the OTC
---------------

Bulletin Board under the symbol "MGEN.OB"

The  Company  was  established to manufacture, sell  and  license
healthcare  products, specifically to the market for  alternative
therapies (health self-care). One out of every three households
practice some form of alternative therapies. Industry observers
estimate



                                                                     3

<PAGE>

this   market's  size at $100 billion a year, which  includes  the
diet category, a level  of  consumer expenditure almost triple the
level of expenditure in 1990.

The  two most prominent factors contributing to this robust growth
are  (i)increased  levels  of education among consumers;  and,  ii)
changing patterns of primary care (both in cost and in delivery).

The  Company's flagship product has been SNORenz[R], a throat  spray
which   reduces   or eliminates the  sounds ordinarily  associated
with  snoring. SNORenz[R] is free of artificial colors,  flavors  or
preservatives. Its patented ingredients, technology and Liposome[R]
manufacturing   process,   delivers consistent and measured droplet
spray  mists directly to the  back of  the  throat,  lubricating the
uvula  and   soft   palate  that vibrate  with  each  breath. Each
application lasts about six  to eight hours. Moreover, the all-natural
peppermint  taste further provides the  satisfaction of waking up
without a morning breath.

SNORenz[R]  is  currently sold through several large  Retailers  and
wholesalers representing a marketing network in excess  of  10,000
stores  nationwide. The Company has accelerated its  timetable  to
introduce   additional  products  that   deploy  its   proprietary
technology. In August of 2004, the company initiated  phase  1  of
its  introduction  of  Good  Nights Sleep[TM]. Good  Nights Sleep[TM] is
a   liquid   throat  spray  formulation  for  sleep  aide.   Using
diphenhydromine  as an  active  ingredient,  "Good  Nights  Sleep[TM]
will  be the first spray liquid in this category to enter the   US
market.   The  product is sold at Brooks-Eckerd's,Rite  Aid's  and
Meijers and other large wholesalers.

The Company also markets SNORenz[R] under several private labels for
other  distributors.  Snoraway[R] is  the  label  that  is  reserved
predominately  for  the  European  market.  The  company's  newest
introduction,  a weight loss program, now called the  UNDIET[TM],  is
expecting an early March marketing date.


Prior to  fiscal  year  2001,  the Company  lacked  the  capital
necessary to successfully market all of its products and  due  to
the  costs  associated with entering the retail  markets  in  the
health  and  nutrition industry, the Company opted to concentrate
its  entire  resources heretofore on the launch of  its  flagship
brand, SNORenz[R].

Initial  development of the SNORenz[R]  product was completed in
the spring of  1997, when several test infomercials were produced
and aired  with  modest  success.  Changes were then made in the
formulation, the label design and the spray applicator. The newly
designed  product was introduced in the fall of 1998, and  sales
grew modestly until an infomercial featuring the Company Chairman
and  Chief Executive, Paul B. Kravitz, began airing in the Spring
of 1999, significantly increasing sales.


                                                                     4

<PAGE>

Sensing an existing demand for a liquid spray alternative  "sleep
aide"  to  compete  with  the  pills and  caplets  already  being
marketed  into a $1.5 billion market category, Med Gen introduced
Good  Nights Sleep[TM]  for  immediate  retail  consumption  with
initial modest success into Eckerd Drug, CVS and Albertsons [a
total of 10,000 stores]. Foregoing the marketing route taken
with SNORenz[R] management expected to acquire shelf space at
leading  retail  stores  because of the  success and  market
penetration already accomplished with SNORenz[R].This plan failed
because  of a lack of capital to advertise and support the  retail
wholesaler and the lack of a contractual obligation of the retailer
to purchase the product on a continuing basis. In numerous instances
when  the  buyer  was  replaced by a new  buyer  the  product  was
dropped, regardless of the Company's protests.

Three  dietary  sprays  marketed under  the  Un-Diet[R]  program
is expected to be introduced in early 2006.
The introductions are dependent upon necessary capital resources.




DESCRIPTION OF PRODUCTS

SNORenz[R]
----------

SNORenz[R]  is  an  original and innovative entry into the   anti-
snoring industry. Never before has any company introduced a liquid
throat   spray  to  prevent  or  quiet  the   noise  of   snoring.
Mr.Kravitz, Mr. Mitchell and Mr. Robinson were awarded a Patent on
the  ingredients and formula on  February 13, 2001. They  assigned
the patent to the Company for a period of three years. The Company
still   utilizes  the  formula  and  all  trade  secrets  in   its
manufacturing  process. The medical and psychological  communities
have studied the causes and symptoms of sleep deprivation for many
years.

Sleep clinics can be found internationally at the largest
hospitals  and  universities,  and  there  is  a  large  body  of
published  work on the subject of snoring. It has been documented
in clinical tests that much of sleep deprivation is caused by
snoring. Not only is the snorer disturbed, but those within close
proximity  of  the noise are disturbed as well. As  the  muscles
relax during sleep, air flows in and out of the mouth causing the
vibration of the tongue, soft palate and uvula which produces the
sound commonly referred to as snoring.

In 2002, the Company completed a double blind study at Northwestern
Hospital's Sleep Center  in  Atlanta, GA, under the direction of
Dr. Samuel  Mickelson of  the  Advanced  Ear Nose  and  Throat P.C.
The results of that study concluded that Snorenz is an effective
product to reduce the noise associated with snoring.

Traditional   snoring   remedies  include   surgical   procedures,
mechanical  devices   and   dental   appliances.  During  surgery,
portions of the vibrating tissue are cut away by scalpel or  laser
in an attempt to remove the noise-making tissues.

This type of procedure is painful, takes months to heal, and may not
offer  a long-term  solution. Mechanical devices primarily attempt to
increase the volume of air or create positive air pressure  using
some type of breathing apparatus connected to an air pump.  This
is not only uncomfortable, it also limits one's sleeping
positions. Dental appliances also attempt to increase the volume
of air by expanding the opening of the mouth or by repositioning the
lower jaw and/or the tongue to decrease the vibration effect.
Again, wearing one of these is not the most comfortable way to
sleep. The costs of these methods can be considerable and may not
be covered by basic medical insurance programs.


                                                                     5

<PAGE>


Snoring is a problem that affects over 60% of males and 40% of
females. In the United States alone, it is documented that there
are over 94 million people who suffer with and from the  effects
of snoring. Snoring causes a poor quality of sleep. The medical
implications of snoring usually are not life threatening, except
for a malady called Sleep Apnea, which is not as yet curable.
Therapy has been increasing in response to demand to solve the
side effects of snoring noise.

Experiments with weight loss, the avoidance of alcoholic
beverages and the changing of sleep positions have largely proven
ineffective. Sufferers who demand some relief are now seeking
more aggressive methods. Invasive surgery, continuous positive
airway pressures (PAP),or appliances are now being used. These
methods have had variable success in improving the  quality  of
sleep and reducing snoring. Due to the discomfort and cost of
these methods, less invasive methods are now being evaluated.

The Biotechnology underlying Med Gen Products
-----------------------------------------------

One of the most promising of all these new methods is the use of
a natural blend of oils and vitamins specially formulated to  be
used  as  a  spray.  After years of research, such a product was
developed  by  a  medical specialist in Brazil  with  encouraging
initial results. The Company acquired this initial technology,
the trade secrets and initial proprietary formula for worldwide
commercial marketing which over the years has been perfected, re-
tested and re-formulated leading to the issuance of a patent that
has  been assigned to the Company. The Company has spent
considerable capital and other resources to further improve  the
delivery of this spray by using, as its manufacturing technology,
the patented technology called Liposome[R], which  enables the
blend of oils to remain equally  disbursed and  suspended in a
vesicle in solution.  This, the patented formula and other trade
secrets comprise the underlying biotechnology of SNORenz[R].

Because of this specialized manufacturing process, there is never
a  need to  shake  the  bottle as the  solution  is  permanently
blended. The  Company  intends to market other  over-the-counter
products for  alternative  therapies  By  way  of  explanation,
Lipoceuticals are liposomes in a multiphasic system that contains
an active ingredient in each phase. The ability to encapsulate a
variety  of lipophilic and hydrophilic ingredients, peptides  and
proteins  are the obvious advantages needed to enhance  delivery,
improve  quality and  sustain  product performance of SNORenz[R].
This technology is far superior and much more expensive than
other emulsion  type delivery  systems  and insures the highest
possible quality available in the market today.

The  advantages  and  benefits of this  technology  and  delivery
system  are that  the   SNORenz[R] LipoSpray  is absorbed
transmucosally to  provide systemic  distribution;  has a higher
concentration of active ingredient in the  mucosal tissue; has
longer residence time of active ingredient in the mucosal tissue;
and, has a high encapsulation rate for improved  performance of
the active ingredient. It also has greater bioavailability, which
means  that it has faster onset of effect, greater  overall
absorption, sustained administration, improved convenience and no
pills, water or swallowing problems.


                                                                     6

<PAGE>


SNORenz[R] attempts to reduce or eliminate the sounds associated
with  snoring by simply lubricating the vibrating tissues in  the
throat  with  a  combination of five natural oils, vitamins,  and
trade  secret  trace ingredients. The product  is  formulated  to
adhere  to  the  soft tissues in the back of the  throat  for  an
extended period of time, and may be reapplied as needed. Clinical
studies,  "Double  Blind" studies and scores of testimonials  and
repeat  sales indicate  a high  level of  success  for SNORenz[R]
users. SNORenz[R] is not effective where users have consumed a
large amount of alcoholic  beverages shortly before  application,
as  the alcohol tends  to  break down the chemical bonds of  the
natural oils. It should also be noted  that SNORenz[R] is not a
cure for APNEA, a condition for which there is no known cure.

SNORenz[R] carries a 30-day money back guarantee. The Company has
experienced  negligible product return rates over the  past five
fiscal years.

GOOD Nights Sleep[TM]
---------------------

Good  Nights Sleep[TM] ("GNS") is a night time sleep  aid and the
first  such  product formulated as a throat spray. Positioned  to
compete  with Sominex[R],Simply Sleep[R] and Excedrin PM, which
are all  solids; GNS enters  the market catering to people  who
have difficulty  taking pills and  who want "fast action" results
which only a liquid can give.

Truly  innovative in its formulation, GNS uses Diphenhydramine
HCLin quantities of 8.3mg in each measured spray. Absorption into
the mucous membranes of the throat and cheeks is immediate  and
the resultant sleep inducement is almost immediate.

GNS is  alcohol free and contains inactive ingredients, citric
acid,  flavor, glycerin, poloxamer  407,potassium sorbate,
purified water, sodium benzoate, sodium citrate and sorbitol.

The product comes in a "protected sealed" bottle with a screw  on
spray  applicator. Heavy emphasis in advertising is on a  "spray
alternative to  pills". Since the product does not contain any
natural sugar, it would be approved for diabetics use.

PAINenz[R]
----------

A recently commercialized product in the Company's family of
products, is a topical analgesic sold over-the-counter.
It significantly reduces the  pain common  to arthritis  sufferers,
normal aches and pains due to exercise and other muscle stress, simple
backache pain and muscle sprains. The product comes in a roll-on
applicator.   The market for  over-the-counter pain relief products is
estimated to exceed $2.5 billion per year.



                                                                     7

<PAGE>


The active  ingredients  in  PAINenz[R] are, Glucosamine,
Chondroitin, Cetyl  Myrist  Oleate(CMO) and Capsaicin (kap SAY ih
sihn),  a derivative  of the hot pepper plant. When applied as an
external analgesic, Capsaicin  depletes and  prevents
reaccumulation of substance P in  peripheral sensory neurons.
Substance P is found in slow-conducting neurons in the outer and
Inner skin layers and joint tissues, and is thought to be  the
primary chemical mediator of pain impulses  from the periphery to
the central nervous system. by depleting substance P, Capsaicin
renders skin and joints insensitive to pain since impulses cannot
be transmitted to the brain.

Capsaicin  has been approved by the United States Food  and  Drug
Administration ("FDA") for use without a prescription in topical
preparations marketed  for the temporary  relief  of  pain  from
arthritis, or for the relief of minor aches and pains of  muscles
and  joints.  Information  on  both  Capsaicin  and  Liposome   is
available on the Internet (www.capsaicin.com  and www.liposomes.com).
                           -----------------      -----------------


THE UNDIET[TM] PROGRAM
----------------------

The strength of the UNDIET[TM] program lies in the very fact that  it
does  not  rely  upon  the [lack of] intake  of  food  to  produce
significant  weight  loss. Rather, the three products,  and  their
formulations,  that form the entire UNDIET[R] program are  specially
formulated liquid sprays, easily absorbed into the mucous membrane
of the throat area to produce specific fast acting results.

THE PROGRAM CONSISTS OF:
Appease[TM], which is an all natural spray producing a strong feeling
of  fullness  thereby reducing the desire to eat. It also  lessens
the desire to crave sugar/sweet products.

Weight  Shield[TM],  which is an all natural spray  formulation  that
------------------
actually "burns" the fat intake. The reduction of fatty foods  and
fat intake is essential for weight control.

Simply  Trim[TM],  which  is  an all natural spray  formulation  that
----------------
combines  the appetite suppressant with the fat burning qualities.
Using  other additives to the formulation, the user will not  only
feel  an immediate lessening of a desire to eat but will, if  used
as  prescribed,  prevent  the  "bounce  back"  that  most  dieters
experience with other diet programs.

The weight loss industry is an ever expanding industry that claims
between  $50-$60  billion  in sales revenue.  Almost  66%  of  the
national  population  suffer from overweight problems.  Medically,
there  is  a  large  array  of illness caused  by  the  overweight
problem.

By  using Med Gen's STWT [Sprays The Way] manufacturing technology
and  by  producing  another industry first (a  liquid  spray  diet
product),  Med  Gen hopes to turn the corner to profitability  and
gain a substantial piece of the $60 billion pie.

Marketing
---------

Med Gen products are currently sold over the counter by more than
10,000 retail stores nationwide and also sold by distributors
overseas. A partial list of retailers that carry Med Gen
brands in the  United  States  are: Albertsons Supermarkets,
American  Stores(a  division of Albertsons  which  includes  Jewel
Stores, Jewel T Stores, Osco Drugs and Sav-On  Drugs), Bashas,
Brooks/Eckerds Pharmacy, Cardinale Distributing  , Drug Store.Com,
Happy Harry's, McKesson Distributing, Meijers, Rally's and Rite Aid.

The  reliance  on  "retail" store distribution has  hurt  Med  Gen
because of the company's inability to sustain large costs put upon
it  by  major  chain and drug stores. Additionally,  the  cost  of
consumer advertising is excessive to support "pull thru" sales  at
the  retail  levels. For this reason, the company has initiated  a
direct  to  consumer marketing program, commonly  referred  to  as
"DTC",  enhanced its web site and pointed its advertising programs
towards increasing this marketing strategy.

In  doing so, the company need only to produce 1/3 of its ordinary
sales to realize the same profit margins. Employing both marketing
strategies is meant to leverage every opportunity the company  has
to   bring  its  products  to  market  while  conserving   capital
resources.


Distribution Agreement
----------------------

Med Gen Inc. has elected to manufacture all its products by contract
manufacturers under secret and protected manufacturing agreements
signed on behalf of the Company. Through a distribution agreement
a  principal  of a manufacturer and the Company's two principals
share patent rights to the formulas.

Not  including  international sales generated from  its  Internet
site,  the Company has distributors to sell its alternate  brands
of  the  snoring  spray in the United  Kingdom,  Germany,
France, Switzerland, Portugal, Turkey, Australia, New Zealand,
Japan, China and Korea.  The Company fully expects to be able to
piggyback  additional products through this distribution  network
in the future.



                                                                     8

<PAGE>

       COMPETITION, MARKET SHARE AND INDUSTRY ENVIRONMENT

The Information Research Institute (IRI) is arguably the seminal
research  organization regarding consumer products research.  The
category, Sleeping Remedies, is a $161 million market. In 1998, a
sub-category, Sleeping Aids, Liquid, was created.

In the snoring relief category, there are three competitors,
Breathe Right Spray[R], Snore Stop[R] and Y-Snore[R], the largest
is Breathe Right[R]. Although this product was introduced into the
market in the past Three years, CNS  has spent a considerable amount
of money on PR and advertising, replacing SNORenz[R] as the number 1
seller in the snoring  category. The company has never been able to
compete with them for lack  of advertising dollars. In the latter part
of 2005, the company started changing its marketing direction to a
Direct to Consumer approach and has recently been moving forward to
obtain funding for this purpose. The company believes that it can build
back its base of loyal customers and reach profitability faster by
concentrating on Direct to Consumer marketing. As a result of this
decision, the Company has updated its website.

Good  Nights Sleep[TM], although new, enjoys an enviable position
in  that it still  remains the  only Brand  available as a liquid
throat spray for  sleep aid. Although it has a lot of competition
from  well known  brands,  all of the  existing  products  are in
"hard" form delivery systems. The Company has begun a marketing
program to direct the consumer to its website.

Dominant Customers
------------------

In  fiscal year 2005, the Company's three largest customers  were
Wal-Mart, Walgreens and Army/ Air Force Exchange Service which
Represented approximately 66% of the Company's annual sales that
year, with WalMart accounting for 40%.Both Wal-Mart and Walgreen's
are no longer customers of the Company. The  Company's largest customer
in fiscal 2004 was Wal-Mart which represented 38% of annual sales that
year.

Internet Sales
--------------

In 2002 the Company converted its marketing strategy from Direct
Marketing to consumer retail store sales as a result, Internet
pricing was dramatically reduced by 50% to be  consistent with
unit pricing in the retail network. Therefore, although unit sales
remained steady, and have even slightly increased, dollar sales
have dropped. This trend is expected to be reversed as a result of
the new DTC approach. The Company operates four e-commerce web
sites, www.snorenz.com ,www.medgen.com .,www.pain-enz.com,
www.4Goodnightsleep.com. Orders from these sites average over
$2,000 per month in retail sales. Future enhancements to the
Company's web sites are planned.


                                                                     9

<PAGE>



The  Company expects to show steady and important increases  in
future sales on its internet site.  During the third quarter  of
fiscal 2005 (April to June), the web site was re-designed to
increase "user friendly" utilization and to offer new company
products. In addition, the company has appointed an executive  to
head-up  the  Internet Sales so that there will be a concentrated
effort made in this important media. Investor Relations will also
be  included and enhanced on the web site with more frequent  up-
dates  than previously given.  Although no sales figures  can  be
given  or estimated, the Company expects that these efforts will
produce substantial increases in e-commerce sales in fiscal 2006.

Patents, Trademarks and Licenses
--------------------------------

The  name "SNORenz[R]" is a registered  trademark, owned by the
Company, and issued by the United  States Patent  and  Trademark
Office  (Reg. No. 2,210,381 -  12/15/98). An application of renewal
has recently been filed. The Company also owns the trademark registration
for the Good Nights Sleep product.

The Company has registered SNORenz[R] in Korea and Snoraway[R] and
Good Night's Sleep[R] in all countries participating in the EU as a
Community Trademark.

Government Regulation
---------------------

The  manufacturing, processing, formulation, packaging,  labeling
and  advertising  of the Company's products  may  be  subject  to
regulation  by one or more federal agencies, including  the  FDA,
the Federal Trade Commission ("FTC"), the Consumer Product Safety
Commission,  the  United States Department  of  Agriculture,  the
United  States  Postal  Service, the United States  Environmental
Protection   Agency  and  the  Occupational  Safety  and   Health
Administration. The Company's products may also be  regulated  by
various  agencies  of  the  states and localities  in  which  our
products  will  be  sold. In particular, the  FDA  regulates  the
safety,   labeling  and  distribution  of  dietary   supplements,
including  vitamins, minerals, herbs, food, OTC and  prescription
drugs and cosmetics.

The  regulations that are promulgated by the FDA relating to  the
manufacturing  process  are known as Current  Good  Manufacturing
Practices  ("CGMPs"), and  are different  for  drug  and   food
products. In addition, the FTC has overlapping jurisdiction  with
the  FDA  to regulate the labeling, promotion and advertising  of
vitamins,  OTC drugs, cosmetics and foods. The FDA  is  generally
prohibited  from  regulating the active  ingredients  in  dietary
supplements as drugs unless product claims, such as claims that a
product  may heal, mitigate, cure or prevent an illness,  disease
or malady, trigger drug status.

Governmental regulations in foreign countries where  the  Company
may sell our products may prevent or delay entry into a market or
prevent  or delay the introduction, or require the reformulation,
of  certain  of  our  products. In addition, the  Company  cannot
predict  whether  new domestic or foreign legislation  regulating
its activities will be enacted. Such new legislation could have a
material adverse effect on the Company.



                                                                     10

<PAGE>


Federal Trade Commission
------------------------

The  Company's  product packaging and advertised claims  strictly
adhere to  Federal Trade Commission regulations and  guidelines.
The Company has complied with all FTC regulations with respect to
revamping and redesigning its packaging and labels with  "APNEA"
warnings that meet all new compliance issues. The Company intends
to  comply with all government regulations, both in domestic  and
foreign markets, regarding the distribution and sales  marketing
of its product lines.

Reports to Security Holders
---------------------------

The Company periodically prepares and publishes News Releases and
other  significant  reports  that are  deemed  newsworthy.  These
reports  are  sent  to  Business Wire for wide  distribution.  In
addition, shareholder reports are mailed to all shareholders,  as
the  Company  deems  necessary.  Notices of yearly  shareholders'
meetings,  proxy  statements  and  events  of  this  nature   are
distributed  with  the  help  of Liberty  Transfer  Company,  the
Company's transfer agent, and with information obtained from ADP
Investor Communication in regard to street name accounts.

Employees
---------

The  Company currently has six full-time employees. Paul Kravitz
is the Chairman, Secretary and Chief Executive Officer of the
Company; Paul S. Mitchell is President, Treasurer and Chief
Operating Officer; and Jack Chien is Chief Financial Officer.



ITEM 2.   DESCRIPTION OF PROPERTY

The office is located at 7284 W. Palmetto Park Road, Suite 207,
Boca Raton, Florida 33433.  The telephone number at this address
is (561) 750-1100. In November 1999, the Company agreed to rent
expandable warehouse space (space  as., needed) located in
Buffalo, New York on the premises of its prime sub-contractor. This
location will  significantly  reduce  the duplicity  of  handling and
its related costs as well  as  reduce overhead. It will also simplify
inventory controls.


                                                                     11

<PAGE>




ITEM 3.   LEGAL PROCEEDINGS:

During May 2003 Global Healthcare Laboratories, Inc. ("Global")
made a claim against the Company for breach of contract under a
master license agreement. A trial was held in August 2004 and a
jury verdict in the sum of $2,501,191  was awarded in favor of
the plaintiff's. The Company subsequently settled the judgment
on December 3rd, 2004. The basic terms of the settlement are the
payment of the sum of $200,000 to plaintiffs, spread over a 4-5
month period and the registration of 8,000,000 common shares by
January 15th, 2005. The Company made the first three installments
totaling $75,000 dollars on a timely basis. The Company tendered
the fourth payment 13 days late and the plaintiff's unilaterally
declared the settlement null and void. The Company filed a motion
to enforce the provisions of the agreement in March 2005.

The uncontroverted facts are as follows:

The Company made the first payment on time, the second payment was
two days late and the third payment was 7 days late (of which four
days were due to a UPS delivery problem).  The fourth payment was
made 13 days late as the Company was undergoing severe cash flow
problems at the time and the check was delivered only after Mr.
Mitchell, the President borrowed the necessary funds on a home-equity
loan to cover the amount. The Company also tendered the final future
payment at that time in advance of the payment schedule. The stock was
registered on August 12th, 2005 and the plaintiff's orally rejected
delivery.

The Court ruled that because the settlement contract had a "time
is of the essence clause" the untimely payments made by the Company allow
Global Healthcare to disaffirm the agreement. The Court ruled that
Enriquillo Export & Import Inc v. M.B.R. Industries Inc. applies and the
Company's 13 day late tender was not adequate performance {Enriquillo
had a 58 day delay}. Furthermore, the Court ruled that the $75,000 dollars
of payments cashed by Global and tendered by the Company under the original
settlement agreement shall not be returned but rather applied to the
judgment.

At present the Company has retained the firm of Furr & Cohen Esq.'s.
and notified its lender, whose outside counsel is working closely with
the Company's counsel to reach a new settlement with the judgment
creditor. The parties have orally agreed to a standstill agreement while
they exhaust all possible remedies in the instant matter. In the event a
new accord is not reached within a few weeks, the Company will be required
to file a Chapter 11 bankruptcy petition to protect the Company and its
assets. Recently, the parties have agreed in principal to new settlement
terms and a definitive agreement should be executed no later than
February 28th, 2006.

In December 2005, the Company filed a litigation against CVS, Inc.
The Company sold CVS in excess of $140,000 dollars of goods and
received payment of approximately $26,000 during an 18 month
period. CVS terminated the product in late May 2005 and claims the
Company owes them $77,000.00 Management expects to recover fully
in this litigation but cannot determine the possible outcome at
this time.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

On June 23rd, 2005 the Company received the proxy certification
from the Transfer Agent and the results were as follows:

     For:      15,695,218
     Against:     351,452
     Abstain:      10,000

The Amendment to increase the authorized shares from 50,000,000 to
250,000,000 passed by majority vote. The Company amended its
certificate of incorporation.


On October 31st, 2005 the Company received the certified tally of
the proxy solicitation which authorized the increase of the issued
and outstanding shares from 250,000,000 to 500,000,000 million. The
authorized is comprised of 495,000,000 common shares and 5,000,000
preferred shares. The vote was as follows:

     For:       2,948,347
     Against:     479,930
     Abstain:         500

The Company amended its certificate of incorporation in Nevada.



                             PART II
                             -------


ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of September 30, 2005, there were approximately 1022 Common Stock
shareholders consisting of both registered shareholders and those
being held by the Deposit Trust Corporation in street name.
Of the 3,278,777 shares outstanding,616,593 were restricted and
2,662,184 were non-restricted.

As  of  January 15th, 2006,the latest date pre-filing of this
report the Company, as a result of additional stock issuances and
option  exercises, has 10,206,777 shares outstanding,1,574,574 are
restricted and 8,632,203 are non-restricted. The Company's Common
Stock is traded on the NASD OTC Bulletin Board under the symbol
"MGEN.OB".  Shares first began trading on the OTC Bulletin Board
in  May of 2000 (prior to May, the Company's Common  Stock  was
traded in the Pink Sheets).

The  following  table sets forth the high and low bid  prices  by
month  for the Company's Common Stock for fiscal years  2002 thru
2005. The following high and low bid prices reflect inter-dealer
prices without retail markup, markdown or commission, and may not
represent actual transactions.



                                                                     12

<PAGE>


Common Stock: Historical Price Data
-----------------------------------

<TABLE>
<CAPTION>


  Fiscal 2002- 2005                     High        Low
  -----------                           ----        ---
<S>                                     <C>         <C>

October    2002                         0.09        0.07
November   2002                         0.13        0.08
December   2002 (end first quarter)     0.10        0.07
January    2003                         0.08        0.03
February*  2003                         0.825       0.03
March      2003 (end second quarter)    1.265       0.60
April      2003                         1.312       0.62
May        2003                         1.225       0.687
June       2003 (end third quarter)     1.50        0.687
July       2003                         1.312       1.25
August     2003                         1.375       1.25
September  2003 (end fourth quarter)    1.312       0.625
October    2003                         1.437       1.1875
November   2003                         2.15        1.25
December   2003 (end first quarter)     1.80        0.95
January    2004                         1.19        0.44
February*  2004                         0.90        0.40
March      2004 (end second quarter)    1.15        0.75
April      2004                         1.312       0.62
May        2004                         1.18        0.75
June       2004 (end third quarter)     1.43        0.55
July       2004                         0.535       0.34
August     2004                         0.70        0.012
September  2004                         0.224       0.065
October    2004                         0.225       0.102
November   2004                         0.168       0.115
December   2004 (end first quarter)     0.178       0.07
January    2005                         0.85        0.65
February   2005                         0.89        0.45
March      2005 (end second quarter)    0.68        0.45
April      2005                         0.118       0.50
May        2005                         0.70        0.45
June       2005 (end third quarter)     0.06        0.032
July       2005                         0.044       0.035
August     2005                         0.057       0.016
September**2005                         0.42        0.061


</TABLE>

*    In February, 2003 the company completed an 80:1 Reverse
     stock split and in November, 2003 the company issued a
     stock dividend of 4:1. As a result of those splits, the
     symbol was changed to MDGN.

*    Starting in February 2003, this table represents the
     common stock taking into consideration the above two
     events.
**   Starting in September 2005 the Company completed a 20:1
     Reverse split. As a result the symbol was changed to MGEN


On September 30, 2005, the bid price of MDGN shares was $0.061 and
the asked price was $0.064

The Transfer agent for the Company's Common Stock is Liberty
Transfer Co.,274 New York Ave, Huntington, NY 11743-2711. The
telephone number is(631) 385-1616.


                                                                     13

<PAGE>


Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULT OF OPERATIONS

The following discussion of our financial condition and our
subsidiaries and our results of operations should be read
together with the consolidated financial statements and related
notes that are included later in this Annual Report on Form 10-
KSB. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking
statements as a result of various factors, including those set
forth under Risk Factors or in other parts of this Annual Report
on Form 10-KSB.

Twelve months ended September 30, 2005
Compared with twelve months ended September 30, 2004
----------------------------------------------------

GENERAL

The Company has been headquartered at 7284 West Palmetto Park
Road, Boca Raton, Florida 33433, since December 1999.
It leases a 2200 square foot facility.  The company, under special
protective contracts, has elected to outsource the manufacturing
of all of its products at this time.

Results of Operations
---------------------

For the twelve months ended September 30, 2005, net sales decreased
23.11% to $802,127 from $1,043,101 in the prior fiscal year.
The decrease in sales was due primarily to four factors:
(1) A multi-million dollar advertising campaign by our direct
competitor Breath-Rite in all of our retail markets which led
them to dominate the point of purchase sale to the consumer and
(2)The successful launch by  several of our retailers of
competitively priced "generic" snoring products which gave the
consumers more products to choose from when making a purchase.
Coupled with these factors were (3) The Company's lack of
substantial advertising budget which did not allow the Company to
affect the consumers purchasing decisions and led to a substantial
loss of revenue until late in the year when the Company began
expending significant amounts on advertising. AN additional factor
was the loss of three major accounts during the last half of the
fiscal year. These accounts Wal-Mart, Walgreens and CVS accounted
for over 60% of the gross revenues in the prior fiscal years.


Gross profit for the twelve months ended September 30, 2005 was
$472,058 versus $606,567 for the same period a year ago, a
decrease of 22.18%. This decrease relates to a substantial
decrease in total sales volume for the fiscal year. Gross profit
margins for the years 2004 were 58.15% and 2005 were 58.85%. The
increase in the gross profit margins was negligible in comparison
to the prior fiscal year. The Company had lower cost of sales
which is directly attributable to the loss in revenue volume over
the last six months of operations in fiscal 2005.


For the twelve-month period ended September 30, 2005 operating
expenses were $9,368,644 as compared to $9,664,294 a decrease of
3.1% from the prior fiscal year. The marginal decrease is due to
the expensing of the costs of the litigation which amounted to
$1,181,191 as compared to $1,320,000 in the prior fiscal year.
This expense resulted from the adverse judicial ruling related to
the settlement of the above referenced litigation, and non-cash
stock compensation of $6,551,800 in 2005 as compared to $5,496,425
in 2004. Management does not believe these types operating expenses
for the next fiscal year will continue.

Excluding these expenses in fiscal 2004 the SG&A was $2,487,869 as
compared to $1,635,653 in fiscal 2005. This represents an actual
reduction of 34.25%. Management has continued to cut expenses in
all areas of operations in an effort to conserve cash until sales
volume substantially increases during fiscal 2006.



                                                                     14

<PAGE>


The operating loss decreased to $(8,896,586) as opposed to a loss
of $(9,057,727) for the same twelve months period, in the prior year.

For the twelve-month periods interest expense increased to
$253,992 from $113,597 primarily as a result of an increase in
borrowings. The Company owes its lender approximately $2,450,000.00
at an 8% coupon rate as of the date of this filing. This figure is based
upon the gross conversions made by the lender through the date of
the filing, (approximately $200,000).

For the twelve months ended September 30, 2005, the Company
reported a loss of $12,214,900 ($7.12 per share) versus a loss of
$9,171,324 ($15.42 per share) for the same fiscal period, a year ago.

Liquidity and Capital Resources
-------------------------------

Net cash used in operating activities was $1,219,999 during the
twelve months ended September 30, 2005 as compared to $2,060,531
in the year earlier. This decrease is attributed principally to
a combination of lower revenues which lowered cash outlays in the
second half of the fiscal year and continued implementation of cost
cutting methods related to overall operating expenses. The Company
intends to attempt to lower monthly cash outlays in fiscal 2006 and
conserve cash until additional financing is secured. The net loss for
the year was $12,214,900 compared to $9,171,234 , a year ago. The loss
was adjusted for non-cash stock compensation of $6,551,800, and
derivative accounting requirements of $4,298,243. Both of these
items are non-cash outlays and substantially affected the fiscal
results for 2005.

Net cash used in investing activities was $5,092 during the
twelve months ended September 30, 2005.

Net cash provided by financing activities was $1,772,317 during
the twelve months ended September 30, 2005, which consisted
principally of proceeds from a convertible stock offering pursuant
to an SB-2 Registration Statement $(1,935,000), the payment of
option exercises $(101,987) and the proceeds from related party
loans ($411,000) reduced by the repayment of advances of related
party loans ($586,000) and financing fess of $(89,670).

The Company launched its first advertising campaign in May -June
of 2004 in order to support the sales of its products Good Night's
Sleep[TM] and SNORenz[R] brand. Other advertising campaigns were
launched in fiscal 2005.The Company intends to seek additional
funding in 2006 through the sale of Common stock in order to launch
its new UNDIET[TM] product line The Company has continued to cut costs
by eliminating staff, and eliminating one-time legal and computer and
Internet related costs.  Since the loss of the major retail accounts
the Company has revitalized its direct sales programs via its Internet
site to the public consumer. The Company's volume via this medium has
slowly increased and management is exploring various ways to drive
the consumer to the website. The Company plans on shooting some
infomercials and advertise on the web in 2006.

At present the Company does not have sufficient cash resources,
receivables and cash flow to provide for all general corporate
operations in the foreseeable future. The Company will be required to
raise additional capital in order to continue to operate in fiscal 2006.

Going Concern

The Company's financial statements are presented on a going
Concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.

The Company has experienced a significant loss from operations
including the settlement of certain litigation. For the years
ended September 30, 2005 and 2004, the  Company incurred net
losses of $12,214,900 and $9,171,324.

The Company's ability to continue as a going concern   is
contingent upon its ability to secure additional financing,
increase ownership equity and attain profitable operations.  In
addition, the  Company's ability to continue as a going concern
must be considered in light of the problems, expenses and
Complications frequently encountered in established markets and
The competitive environment in which the Company operates.



                                                                     15

<PAGE>


The Company is pursuing financing for its operations and seeking
additional investments. In addition, the Company is seeking to
expand its revenue base by adding new customers and increasing
its advertising and is attempting to settle certain litigation.
Failure to secure such financing, to raise additional equity
capital, settle the litigation and to expand its revenue base may
result in the Company depleting its available funds and not being
able pay its obligations.

The financial statements do not include any adjustments to
Reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the
Company to continue as a going concern.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance
with accounting principles generally accepted in the United
States, and make estimates and assumptions that affect our
reported amounts of assets, liabilities, revenue and expenses,
and the related disclosures of contingent liabilities. We base
our estimates on historical experience and other assumptions that
we believe are reasonable in the circumstances. Actual results
may differ from these estimates.

The following critical accounting policies affect our more
significant estimates and assumptions used in preparing our
consolidated financial statements.

Revenue Recognition

In general, the Company records revenue when persuasive evidence
of an arrangement exists, services have been rendered or product
delivery has occurred; the sales price to the customer is fixed
or determinable, and collect ability is reasonably assured. The
following policies reflect specific criteria for the various
revenues streams of the Company:

Revenue is recognized at the time the product is delivered.
Provision for sales returns will be estimated based on the
Company's historical return experience. Revenue is presented net
of returns.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees
for services based on the fair value of the equity instruments
issued and accounts for equity instruments issued to other than
employees based on the fair value of the consideration received
or the fair value of the equity instruments, whichever is more
reliably measurable.

The Company accounts for stock based compensation in accordance
with SFAS 123, "Accounting for Stock-Based Compensation." The
provisions of SFAS 123 allow companies to either expense the
estimated fair value of stock options or to continue to follow
the intrinsic value method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25) but disclose
the pro forma effects on net income (loss) had the fair value of
the options been expensed. The Company has elected to continue to
apply APB 25 in accounting for its stock option incentive plans.



                                                                     16

<PAGE>



Derivative instruments

In connection with the sale of debt or equity instruments, we may
sell options or warrants to purchase our common stock. In certain
circumstances, these options or warrants may be classified as derivative
liabilities, rather than as equity. Additionally, the debt or equity
instruments may contain embedded derivative instruments, such as conversion
options, which in certain circumstances may be required to be bifurcated
from the associated host instrument and accounted for separately as a
derivative instrument liability.

The identification of, and accounting for, derivative instruments is
complex. Our derivative instrument liabilities are re-valued at the end
of each reporting period, with changes in the fair value of the derivative
liability recorded as charges or credits to income, in the period in which
the changes occur. For options, warrants and bifurcated conversion options
that are accounted for as derivative instruments liabilities, we determine
the fair value of these instruments using the Black-Scholes option pricing
model. That model requires assumptions related to the remaining term of the
instruments and risk-free rates of return, our current common stock price
and expected dividend yield, and the expected volatility of our common
stock price over the life of the option. We have estimated the future
volatility of our common stock price based the history of our stock price.
The identification of, and accounting for, derivative instruments and the
assumptions used to value them can significantly affect our financial
statements.



Recently Issued Accounting Pronouncements
-----------------------------------------

Recently issued accounting pronouncements and their effect on us
are discussed in the notes to the financial statements in our
September 30, 2005 audited financial statements.




ITEM 7.   FINANCIAL STATEMENTS

End of report

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None

Item 8A. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in
the Company's  Exchange Acts reports is recorded, processed and
summarized and is reported within the time periods specified in
the SEC's rules and forms, and that such information   is
accumulated   and communicated to the Company's   management,
including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure
control procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the  desired
control  objectives, and management necessarily was  required  to
apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

As of the date of this report, the Company's  management, including
the President (principal executive officer) and  Chief  Financial
Officer, carried out an evaluation  of  the effectiveness  of  the
design and  operation  of  the  Company's disclosure controls and
procedures pursuant to Exchange Act  Rule 13a-14.  Based  upon the
evaluation,  the  Company's  President (principal   executive  officer)
and  Chief  Financial   Officer concluded  that the Company's disclosure
controls and  procedures are  effective  in  timely alerting them to
material  information required  to  be included in the Company's
periodic SEC  filings. There  have been no significant changes in the
Company's internal controls  or  in other factors, which could
significantly  affect internal controls subsequent to the date the
Company's management carried out its evaluation.

Item 8B. Other Information

Not Applicable

                                                                     17

<PAGE>






                             PART III
                             --------

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS

<TABLE>
<CAPTION>
     Name              Age               Position
     ----              ---               --------
<S>                    <C>         <C>

Paul B. Kravitz        72          Chairman; Chief Executive Officer
                                   Secretary and Director

Paul S. Mitchell       51          President, Treasurer, Chief
                                   Operating Officer and Director
</TABLE>


All  directors  hold  office until the  next  annual meeting  of
stockholders  and  the  election  and  qualification   of  their
successors. In 2002 at the Annual shareholders meeting the
shareholders elected the Board of Directors for a three year term.
Officers were elected for the same term  and, subject  to  existing
employment and consulting contracts and agreements, serve at the
discretion of the  Board. The Company intends to conduct an annual
shareholders meeting in  accordance with Nevada state law  at its
principal office location  at 7284 West Palmetto Park  Road,  Boca
Raton, Florida.

Paul B. Kravitz (72) is Chairman and Chief Executive Officer. He
---------------
has  been  a  member  of  the Board of  Directors  since  company
inception.   Prior to founding Med Gen and its principal product
SNORenz[R],  Mr. Kravitz was the President and  CEO  of  a public
company  (AppleTree Companies, Inc.) engaged in  the  manufacture
and  distribution of food supplies to convenience  stores  in  24
states.  Annual Sales exceeded $38 million. Mr. Kravitz retired
from that company in 1996.

From  1986  until  1992, Mr. Kravitz was the  CEO  and  principal
shareholder of The Landon Group, a financial services company. In
1990/1991, Mr. Kravitz was appointed Chairman of the Southeast
Bank's Leasing Division, an appointment made by the Federal
Deposit Insurance Corporation which was in the process of
liquidating  that bank. From 1960 until the mid-1980's, Mr.
Kravitz  was the CEO of several furniture companies  (American



                                                                     18

<PAGE>


Furniture Company, Inc., and Furniture Resources International,
Inc.) whose operations encompassed manufacturing of and marketing
to retail showrooms  nationwide. The furniture companies were
taken public in 1979 and had reached combined sales in excess of
$450,000,000.

Mr.  Kravitz is a graduate of Boston University with a BS Degree.
He is a published writer for the aviation industry, food industry
and  the natural supplement industry. He has appeared on national
television,  in  infomercials for  SNORenz[R] and  Med  Gen. Mr.
Kravitz is a veteran of the Korean War and served honorably as an
officer in the United States Air Force. Mr. Kravitz was honorably
discharged  receiving  the Distinguished Service  Medal  for  his
military  service during the Korean War. In 1955 he was  retired
from active duty and placed on Reserve. In 1972 he was retired as
a  permanent  1st  Lt. USAFR after 20 years  of  service  to  his
country.

Paul  S.  Mitchell  (51) is the President and  Chief  Operation
------------------
Officer.  He has also been a Director of the Company since  1997.
In  1995,  Mr.  Mitchell  sold  his food  services  company  (the
Sandwich  Makers) to AppleTree, becoming that  company's  Chief
Operating  Officer.  From $135,000 in sales in  1987,  sales  had
increased  to  almost  $5 million by the  time  it  was  sold  to
AppleTree.  Prior to 1987, Mr. Mitchell worked for  Tasty  Baking
Company  based  in  Pennsylvania, and for whom  he  held  several
positions nationwide.


ITEM 10.  EXECUTIVE COMPENSATION

The  following table shows  that for  the  fiscal  years  ended
September 30, 2003, September 30, 2004 and September 30, 2005 the
cash  and other  compensation paid  to each  of  the executive
officers and directors of the Company.

                       Annual Compensation
                       -------------------
<TABLE>
<CAPTION>


                                                               Awards      Other
Name and                                       Other         Restricted    Stock
Position Held         Year    Salary   Bonus   Compensation    Stock       Awards
-------------         ----    ------   -----   ------------  ----------    ------
<S>                   <C>     <C>      <C>     <C>           <C>           <C>

Paul B. Kravitz,      2005     65,000   -0-    Options          -0-        175,000
Chairman & CEO,       2004     65,000   -0-    Options          -0-           -0-
 Director             2003     65,000   -0-    Options          -0-           -0-

Paul S. Mitchell      2005     65,000   -0-    Options          -0-        175,000
President & COO,      2004     65,000   -0-    Options          -0-           -0-
 Director             2003     65,000   -0-    Options          -0-           -0-

</TABLE>


In August 2005 Management received 350,000 shares which were
registered pursuant to an SB-2 Registration statement. The shares
have a lock up until February 2006.

                                                                     19

<PAGE>



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>


------------------------------------------------------------------------------
(1)                (2)                       (3)                    (4)
------------------------------------------------------------------------------
Title of Class     Name and Address of       Amount and Nature of   Percent of
                   Beneficial Owner          Beneficial Owner       Class
------------------------------------------------------------------------------
<S>                <C>                       <C>                     <C>

Common Stock       Paul B. Kravitz
                   4320 NW 101 Drive
                   Coral Springs, FL 33065    213,685                6.51%
------------------------------------------------------------------------------

Common Stock       Paul S. Mitchell
                   7284 W. Palmetto Pk Rd     178,680                5.45%
                   Boca Raton, FL  33433
------------------------------------------------------------------------------

                   Directors and Executive
                   Officers as a group
                   (2 persons)                392,365               11.96%
------------------------------------------------------------------------------
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the past three years there have been no transactions to
which the Company was a party with the following persons who  had
or  would  have  direct  or  indirect material  interest  in  the
transaction:

   Any director or executive officer of the company.

   Any nominee for the election as a director, any security holder
   or any immediate family member of a director, executive officer
   or affiliate of the company.



                                                                     20

<PAGE>


Mr Kravitz and Mr. Mitchell held 82,300 shares in Di-Su Holding.
Di-Su Holding was an affiliate of the company. After the 20:1
reverse split they closed Di-SU Holding and divided the shares
(4115)to themselves. They each  beneficially owned 50% of the company.
During the past five years there have been no material transactions
between the Company and Di-Su Holding.

Mr. Kravitz and Mr. Mitchell have signed two identical Employment
contracts dated September 27, 2002. The contracts provide  for  a
gross  income of $150,000 each and participation in the Company's
benefit plans and stock option plans. The contract also calls for
the benefit package to continue on until Mr. Kravitz's death. The
contract calls for a payment of 1.66% Bonus based upon a pre-tax
income or net cash flow, whichever is greater. The terms are for
five  years,  renewable  every year and provide  for  termination
under normal and usual conditions. These 2002 contracts were
cancelled. In 2004 these officers agreed to accept annual
compensation of $65,000.00.


In 2002 the Company filed a Form S-8 Registration Statement and granted
Mrs. Kravitz and Mitchell 10,270,000 cashless options.In 2002, 2003
and 2004 Mr Mitchell exercised and sold 5,135,700 shares and Mr. Kravitz
exercised and sold 5,100,000 shares. All of these option shares were not
affected by the reverse and forward splits approved by the Company during
the exercise periods. Mr Kravitz was required to pledge 35,000 of his
common shares as collateral for the recent funding by NIR Group.

The Company received the exercise price from the proceeds from these
sales and they were reported on Forms 4 and Forms 5 as required by
the Securities Act of 1933.

In September 2004 the Company filed a Form S-8 Registration statement
Covering 10,000,000 common shares at an original price of $0.75
cents. These shares were registered for employees and consultants
and at present 4,410,000 shares have been issued to consultants and
accounted for as non-cash compensation on the Company's financial
statements.These shares are also unaffected by the reverse and
forward splits that the Company has approved.


ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8K

 (a) Exhibits

EXHIBIT
NUMBER     DESCRIPTION

31.1   Certification of Chief Executive Officer and Chief Financial
       Officer pursuant to Section 302 of the Sarbanes-Oxley
       Act of 2002(1)

32.1   Certification of Chief Executive Officer and Chief Financial
       Officer pursuant to pursuant to 18 U.S.C. Section 1350,
       as adopted pursuant to Section 906 of the Sarbanes-Oxley
       Act of 2002(1)


                                                                     21

<PAGE>


(1) Filed as an exhibit to this Annual Report on Form 10-KSB



(b)  The  following documents are filed as  part  of  the
     report:

        1.        Financial statements
                  Independent Auditors Report
                  Balance Sheet
                  Statements Of Operations
                  Statement of Stockholders' (Deficit)
                  Statements of Cash Flows
                  Notes to Financial Statements

(c)  Reports on Form 8K: The Company filed Form 8K on 10-31-2003,
     And 8-10-2004 and an amended Form 8-K on 8-24-2004.


The Registrant will send its annual report to security holders and
proxy solicitation material, when required,  subsequent  to  the
filing of  this  form and shall furnish copies of  both  to  the
Commission when they are sent to security holders.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a) Audit Fees

Total audit fees billed for professional services rendered by
our principal accountant for the audit of our annual financial
statements and review of financial statements included in our
Form 10-QSB will total US $30,000 (2004- $29,500)

(b) Audit-Related Fees

During fiscal 2005 we were not required to incur any additional
audit-related fees in preparation of our financial statements or
otherwise (2004 - $nil)

(c) Tax Fees

We do not engage our principal accountant to assist with the
preparation or review of our annual tax filings. We do, however,
engage an outside tax consultant to provide this service. In
fiscal 2005 we will pay $1500 (2004- $1,500)

(d) All Other Fees

During fiscal 2005 we did not incur any other fees other than
assurance and tax consulting fees disclosed in items 14 (a) and
14 (c) (2004 - $nil)

(e) Audit Committees Pre-approval Policy

The audit committee pre-approval policies include annually
approving the principal accountants and a detailed review and
discussion of the principal accountants current year audit
engagement letter and fees estimate.


                                                                     22

<PAGE>



                          SIGNATURES
                          ----------

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



MED GEN, INC.
(Registrant)


Date: January 20, 2006



By: /s/ Paul B. Kravitz
   ------------------------
     (Signature)

Paul B. Kravitz, Chairman and CEO
----------------------------------------
(Print name and title of signing officer)



                                                                     23

<PAGE>



                             MED GEN, INC.
                         FINANCIAL STATEMENTS
                          SEPTEMBER 30, 2005
                            C O N T E N T S



Reports of Independent Auditors                                    F-1

Financial Statements:

Balance Sheet                                                      F-2

Statements of Operations                                           F-3

Statement of Stockholders' (Deficit)                               F-4

Statements of Cash Flows                                           F-5

Notes to Financial Statements                                    F-6-F-21






<PAGE>






     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Stockholders and Board of Directors
Med Gen, Inc.

We  have audited the accompanying balance sheet of Med Gen,  Inc.
as   of  September  30,  2005,  and  the  related  statements  of
operations, stockholders' (deficit) and cash flows for the  years
ended September 30, 2004 and 2005. These financial statements are
the    responsibility   of   the   Company's   management.    Our
responsibility  is  to  express an  opinion  on  these  financial
statements based on our audits.

We  conducted our audits in accordance with the standards of  the
Public Company Accounting Oversight Board (United States).  Those
standards  require that we plan and perform the audits 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   by
management, as well as evaluating the overall financial statement
presentation.  We  believe that our audits provide  a  reasonable
basis for our opinion.

In  our  opinion,  the  financial statements  referred  to  above
present  fairly, in all material respects, the financial position
of  Med  Gen, Inc. as of September 30, 2005, and results  of  its
operations  and its cash flows for the years ended September  30,
2004 and 2005, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming
that  the Company will continue as a going concern.  As discussed
in  Note  2 to the financial statements, the Company has incurred
significant  losses from operations and has working  capital  and
stockholder  deficiencies. These factors raise substantial  doubt
about  the  Company's  ability to continue as  a  going  concern.
Management's plans in regard to this matter are also discussed in
Note  2.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


Stark Winter Schenkein & Co., LLP

/s/Stark Winter Schenkein & Co., LLP


Denver, Colorado
January 16, 2006


                                  F-1

<PAGE>



                              Med Gen, Inc.
                              Balance Sheet
                            September 30, 2005

ASSETS

Current Assets
   Cash and cash equivalents                           $       760,934
    Accounts receivable, net of reserve of $10,000              43,361
    Inventory                                                  129,201
    Other current assets                                         5,700
                                                       ---------------
      Total Current Assets                                     939,196
                                                       ---------------

Property and Equipment, net                                     37,999
                                                       ---------------
Other Assets
    Deferred financing fees                                    194,670
    Deposits and other                                          52,735
                                                       ---------------

                                                       $     1,224,600
                                                       ===============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable                                    $        35,315
   Accrued expenses                                            265,080
   Accrued litigation judgment                               2,426,191
                                                       ---------------
      Total Current Liabilities                              2,726,586
                                                       ---------------
Derivitive financial instruments                               608,766
Convertible debentures                                               -

Stockholders' Equity
   Preferred stock, $.001 par value, 5,000,000 shares
     authorized:
   Series A 8% cumulative, convertible, 1,500,000 shares
      authorized, no shares issued and outstanding                   -
   Undesignated, 3,500,000 shares authorized                         -
   Common stock, $.001 par value, 495,000,000
     shares authorized, 3,278,777 shares
     issued and outstanding                                      3,279
   Paid in capital                                          24,340,732
   Accumulated (deficit)                                   (26,419,763)
                                                       ---------------
                                                            (2,075,752)
   Receivable for common stock                                 (35,000)
                                                       ---------------
                                                            (2,110,752)
                                                       ---------------

                                                       $     1,224,600
                                                       ===============


              See accompanying notes to financial statements.

                                  F-2

<PAGE>



                              Med Gen, Inc.
                        Statements of Operations
              For the Years Ended September 30, 2004 and 2005

<TABLE>
<CAPTION>

                                                               2004            2005
                                                           ------------    ------------
<S>                                                        <C>             <C>
Net sales                                                  $  1,043,101    $    802,127

Cost of sales                                                   436,534         330,069
                                                           ------------    ------------

Gross profit                                                    606,567         472,058
                                                           ------------    ------------
Operating expenses:
  Selling, general and administrative expenses -
   non cash stock compensation - not included
   in selling, general and administrative expenses below      5,496,425       6,551,800
   Litigation                                                 1,320,000       1,181,191
  Selling, general and administrative expenses                2,847,869       1,635,653
                                                           ------------    ------------
                                                              9,664,294       9,368,644
                                                           ------------    ------------

(Loss) from operations                                       (9,057,727)     (8,896,586)
                                                           ------------    ------------
Other (income) expense:
  Derivitive instrument expense                                       -       3,064,322
  Interest expense                                              113,597         253,992
                                                           ------------    ------------
                                                                113,597       3,318,314
                                                           ------------    ------------

Net (loss)                                                 $ (9,171,324)   $(12,214,900)
                                                           ============    ============
Per share information - basic and fully diluted:

 Weighted average shares outstanding                            594,592       1,714,454
                                                           ============    ============

 Net (loss) per share                                      $     (15.42)   $      (7.12)
                                                           ============    ============
</TABLE>

              See accompanying notes to financial statements.

                                  F-3

<PAGE>



                              Med Gen, Inc.
                 Statement of Stockholders' Equity (Deficit)
               For the Years Ended September 30, 2004 and 2005

<TABLE>
<CAPTION>

                                                                             Receivable for
                                            Common Stock       Additional       Common        Accumulated
                                            ------------
                                            Shares  Amount   Paid in Capital    Stock           Deficit       Total
                                            ------  ------   ---------------   ----------       -------       -----
                                            <S>     <C>       <C>             <C>            <C>           <C>
Balance September 30, 2003                  61,212  $    62   $  4,904,447    $  (752,225)   $ (5,033,539) $   (881,255)

Common stock issued pursuant to
 Regulation S Offerings                    588,215      588      2,126,187              -               -     2,126,775
Payment on option exercise                       -        -              -      1,059,173               -     1,059,173
Common stock issued for services            16,000       16        302,584              -               -       302,600
Stock options issued                             -        -        112,500              -               -       112,500
Exercise of stock options                  566,250      566      5,442,334     (5,442,900)              -             -
Reduction in exercise price of
 stock options                                   -        -              -      5,081,325               -     5,081,325
Conversion of notes payable                 15,101       15        399,985                                      400,000
Stock issuable pursuant to
 settlement of litigation                        -        -      1,120,000              -               -     1,120,000
Net (loss)                                       -        -              -              -      (9,171,324)   (9,171,324)
                                         ---------   ------    -----------     ----------    ------------   -----------

Balance September 30, 2004               1,246,777    1,247     14,408,037        (54,627)    (14,204,863)      149,794

Cancellation of stock issuable pursuant
 to settlement of litigation                     -        -     (1,120,000)             -               -    (1,120,000)
Conversion of convertible debentures
 including embedded derivative
 instruments                               832,000      832      4,419,735              -               -     4,420,567
Exercise of stock options                  100,000      100        199,900       (200,000)              -             -
Payments on stock options                        -        -              -        101,987               -       101,987
Adjustment of option price                       -        -              -        117,640               -       117,640
Value of options issued                          -        -        120,000              -               -       120,000
Common stock issued for services           700,000      700      6,313,460              -               -     6,314,160
Common stock issued for settlement
 of litigation and subsequently
 cancelled                                 400,000      400           (400)             -               -             -
Net (loss)                                       -        -              -              -     (12,214,900)  (12,214,900)
                                         ---------   ------    -----------     ----------    ------------   -----------

Balance September 30, 2005               3,278,777  $ 3,279   $ 24,340,732    $   (35,000)   $(26,419,763) $ (2,110,752)
                                         =========  =======   ============    ===========    ============  ============
</TABLE>

              See accompanying notes to financial statements.

                                  F-4

<PAGE>



                               Med Gen, Inc.
                         Statements of Cash Flows
               For the Years Ended September 30, 2004 and 2005
<TABLE>
<CAPTION>

                                                           2004             2005
                                                      -------------    --------------
<S>                                                   <C>              <C>
Cash flows from operating activities:
Net (loss)                                            $  (9,171,324)   $  (12,214,900)
  Adjustments to reconcile net (loss) to
  net cash (used in) operating activities:
  Depreciation and amortization                              30,709            24,518
  Derivatives                                                     -         4,298,243
  Common shares and options issued for services           5,496,425         6,551,800
  Common stock subscriptions for settlement
     of litigation 1,120,000 -
Changes in assets and liabilities:
  Decrease in accounts receivable                           323,042           135,029
  (Increase) decrease in inventory                           97,817            (8,332)
  Decrease in other current assets                           15,700                 -
  (Increase) decrease in deposits and
     other assets                                            90,297           (18,963)
  (Decrease) in accounts payable                           (263,197)          (49,755)
  Derivative classification of convertible
     debentures                                                   -        (1,308,910)
  Increase in accrued litigation                                  -         1,306,191
  Increase in accrued expenses                              200,000            65,080
                                                      -------------    --------------
Net cash (used in) operating activities                  (2,060,531)       (1,219,999)
                                                      -------------    --------------
Cash flows from investing activities:
  Acquisition of property and equipment                           -            (5,092)
                                                      -------------    --------------
Net cash (used in) investing activities                           -            (5,092)
                                                      -------------    --------------
Cash flows from financing activities:
  Proceeds from advances and notes payable -
     related parties                                        340,200           411,000
  Repayment of advances notes payable -
     related parties                                     (1,312,700)         (586,000)
  Proceeds from convertible debentures                            -         1,935,000
  Financing fees                                                  -           (89,670)
  Repayment of convertible debentures                       (30,000)                -
  Proceeds from option exercises -
     related parties                                      1,059,173           101,987
       Proceeds from stock issuances                      2,126,775                 -
                                                      -------------    --------------
Net cash provided by financing activities                 2,183,448         1,772,317
                                                      -------------    --------------

Net increase in cash                                        122,917           547,226

Beginning - cash balance                                     90,791           213,708
                                                      -------------    --------------

Ending - cash balance                                 $     213,708    $      760,934
                                                      =============    ==============
Supplemental cash flow information:
  Cash paid for income taxes                          $           -    $            -
                                                      =============    ==============
  Cash paid for interest                              $     113,597    $       52,267
                                                      =============    ==============
Non cash investing and financing activities:
  Common shares issued for receivable                 $   5,442,900    $            -
                                                      =============    ==============
  Conversion of notes payable to common stock         $     400,000    $      122,324
                                                      =============    ==============
  Reclassification of paid in capital to accrued
     litigation                                       $           -    $    1,120,000
                                                      =============    ==============
</TABLE>

              See accompanying notes to financial statements.

                                F-5

<PAGE>

                             Med Gen, Inc.
                    Notes to Financial Statements
                         September 30, 2005


Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Med  Gen,  Inc. the (Company) was incorporated October 22,  1996,
under the laws of the State of Nevada and began operations in the
State  of  Florida  on November 12, 1996. The  Company  currently
markets an all natural product, SNORENZ, which is designed to aid
in  the  prevention of snoring. The Company also plans  to  offer
additional products dealing with alternative nutritionals as well
as other health related items.

Reclassifications

Certain   items  presented  in  the  previous  year's   financial
statements  have  been reclassified to conform  to  current  year
presentation.

Revenue Recognition

In  general, the Company records revenue when persuasive evidence
of  an arrangement exists, services have been rendered or product
delivery  has occurred, the sales price to the customer is  fixed
or  determinable, and collectability is reasonably  assured.  The
following  policies  reflect specific criteria  for  the  various
revenues streams of the Company:

Revenue  is  recognized  at the time the  product  is  delivered.
Provision  for  sales  returns will be  estimated  based  on  the
Company's historical return experience. Revenue is presented  net
of returns.

Cash and Cash Equivalents

The  Company  considers  all highly liquid  investments  with  an
original maturity of three months or less to be cash equivalents.
At  September  30,  2005, the Company's  cash  on  deposit  at  3
financial  institutions exceeded the federally insured limits  by
$460,934.

Inventory

Inventory is stated at the lower of cost, determined on the first-
in,  first-out method, or net realizable market value.  Inventory
at  September 30, 2005, consisted of finished goods and packaging
materials.

Property and Equipment

Property  and  equipment  is recorded at cost.  Expenditures  for
major  improvements and additions are added to the  property  and
equipment  accounts while replacements, maintenance and  repairs,
which do not extend the life of the assets, are expensed.

Accounts Receivable

Accounts receivable are stated at estimated net realizable value.
Accounts  receivable are comprised of balances due from customers
net  of  estimated  allowances  for  uncollectible  accounts.  In
determining  collectability, historical trends are evaluated  and
specific  customer issues are reviewed to arrive  at  appropriate
allowances. Accounts receivable are stated net of an allowance of
$10,000.

The  Company's standard credit terms are net 30 days. In  certain
limited instances and in conjunction with initial orders by large
established retailers the Company will extend credit terms to  90
to 120 days.


                                F-6

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


Depreciation and Amortization

Depreciation and amortization are computed by using the straight-
line  method  over the estimated useful lives of the assets.  The
estimated useful lives are summarized as follows:

                 Furniture and fixtures           7 years
                 Office and computer equipment    5 years
                 Computer software                3 years
                 Leasehold improvements           5 years

Financial Instruments

Fair  value  estimates discussed herein are  based  upon  certain
market   assumptions  and  pertinent  information  available   to
management  as  of  September 30, 2005. The  respective  carrying
value   of   certain   on-balance-sheet   financial   instruments
approximated  their  fair  values.  These  financial  instruments
include  cash, accounts receivable, accounts payable and  accrued
expenses. Fair values were assumed to approximate carrying values
for  these financial instruments because they are short  term  in
nature  and  their carrying amounts approximate fair values.  The
carrying  value of the Company's long-term debt approximated  its
fair  value  based on the current market conditions  for  similar
debt instruments.

Long Lived Assets

The  carrying value of long-lived assets is reviewed on a regular
basis  for the existence of facts and circumstances that  suggest
impairment.  To date, no material impairment has been  indicated.
Should  there  be an impairment, in the future, the Company  will
measure the amount of the impairment based on the amount that the
carrying  value  of the impaired assets exceed  the  undiscounted
cash  flows expected to result from the use and eventual disposal
of the from the impaired assets.

Net Income (Loss) Per Common Share

The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards (SFAS) 128, "Earnings
per  Share."  Basic earnings (loss) per share  is  calculated  by
dividing  net  income (loss) by the weighted  average  number  of
common shares outstanding for the period. Diluted earnings (loss)
per  share  is  calculated by dividing net income (loss)  by  the
weighted  average  number of common shares  and  dilutive  common
stock  equivalents  outstanding.  During  periods  in  which  the
Company  incurs losses common stock equivalents, if any, are  not
considered, as their effect would be anti dilutive.

Use of Estimates

The  preparation  of  financial  statements  in  conformity  with
accounting principles generally accepted in the United States  of
America  requires  management to make estimates  and  assumptions
that affect the amounts reported in the financial statements  and
accompanying  notes.  Actual  results  could  differ  from  those
estimates.

In addition, the determination and valuation of derivative
financial instruments is a significant estimate.


                                F-7

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


Advertising Costs

Advertising costs are charged to expense as incurred. Advertising
costs  charged  to  expense  included  in  selling,  general  and
administrative  expenses, amounted to $958,259 and  $406,168  for
the  years ended September 30, 2004, and 2005. Advertising  costs
include  agreed upon amounts withheld from payments  on  accounts
receivable  by  certain  customers for advertising  done  by  the
specific customer.

Segment Information

The  Company follows SFAS 131, Disclosures about "Segments of  an
Enterprise  and  Related  Information."  Certain  information  is
disclosed,  per  SFAS 131, based on the way management  organizes
financial   information  for  making  operating   decisions   and
assessing performance. The Company currently operates in a single
segment   and   will   evaluate  additional  segment   disclosure
requirements as it expands its operations.

Income Taxes

The  Company follows SFAS 109 "Accounting for Income  Taxes"  for
recording the provision for income taxes. Deferred tax assets and
liabilities  are computed based upon the difference  between  the
financial   statement  and  income  tax  basis  of   assets   and
liabilities  using the enacted marginal tax rate applicable  when
the  related  asset or liability is expected to  be  realized  or
settled.  Deferred income tax expenses or benefits are  based  on
the  changes in the asset or liability each period. If  available
evidence  suggests  that it is more likely  than  not  that  some
portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets
to the amount that is more likely than not to be realized. Future
changes in such valuation allowance are included in the provision
for deferred income taxes in the period of change.

Stock-Based Compensation

The  Company accounts for equity instruments issued to  employees
for  services  based on the fair value of the equity  instruments
issued  and accounts for equity instruments issued to other  than
employees  based on the fair value of the consideration  received
or  the  fair value of the equity instruments, whichever is  more
reliably measurable.

The  Company accounts for stock based compensation in  accordance
with  SFAS  123,  "Accounting for Stock-Based Compensation."  The
provisions  of  SFAS  123 allow companies to either  expense  the
estimated  fair value of stock options or to continue  to  follow
the   intrinsic  value  method  set  forth  in  APB  Opinion  25,
"Accounting for Stock Issued to Employees" (APB 25) but  disclose
the pro forma effects on net income (loss) had the fair value  of
the options been expensed. The Company has elected to continue to
apply APB 25 in accounting for its stock option incentive plans.

Derivative financial instruments

The   Company  does  not  use  derivative  instruments  to  hedge
exposures to cash flow, market, or foreign currency risks.

The  Company  reviews the terms of convertible  debt  and  equity
instruments  issued  to  determine  whether  there  are  embedded
derivative instruments, including the embedded conversion option,
that  are  required to be bifurcated and accounted for separately
as  a derivative financial instrument. In circumstances where the
convertible instrument contains more than one embedded derivative
instrument, including the conversion option, that is required  to
be   bifurcated,   the  bifurcated  derivative  instruments   are
accounted for as a single, compound derivative instrument.  Also,
in  connection  with  the  sale of convertible  debt  and  equity


                                F-8

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


instruments,  the  Company  may  issue  freestanding  options  or
warrants that may, depending on their terms, be accounted for  as
derivative  instrument liabilities, rather than  as  equity.  The
Company  may  also issue options or warrants to non-employees  in
connection with consulting or other services they provide.

When  the risks and rewards of any embedded derivative instrument
are not "clearly and closely" related to the risks and rewards of
the  host  instrument,  the  embedded  derivative  instrument  is
generally required to be bifurcated and accounted for separately.
If   the   convertible  instrument  is  debt,  or  has  debt-like
characteristics,  the  risks  and  rewards  associated  with  the
embedded conversion option are not "clearly and closely"  related
to that debt host instrument. The conversion option has the risks
and  rewards  associated with an equity instrument,  not  a  debt
instrument,  because its value is related to  the  value  of  our
common  stock. Nonetheless, if the host instrument is  considered
to   be   "conventional  convertible  debt"   (or   "conventional
convertible  preferred  stock"),  bifurcation  of  the   embedded
conversion  option  is generally not required.  However,  if  the
instrument is not considered to be conventional convertible  debt
(or conventional convertible preferred stock), bifurcation of the
embedded   conversion   option  may  be   required   in   certain
circumstances.

Certain  instruments,  including  convertible  debt  and   equity
instruments and the freestanding options and warrants  issued  in
connection with those convertible instruments, may be subject  to
registration  rights  agreements,  which  impose  penalties   for
failure  to  register the underlying common stock  by  a  defined
date.  If  the  convertible debt or equity  instruments  are  not
considered  to  be  "conventional", then  the  existence  of  the
potential  cash  penalties under the related registration  rights
agreement  requires  that  the  embedded  conversion  option   be
accounted  for  as a derivative instrument liability.  Similarly,
the  potential  cash  penalties under  the  related  registration
rights  agreement may require us to account for the  freestanding
options   and   warrants   as  derivative  financial   instrument
liabilities, rather than as equity. In addition, when the ability
to  physical  or net-share settle the conversion  option  or  the
exercise of the freestanding options or warrants is deemed to  be
not  within  the control of the company, the embedded  conversion
option or freestanding options or warrants may be required to  be
accounted for as a derivative financial instrument liability.

Derivative financial instruments are initially measured at  their
fair  value.  For  derivative  financial  instruments  that   are
accounted  for  as  liabilities,  the  derivative  instrument  is
initially  recorded at its fair value and is  then  re-valued  at
each  reporting date, with changes in the fair value reported  as
charges   or  credits  to  income.  For  option-based  derivative
financial instruments, the Company uses the Black-Scholes  option
pricing model to value the derivative instruments.

If  freestanding  options or warrants were issued  in  connection
with  the issuance of convertible debt or equity instruments  and
will  be  accounted  for  as  derivative  instrument  liabilities
(rather  than as equity), the total proceeds received  are  first
allocated to the fair value of those freestanding instruments. If
the  freestanding options or warrants are to be accounted for  as
equity  instruments,  the  proceeds  are  allocated  between  the
convertible  instrument and those derivative equity  instruments,
based on their relative fair values. When the convertible debt or
equity  instruments contain embedded derivative instruments  that
are  to be bifurcated and accounted for as liabilities, the total
proceeds allocated to the convertible host instruments are  first
allocated  to  the  fair  value of all the bifurcated  derivative
instruments.  The remaining proceeds, if any, are then  allocated
to  the convertible instruments themselves, usually resulting  in
those  instruments being recorded at a discount from  their  face
amount.

To  the  extent  that the fair values of the freestanding  and/or
bifurcated  derivative instrument liabilities  exceed  the  total
proceeds  received, an immediate charge to income is  recognized,
in   order   to   initially  record  the  derivative   instrument
liabilities at their fair value.


                                F-9

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


The  discount  from  the  face value  of  the  convertible  debt,
together with the stated interest on the instrument, is amortized
over  the  life  of  the instrument through periodic  charges  to
income,  usually  using the effective interest method.  When  the
instrument is convertible preferred stock, the dividends  payable
are  recognized  as they accrue and, together with  the  periodic
amortization  of the discount, are charged directly  to  retained
earnings.

The  classification of derivative instruments, including  whether
such  instruments should be recorded as liabilities or as equity,
is  re-assessed  periodically,  including  at  the  end  of  each
reporting  period.  If re-classification is  required,  the  fair
value of the derivative instrument, as of the determination date,
is  re-classified. Any previous charges or credits to income  for
changes  in the fair value of the derivative instrument  are  not
reversed. Derivative instrument liabilities are classified in the
balance sheet as current or non-current based on whether  or  not
net-cash  settlement  of  the  derivative  instrument  could   be
required within twelve months of the balance sheet date.

Deferred Financing Fees

The   Company  amortizes  fees  associated  with  obtaining  debt
instruments over the term of the related debt using the effective
interest  method. Deferred financing fees aggregated $194,670  at
September 30, 2005.

Recent Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB)
issued  SFAS  151  "Inventory Costs". 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).  In
addition,  this  Statement  requires  that  allocation  of  fixed
production  overhead to the costs of conversion be based  on  the
normal  capacity of the production facilities. The provisions  of
this  Statement will be effective for the Company beginning  with
its  fiscal  year  ending  September 30,  2006.  The  Company  is
currently  evaluating the impact this new Standard will  have  on
its  operations,  but believes that it will not have  a  material
impact on the Company's financial position, results of operations
or cash flows.

In  December  2004,  the FASB issued SFAS 153 "Exchanges  of  Non
monetary  Assets  -  an amendment of APB Opinion  No.  29".  This
Statement  amended APB Opinion 29 to eliminate the exception  for
non  monetary exchanges of similar productive assets and replaces
it  with a general exception for exchanges of non monetary assets
that  do  not have commercial substance. A non monetary  exchange
has  commercial substance if the future cash flows of the  entity
are expected to change significantly as a result of the exchange.
The  adoption  of  this  Standard is not  expected  to  have  any
material  impact on the Company's financial position, results  of
operations or cash flows.

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-
Based  Payment". This Statement requires that the cost  resulting
from  all  share-based transactions be recorded in the  financial
statements.   The  Statement  establishes  fair  value   as   the
measurement  objective  in  accounting  for  share-based  payment
arrangements  and  requires all entities to apply  a  fair-value-
based   measurement   in  accounting  for   share-based   payment
transactions with employees. The Statement also establishes  fair
value  as the measurement objective for transactions in which  an
entity  acquires goods or services from non-employees  in  share-
based  payment  transactions.  The Statement  replaces  SFAS  123
"Accounting  for  Stock-Based Compensation"  and  supersedes  APB
Opinion  No.  25 "Accounting for Stock Issued to Employees".  The
provisions  of this Statement will be effective for  the  Company


                                F-10

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


beginning  with its fiscal year ending September  30,  2007.  The
Company is currently evaluating the impact this new Standard will
have  on  its financial position, results of operations  or  cash
flows.

In  March  2005,  the  Securities and Exchange  Commission  (SEC)
issued  Staff   Accounting   Bulletin  No.107  (SAB  107)   which
provides guidance  regarding the  interaction  of SFAS 123(R) and
certain SEC rules and  regulations. The new guidance includes the
SEC's  view on the valuation of share-based payment  arrangements
for  public  companies  and may simplify some  of  SFAS  123(R)'s
implementation   challenges  for  registrants  and   enhance  the
information investors receive.

In   March  2005,  the  FASB  issued  FIN  47,   Accounting   for
Conditional  Asset Retirement Obligations, which  clarifies  that
the  term 'conditional asset retirement  obligation'  as used  in
SFAS 143,  Accounting for Asset Retirement Obligations, refers to
a  legal  obligation to perform an asset retirement  activity  in
which the timing and/or method of settlement are conditional   on
a  future event that may or may not be within the control of  the
entity.  FIN 47 requires an entity to  recognize a liability  for
the  fair value of a conditional asset retirement  obligation  if
the  fair  value can be reasonably estimated. FIN 47 is effective
no  later  than the end of the fiscal year ending after  December
15, 2005. The Company does not  believe  that FIN 47 will have  a
material   impact  on  its  financial position  or  results  from
operations.

 In August 2005, the FASB issued SFAS 154, Accounting Changes and
Error  Corrections.   This  statement applies  to  all  voluntary
changes  in  accounting principle and to changes required  by  an
accounting   pronouncement if the pronouncement does not  include
specific   transition    provisions,    and   it   changes    the
requirements for accounting for and reporting them. Unless it  is
impractical,  the  statement requires retrospective   application
of  the  changes  to prior  periods'  financial statements.  This
statement is effective for accounting  changes and correction  of
errors made in fiscal years  beginning  after December 15, 2005.

NOTE 2. BASIS OF REPORTING

The  Company's  financial statements are  presented  on  a  going
concern  basis, which contemplates the realization of assets  and
satisfaction of liabilities in the normal course of business.

The  Company  has experienced a significant loss from  operations
including  the settlement of certain litigation as  discussed  in
Note  9.  For  the years ended September 30, 2004 and  2005,  the
Company incurred net losses of $9,171,324 and $12,214,900 and has
working  capital  and stockholders' deficits  of  $1,787,390  and
$2,110,752 at September 30, 2005.

The  Company's  ability  to  continue  as  a  going  concern   is
contingent  upon  its  ability  to secure  additional  financing,
increase   ownership   equity,  settle  litigation   and   attain
profitable  operations.  In addition, the  Company's  ability  to
continue  as a going concern must be considered in light  of  the
problems,  expenses and complications frequently  encountered  in
established markets and the competitive environment in which  the
Company operates.

The  Company is pursuing financing for its operations and seeking
additional  investments. In addition, the Company is  seeking  to
expand  its  revenue base by adding new customers and  increasing
its advertising and to settle the litigation discussed in Note 9.
Failure  to  secure such financing or to raise additional  equity
capital  and to expand its revenue base may result in the Company
depleting  its  available  funds  and  not  being  able  pay  its
obligations.

The  financial  statements  do not  include  any  adjustments  to
reflect  the  possible future effects on the  recoverability  and
classification  of  assets or the amounts and  classification  of


                                F-11

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


liabilities  that may result from the possible inability  of  the
Company to continue as a going concern.

NOTE 3. PROPERTY AND EQUIPMENT

Property  and equipment at September 30, 2005, consisted  of  the
following:

     Furniture and office equipment             $  70,506
     Computer equipment and  software              80,339
     Leasehold improvements                         7,657
                                                ---------
                                                  158,502
     Accumulated depreciation and amortization   (120,503)
                                                ---------
                                                $  37,999
                                                =========

Depreciation  and  amortization  expense  for  the  years   ended
September 30, 2004, and 2005 was $30,709 and $24,518.

NOTE 4. NOTES AND ADVANCES PAYABLE - RELATED PARTIES

Through  September 2003 the Company had borrowed an aggregate  of
$875,000  from  an affiliated entity. During 2004 and  2005,  the
Company  borrowed an additional $225,000 and $286,000  from  this
affiliated  entity.  The note bears interest  at  8%  per  annum,
requires  monthly  interest payments and is due  on  demand.  The
Company  paid  interest aggregating $102,005 and  $10,124  during
2004  and  2005, related to this note. Substantially all  of  the
Company's  assets secured this loan. Through September 30,  2005,
the Company repaid the entire balance of $1,386,000.

Through  September 2003 the Company had borrowed an aggregate  of
$205,000  from  an  officer. During 2004 and  2005,  the  Company
borrowed  an additional $100,000 and $125,000 from this  officer.
The  loans  were due on demand and accrued interest  at  10%  per
annum.  Through  September 30, 2005, the loans were  repaid.  The
Company paid interest aggregating $11,592 and $0 during 2004  and
2005, related to these advances.

During  2003  an officer advanced $70,000 to the Company.  During
2004  this  officer  and another officer advanced  an  additional
$15,200.  These  advances  were repaid  $2,500  during  2003  and
$82,700 during 2004.

NOTE 5. CONVERTIBLE DEBENTURES

Convertible  debentures,  as of September  30,  2003,  aggregated
$30,000  maturing on July 31, 2004 and providing  for  8%  annual
interest.  Each  $1,000 face value debenture is convertible  into
100  shares of common stock. Additionally, each $1,000 face value
debenture  includes 50 warrants, which were convertible  into  50
shares of common stock at $125 per share. The warrants were  non-
detachable  and expired on July 31, 2004. During the  year  ended
September 30, 2004, the Company repaid this $30,000 debenture.

During February through April 2002 the Company issued $400,000 of
8%  cumulative  convertible debentures due in May 2004  for  cash
aggregating $400,000. The debentures were convertible into common
shares of the Company as follows:


                                F-12

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


   At any time after the Company's common stock price exceeds  $3
per share for a period of ten consecutive trading days the holder
may  convert 50% of the value of the debenture into common  stock
at the rate of $40 per common share (election to convert).

   The  remaining  50% of the debenture may be  redeemed  by  the
Company  for cash or may be converted into the number  of  common
shares  of the Company determined by dividing the balance of  the
value  of the debenture by the common stock price at the time  of
the election to convert.

Notwithstanding the above, on the 25th monthly anniversary of the
date of the investments the debentures automatically convert into
common stock as follows:

   50%  of the value of the debentures converts into common stock
at  the rate of $40 per common share and the remaining 50% of the
value of the debentures converts into the number of common shares
determined by dividing the balance of the value of the debentures
by the common stock price at the 25th monthly anniversary.

The  shares  of  common stock to be issued  upon  conversion  are
subject to certain registration rights.

During  the year ended September 30, 2004, these debentures  were
converted into an aggregate of 15,101 shares of common stock. The
conversions  were  made based on the fair  market  value  of  the
Company's common stock on the conversion date.

NOTE   6.  CALLABLE  SECURED  CONVERTIBLE  NOTES  AND  DERIVATIVE
INSTRUMENT LIABILITIES

On March 30, 2005, the Company entered into a Securities Purchase
Agreement with four accredited investors ("Note Holders") for the
sale  of  up  to  (i) $1,540,000 in Callable Secured  Convertible
Notes (the "Convertible Notes") and (ii) warrants to purchase  up
to  1,540,000  shares of its common stock (the  "Warrants").  The
Convertible Notes bear interest at 8% and have a maturity date of
three  years  from  the  date of issuance.  The  Company  is  not
required  to make any principal payments during the term  of  the
Convertible  Notes.  The Convertible Notes are  convertible  into
shares of the Company's common stock at the Note Holders' option,
at the lower of (i) $0.09 per share or (ii) 60% of the average of
the three lowest intra-day trading prices for the common stock as
quoted  on the Over-the-Counter Bulletin Board for the 20 trading
days  preceding the conversion date. The warrants are exercisable
for a period of five years from the date of issuance and have  an
exercise price of $0.085 per share. The full principal amount  of
the Notes is due upon the occurrence of an event of default.

The  Convertible  Notes and the Warrants  were  issued  in  three
tranches,  on March 30, 2005 ($740,000 of Convertible  Notes  and
740,000 Warrants), on May 25, 2005 ($700,000 of Convertible Notes
and  700,000  Warrants),  and on August  23,  2005  ($100,000  of
Convertible Notes and 100,000 Warrants).

On  August  31, 2005, the Company sold an additional $500,000  of
Convertible  Notes  and  500,000  Warrants  to  the   same   four
investors.    The terms of these Convertible Notes  and  Warrants
are the same as those previously issued, except that the exercise
price of the Warrants is $0.09 per share.

The  conversion price of the Convertible Notes and  the  exercise
price  of  the  warrants will be adjusted in the event  that  the
Company  issues common stock at a price below the  initial  fixed
conversion or exercise price, with the exception of any shares of
common stock issued in connection with the Convertible Notes. The
conversion price of the Convertible Notes and the exercise  price
of  the  warrants  may also be adjusted in certain  circumstances
such  as  if  the  Company pays a stock dividend,  subdivides  or
combines  outstanding shares of common stock into  a  greater  or
lesser  number  of shares, or takes such other actions  as  would


                                F-13

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


otherwise  result in dilution of the Note Holders' position.  The
Note  Holders have contractually agreed to restrict their ability
to convert their Convertible Notes or exercise their warrants and
receive shares of the Company's common stock such that the number
of  shares  of  common stock held by the Note Holders  and  their
affiliates  after  such conversion or exercise  does  not  exceed
4.99%  of the then issued and outstanding shares of common stock.
In   addition,   the  Company  has  granted  the   Note   Holders
registration rights and a security interest in substantially  all
of  the Company's assets. The Company has the right to prepay the
Convertible  Notes  under  certain  circumstances  at  a  premium
ranging from 25% to 50% of the principal amount, depending on the
timing of such prepayment.

Pursuant to the terms of a Registration Rights Agreement  entered
into  with the Note Holders, the Company is obligated to register
for  resale, within a defined time period, the shares  underlying
the  Warrants  and  the  shares issuable  on  conversion  of  the
Convertible Notes. The terms of the Registration Rights Agreement
provide  that, in the event that the registration statement  does
not  become  effective within 105 days of  the  issuance  of  the
Warrants or Convertible Notes, the Company is required to pay  to
the Note Holders as liquidated damages, an amount equal to 2% per
month  of  the  principal amount of the Convertible  Notes.  This
amount  may be paid in cash or, at the Holder's option, in shares
of  common stock priced at the conversion price then in effect on
the date of the payment.

Because  the  Warrants  are  subject  to  a  Registration  Rights
Agreement with the Note Holders, they have been accounted for  as
derivative instrument liabilities (see below) in accordance  with
EITF  00-19,  "Accounting  for Derivative  Financial  Instruments
Indexed  To, and Potentially Settled In, a Company's  Own  Common
Stock" (EITF 00-19).  Accordingly the fair value of the warrants,
amounting  to  an  aggregate of $1,548,800,  was  recorded  as  a
derivative  instrument liability. The fair value of the  warrants
was determined using the Black-Scholes valuation model, based  on
the  market  price of the common stock on the date  the  Warrants
were  issued,  an  expected dividend yield  of  0%,  a  risk-free
interest rate based on constant maturity rates published  by  the
U.S.  Federal  Reserve, applicable to the life of  the  Warrants,
expected  volatility  of  50% and  the  five  year  life  of  the
Warrants.

The  Company  is  required to re-measure the fair  value  of  the
warrants   at   each  reporting  period  until  the  registration
statement  is  declared effective. Accordingly, the  Company  re-
measured  the  fair value of the Warrants at September  30,  2005
using the Black-Scholes valuation model based on the market price
of  the common stock on that date, an expected dividend yield  of
0%,  a  risk-free interest rate based on constant maturity  rates
published  by  the  U.S.  Federal  Reserve,  applicable  to   the
remaining term of the Warrants, expected volatility of 50% and an
expected  life equal to the remaining term of the Warrants.  This
resulted  in a fair market value for the warrants of  $40,800  at
September 30, 2005.   Upon the Company meeting its obligation  to
register the securities, the fair value of the Warrants  on  that
date will be reclassified to equity.

Because  the  conversion price of the Convertible  Notes  is  not
fixed,  the  Convertible Notes are not "conventional  convertible
debt"  as that term is used in EITF 00-19.  Accordingly,  because
the shares underlying the conversion of the Convertible Notes are
subject  to  the Registration Rights Agreement with the  Holders,
the  Company is required to bifurcate and account separately  for
the   embedded  conversion  options,  together  with  any   other
derivative instruments embedded in the Convertible Notes.

The  conversion option related to each Convertible Note, together
with  the  embedded call options represented by the Note Holders'
right  to  receive interest payments and any registration  rights
penalties  in  common stock, were treated, for  each  Convertible
Note,  as  a  single  compound derivative  instrument,  and  were
bifurcated from the Convertible Note and accounted for separately
as a derivative instrument liability (see below).  The bifurcated
embedded   derivative   instruments,   including   the   embedded
conversion  options  which were valued  using  the  Black-Scholes
valuation model, were recorded at their initial fair value of  an


                                F-14

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


aggregate  of  $20,969,788.  Because the initial fair  values  of
these  embedded derivative instruments, together  with  the  fair
values of the Warrants that were also accounted for as derivative
instrument  liabilities  and  recorded  at  their  fair   values,
exceeded   the  proceeds  received  (the  face  amount   of   the
Convertible  Notes), the difference was recorded as an  immediate
charge to income.

The  discount  from  the  face amount of  the  Convertible  Notes
represented by the value assigned to the Warrants and  bifurcated
derivative instruments is being amortized over the period to  the
due  date  of each Convertible Note, using the effective interest
method.

A summary of the Callable Secured Convertible Notes and
derivative instrument liabilities at September 30, 2005,
is as follows:

Callable Secured Convertible Notes; 8% per annum; due
   March 30, 2008                                             $740,000
Less: face amount of Notes converted                          (122,324)
                                                           -----------
                                                               617,676
Less: unamortized discount related to warrants and
   bifurcated embedded derivative instruments                 (617,676)
                                                           -----------
                                                           $         -
                                                           -----------
Callable Secured Convertible Notes; 8% per annum;
   due May 25, 2008                                        $   700,000
Less: unamortized discount related to warrants and
   bifurcated embedded derivative instruments                 (700,000)
                                                           -----------
                                                           $         -
                                                           -----------
Callable Secured Convertible Notes; 8% per annum;
   due August 23, 2008                                     $   100,000
Less: unamortized discount related to warrants and
   bifurcated embedded derivative instruments                 (100,000)
                                                           -----------
                                                           $         -
                                                           -----------
Callable Secured Convertible Notes; 8% per annum;
   due August 31, 2008                                     $   500,000
Less: unamortized discount related to warrants and
   bifurcated embedded derivative instruments                 (500,000)
                                                           -----------
                                                           $         -
                                                           -----------
Total carrying value at September 30, 2005                 $         -
                                                           ===========

Derivative financial instrument liabilities

We  use  the Black-Scholes valuation model to value the  Warrants
and  the  embedded conversion option components of any bifurcated
embedded  derivative instruments that are recorded as  derivative
liabilities.

In  valuing  the  Warrants  and the  embedded  conversion  option
components of the bifurcated embedded derivative instruments,  at
the  time they were issued and at September 30, 2005, we used the
market  price  of our common stock on the date of  valuation,  an
expected  dividend yield of 0% and the remaining  period  to  the
expiration  date  of  the  warrants  or  repayment  date  of  the
Convertible  Notes. All warrants and conversion  options  can  be
exercised by the holder at any time.


                                F-15

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


Because  of  the limited historical trading period of our  common
stock,  the  expected  volatility of our common  stock  over  the
remaining  life of the conversion options and Warrants  has  been
estimated  at 50%. The risk-free rates of return used were  based
on constant maturity rates published by the U.S. Federal Reserve,
applicable  to  the remaining life of the conversion  options  or
Warrants.

At  September  30,  2005,  the following  derivative  liabilities
related   to   common  stock  Warrants  and  embedded  derivative
instruments were outstanding:

<TABLE>
<CAPTION>
                                            Exercise                  Value -
                                            Price Per  Value-Issue  September 30,
Issue Date   Expiry Date                     Share        Date          2005
_________________________________________________________________________________
<S>          <C>          <C>                <C>        <C>          <C>
03-30-2005   03-30-2010   740,000 warrants   $0.085     $673,400     $14,800

05-25-2005   05-25-2010   700,000 warrants    0.085      693,000      14,000

08-23-2005   08-23-2005   100,000 warrants    0.085       31,000       2,000

08-26-2005   08-26-2005   500,000 warrants    0.090      145,000      10,000
                                                                   _________
Fair value of freestanding derivative
instrument liabilities for warrants                                  $40,800
                                                                   _________
</TABLE>


<TABLE>
<CAPTION>
                                                                    Value -
                                                     Value-Issue  September 30,
Issue Date   Expiry Date                                 Date          2005
_________________________________________________________________________________
<S>          <C>          <C>                          <C>          <C>

03-30-2005   03-30-2008   $617,676 convertible notes    $9,176,010   $177,966

05-25-2005   05-25-2008   $700,000 convertible notes     9,451,556    210,000

08-23-2005   08-23-2008   $100,000 convertible notes       413,333     30,000

08-26-2005   08-26-2005   $500,000 convertible notes     1,928,889    150,000
                                                                    _________
Fair value of bifurcated embedded derivative instrument
  liabilities associated with the above convertible notes            $567,966
                                                                    _________
Total derivative financial instruments                               $608,766
                                                                    =========
</TABLE>

NOTE 7. INCOME TAXES

The  Company  accounts  for income taxes under  SFAS  109,  which
requires  use  of  the liability method. SFAS 109  provides  that
deferred  tax  assets and liabilities are recorded based  on  the
differences  between the tax bases of assets and liabilities  and
their carrying amounts for financial reporting purposes, referred
to  as temporary differences. Deferred tax assets and liabilities
at  the  end  of  each period are determined using the  currently
enacted  tax  rates applied to taxable income in the  periods  in
which the deferred tax assets and liabilities are expected to  be
settled or realized.


                                F-16

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


The  provision for income taxes differs from the amount  computed
by  applying  the  statutory federal income tax  rate  to  income
before provision for income taxes. The sources and tax effects of
the differences are as follows:

         Income tax provision at
          the federal statutory rate	  34 %
         Effect of operating losses	 (34)%
                                        ----
                                           -
                                        ====

As  of  September 30, 2005, the Company has a net operating  loss
carryforward  of  approximately $8,000,000.  This  loss  will  be
available  to  offset future taxable income. If  not  used,  this
carryforward will expire through 2025. The deferred tax asset  of
approximately   $2,700,000  relating  to   the   operating   loss
carryforward has been fully reserved at September 30,  2005.  The
increase  in the valuation allowance related to the deferred  tax
asset  was $400,000 during 2005. The principal difference between
the accumulated deficit for income tax purposes and for financial
reporting  purposes results from non-cash stock compensation  and
derivative  instrument expense being charged  to  operations  for
financial reporting purposes.

NOTE 8. STOCKHOLDERS' (DEFICIT)

During  the  periods  covered by these financial  statements  the
Company issued shares of common stock and subordinated debentures
without  registration under the Securities Act of 1933.  Although
the  Company  believes that the sales did not  involve  a  public
offering  of its securities and that the Company did comply  with
the   "safe  harbor"  exemptions  from  registration,   if   such
exemptions  were found not to apply, this could have  a  material
impact  on  the  Company's  financial  position  and  results  of
operations.  In  addition, the Company issued  shares  of  common
stock  pursuant to Form S-8 registration statements and  pursuant
to  Regulation S. The Company believes that it complied with  the
requirements  of  Form S-8 and Regulation S in  regard  to  these
issuances, however if it were determined that the Company did not
comply with these provisions this could have a material impact on
the Company's financial position and results of operations.

During   June   2005  the  Company  amended   its   Articles   of
Incorporation  to authorize 5,000,000 shares of  preferred  stock
$.001 par value and 245,000,000 shares of common stock $.001  par
value.  In  October  2005  the Company amended  its  Articles  of
Incorporation  to authorize 5,000,000 shares of  preferred  stock
$.001 par value and 495,000,000 shares of common stock $.001  par
value.

During  September  2005 the Company affected  a  one  for  twenty
reverse stock split and during November 2003 the Company affected
a  four  to  one  forward stock split. All share  and  per  share
amounts have been restated to give effect to these splits.

Common stock

From February through July 2004 the Company issued 588,215 shares
of  common  stock  for  cash aggregating $2,126,775  pursuant  to
Regulation S offerings.

During  the  year  ended September 30, 2004  the  Company  issued
16,000  shares  of common stock for services valued  at  $302,600
which represents the fair market value of the shares issued.

During  the year ended September 30, 2004 officers of the Company
exercised  566,250 options and received 566,250 shares of  common
stock.  The aggregate value for the shares of $5,442,900  is  due


                                F-17

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


from these officers at such time as they sell the shares and  has
been recorded as a receivable for common stock.

The  Company  received an aggregate of $1,059,173 as payment  for
shares issued to officers pursuant to option exercises during the
years  ended September 30, 2004 and 2003, and reduced the  amount
receivable  related to 227,613 shares held by  officers  received
pursuant  to option exercises to $.24 per share which represented
the fair market value of the shares on the date of the reduction.
The  Company recorded $5,081,325 in compensation expense  related
to  this reduction. The aggregate receivable for shares issued to
officers was $54,627 at September 30, 2004. During the year ended
September  30,  2005, the Company issued 100,000  options  to  an
officer  exercisable at $2.00 per share. In addition, during  the
year ended September 30, 2005, this officer paid an aggregate  of
$101,987  towards  the  exercise price of  the  options  and  the
options were repriced which resulted in a charge to operations of
$117,640  during the year. The balance due from this officer  was
$35,000 at September 30, 2005.

From  November  2003 through May 2004 the Company  issued  15,101
shares  of common stock for the conversion of $400,000  of  debt.
The  debt  was converted at the fair market value of  the  shares
issued on the conversion date (see Note 5).

At  September  30,  2004, the Company recorded  an  aggregate  of
$1,120,000  related to shares issuable pursuant to the settlement
of  a  lawsuit  with Global. During the year ended September  30,
2005, the settlement agreement was set aside by the court and the
$1,120,000 was reclassified to a liability.

During  October 2004 the Company issued 100,000 shares of  common
stock  to an officer pursuant to the exercise of options  granted
in October 2004 at $2.00 per share.

During  the year ended September 30, 2005, the Company issued  an
aggregate  of  700,000 shares of it's common stock  for  services
with  a  fair  value  of $6,314,160 which  has  been  charged  to
operations during the year. Of these shares 690,000 shares with a
fair  value  of $6,203,600 were issued to officers, directors  or
affiliates.

During  the  year  ended September 30, 2005, the  holder  of  the
debentures  discussed in Note 6 converted $122,324 of  debt  into
832,000 shares of the Company's common stock.


Stock-based Compensation

During  the  year  ended September 30, 2004, the  Company  issued
options  to  purchase  shares of common  stock  to  certain  non-
employees  and recorded $112,500 in compensation expense  related
to these issuances. During the year ended September 30, 2005, the
Company  issued  options to purchase shares of  common  stock  to
certain   officers.  Compensation  costs  charged  to  operations
aggregated $120,000 for the year ended September 30, 2005.

SFAS  123  requires  the Company to provide proforma  information
regarding  net  income and earnings per share as if  compensation
cost for the Company's stock option plans had been determined  in
accordance  with the fair value based method prescribed  in  SFAS
123. The fair value of the option grants is estimated on the date
of  grant  utilizing the Black-Scholes option pricing model  with
the  following weighted average assumptions for grants during the
year  ended  September 30, 2005: expected life of  options  of  5
years, expected volatility of 200%, risk-free interest rate of 4%
and  no  dividend yield. The weighted average fair value  at  the
date of grant for options granted during the year ended September
30, 2005, approximated $2.00 per option. These results may not be
representative of those to be expected in future years.


                                F-18

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


Under the provisions of SFAS 123, the Company's net income (loss)
and earnings (loss) per share would have been reduced (increased)
to the proforma amounts indicated below:

<TABLE>
<CAPTION>
                                           2004               2005
                                           ----                ----
<S>                                      <C>               <C>
Net (loss)
        As reported                      $(9,171,324)      $(12,214,900)
        Proforma                         $(9,171,324)      $(12,294,900)
Basic and diluted (loss) per share
        As reported                      $(15.42)          $(7.12)
        Proforma                         $(15.42)          $(7.17)

</TABLE>

A summary of stock option activity is as follows:

<TABLE>
<CAPTION>

                                              Weighted   Weighted
                                     Number   average     average
                                       of     exercise     fair
                                     shares    price       value
                                     ------    -----       -----
        <S>                        <C>         <C>        <C>
	Balance at
          September 30, 2003       573,980
        Granted                     38,980     $26.60      $26.60
        Exercised/Forfeited       (566,250)    $9.60       $9.60
                                  --------
	Balance at
          September 30, 2004        46,710
        Granted                    100,000     $2.00       $2.00
        Exercised/Forfeited       (137,513)    $0.44       $0.44
                                 ---------
	Balance at
          September 30, 2005         9,197     $24.50      $24.50
                                 =========
</TABLE>

The  following  table  summarizes information  about  fixed-price
stock options at September 30, 2005:

<TABLE>
<CAPTION>

                                        Outstanding        Exercisable
              Weighted      Weighted     Weighted-
               Average      Average      Average
 Exercise       Number    Contractual    Exercise     Number       Exercise
  Prices     Outstanding     Life          Price    Exercisable      Price
  ------     -----------     ----          -----    -----------      -----
  <S>        <C>            <C>           <C>       <C>            <C>
  $1.01        1,597        1.0 years     $20.20       1,597       $20.20
  $1.25        5.000        3.0 years     $25.00     100,000       $25.00
  $1.31        2,600        3.0 years     $26.20       2,600       $26.20
             -------                                 -------
               9,197                                   9,197
             =======                                 =======
</TABLE>

NOTE 9. COMMITMENTS AND CONTINGENCIES

Operating Leases

The  Company leases its office facilities under operating  leases
for  gross  monthly rent, including common area  maintenance,  of
approximately  $6,200. The office lease provides  for  no  annual
cost  of  living adjustments in the base rent and  the  warehouse
leases provide for fixed annual increases in the base rent.

Future  minimum lease payments under all non-cancelable operating


                                F-19

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005


leases  for years ending subsequent to September 30, 2005 are  as
follows:

          2006     $    74,400
          2007          74,400
          2008          74,400
          2009          18,600
                   -----------
                   $   241,800
                   ===========

Rent expense for the years ended September 30, 2004 and 2005  was
$159,086 and $75,910.

Litigation

During  May  2003 Global Healthcare Laboratories,  Inc.  (Global)
made  a claim against the Company for breach of contract under  a
master   license  agreement.  Management  contended  that  Global
committed  fraud  and  multiple breaches of  the  master  license
agreement and that the claim was without merit. The matter was re-
filed  for  the  third  time by the plaintiffs  after  two  prior
dismissals by the Federal courts for failure to state a cause  of
action. On August 31, 2004 a verdict was rendered in favor of the
plaintiffs  and  they  were awarded a  judgment  in  the  sum  of
$2,501,191. The Company initially intended to appeal the verdict,
however  on December 3, 2004, the Company and Global settled  the
matter as follows:

The  Company  would  make  cash payments  to  Global  aggregating
$200,000  through  March 1, 2005, and would issue  to  Global  an
aggregate of 8,000,000 shares of common stock. The shares  to  be
issued were valued at their fair market value of $1,120,000.  The
Company has recorded an accrual of $200,000 for the cash payments
due  and a stock subscription of $1,120,000 for the common shares
issuable  at  September  30,  2004,  and  charged  $1,320,000  to
operations for the settlement during the year ended September 30,
2004.  The  Company  has agreed to file a registration  statement
covering an aggregate of 10,200,000 shares of common stock on  or
before  January 15, 2005, and should it not due so an  additional
500,000  shares  of common stock would be due to  Global.  Global
will  be required to execute proxies giving the voting rights  of
the shares issuable to an officer of the Company.

A  dispute between the parties arose and the settlement agreement
was  set  aside by the Court and no new settlement agreement  has
yet  been  reached. Through September 30, 2005, the Company  made
payments  to Global aggregating $75,000.  At September 30,  2005,
the  Company  has  recorded an accrual amounting $2,426,191  (the
original  judgment  of  $2,501,191  less  the  payments  made  of
$75,000)  plus  post judgment interest at 7% of $169,800.  During
the  year  ended  September 30, 2005,  the  Company  has  charged
$1,181,191   to  operations  for  the  difference   between   the
settlement  recorded during 2004 and the total judgment  awarded.
The Company is currently attempting to negotiate a new settlement
agreement  with  Global. In addition, the Company issued  400,000
shares of its common stock which were held by the Company pending
issuance  to  Global.  These  shares  were  cancelled  when   the
settlement was set aside.

In  December 2005, the Company filed litigation against CVS, Inc.
The  Company sold CVS in excess of $140,000 dollars of goods  and
received  payment  of approximately $26,000 during  an  18  month
period.  CVS terminated the product in late May 2005  and  claims
the  Company  owes them $77,000. Management cannot determine  the
outcome of this litigation at this time.

NOTE 10. CONCENTRATIONS

During  years  ended  September 30, 2004 and  2003,  the  Company
derived  substantially all of its revenue from the  sale  of  one
product,  SNORENZ. Credit is granted to their  customers  in  the


                                F-20

<PAGE>

                             Med Gen, Inc.
                      Notes to Financial Statements
                         September 30, 2005



normal  course of business. The Company has an exclusive contract
with a single manufacturing company to produce SNORENZ.

The  Company's  product  SNORENZ will no  longer  be  carried  by
WalMart.  The  decision was made by Walmart because of  declining
sales  in the overall category and declining sales by its largest
competitor.  WalMart sales were $344,218 in 2004 and $323,474  in
2005. They represented 38% and 40% of the annual volume of sales.

In  August  2005  the  Company was notified  by  Walgreen's  that
Snorenz  would  no  longer be carried  by  the  chain.  Sales  at
Walgreens  were  $142,022  in 2004  and  $91,715  in  2005.  They
represented 16% and 11% of the annual sales volume.

NOTE 11. RELATED PARTY TRANSACTIONS

During  the years ended September 30, 2004 and 2005, the  Company
paid consulting fees to the affiliated entity discussed in Note 4
aggregating $480,373 and $35,000.

NOTE 12. SUBSEQUENT EVENTS

From October 1, 2005 through January 18, 2006, the holders of the
Callable   Secured  Convertible  Notes  advanced  an   additional
$600,000 to the Company and converted an aggregate of $77,728  of
debt into 6,337,950 shares of the Company's common stock. Through
January 18, 2006, the holders of the Callable Secured Convertible
Notes converted an aggregate of $200,052 into 7,169,950 shares of
common stock which represents approximately 68% of the issued and
outstanding  shares.  In  addition, the  Company  issued  690,000
shares of common stock to an affiliate for services.


                                F-21

<PAGE>