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, 2006

[ ] 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: $270,801

State the aggregate market value of the company's common stock held by
non-affiliates as of September 30, 2006, was (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) $1,320,299 as of
September 30, 2005.

<PAGE>

State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date 289,311,265 Shares
of Common Stock as of December 18, 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]

<PAGE>

                         TABLE OF CONTENTS
                               INDEX


                                                                          PAGE

PART I

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

Item 2.    Description Of Property.                                         8
-------

Item 3.    Legal Proceedings.                                               8
-------

Item 4.    Submission Of Matters To A Vote Of Security Holders.             9
-------

PART II

Item 5.    Market For Common Equity And Related Stockholder Matters.       10
-------

Item 6.    Management's Discussion And Analysis Or Plan Of Operation.      11
-------

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

Item 8.    Changes In And Disagreements With Accountants On
-------    Accounting And Financial Disclosure.                            14

Item 8A.   Controls And Procedures                                         14

Item 8B    Other Information                                               14

PART III

Item 9.    Directors, Executive Officers, Promoters And Control
-------    Persons; Compliance With Section 16(A) Of The Exchange Act      15

Item 10.   Executive Compensation                                          15
--------

Item 11.   Security Ownership Of Certain Beneficial Owners And Management  16
--------

Item 12.   Certain Relationships And Related Transactions                  16
--------

Item 13.   Exhibits And Reports On Form 8-K                                17
--------

Item 14.   Principal Accountant and Services.                              17
--------

Signatures                                                                 18
----------

<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 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 Direct Marketing (DRTV) and
Direct to Consumer (DTC) programs by way of the company owned web
sites, affiliate programs and various TV Commercials and Print
advertising campaigns. The company also sells retailers and
wholesalers representing a marketing network in excess of 4,000 stores
nationwide.

The Company also markets additional products that deploy its
proprietary technology. 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] is the
first spray liquid in this category to enter the US market. The
product is now being sold on the Company web site. In August, 2006 the
company completed R&D on UNDIET[R], a novel all liquid diet system
featuring Hoodia Gordonii and Advantra Z[R] UNDIET[R] was test launched in
October 2006 when it aired on 10 Cable TV stations, Woman's Day, Red
Book and Newsweek magazines.

                                 3
<PAGE>

Painenz[R], a roll-on topical pain relief product, has been successfully
tested with Health & Wellness Club, Golf  PGA and Gardner clubs and
their affiliated magazines. The product has met with a better than 78%
approval rating. Painenz is now being advertised in Newsweek magazine
as a test for future revenue growth.

The Company also markets its products under several private labels for
other distributors in the United States and overseas.

The company is working on the completion of two new products to be
launched in early 2007 using its proprietary STW technology. Recently
the company launched its Sonergy[R] line of nine (9) commonly used
vitamin and herbal products on its web site. The line should bring
greater visibility to the site and result in increased sales.


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.

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


                                  4
<PAGE>

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.

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.

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


                                 5
<PAGE>

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[R] SYSTEM
--------------------

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  through DRTV television and print
advertising campaigns. As well as company owned and operated web sites
direct to the consumer. It is also sold to distributors overseas under
protective Distribution Agreements. Snorenz[R] is sold in select retail
stores over the counter. 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).

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 establsihed 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


                                 6
<PAGE>

through this distribution network in the future.


         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.

The company's entree into the weight loss industry is significant to
its overall strategy. The present market is in excess of $70 billion
and the company belives that its UNDIET[R] System represents a unique
alternative to those seeking a non-food weight loss system. A small
percentage of this market will represent significant earnings for Med
Gen. Management does not know of any similar program presently being
marketed. This "stand alone" position represents a tremendous
opportunity for Med Gen.

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

In fiscal year 2006 the Company's largest retail customer was
Albertson's. The company has reduced its dependence on retail stores
and now sells direct to its customers via TV, Radio, and Print
commercials, as well as its web site.

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 $4,000 per month in retail sales. Other
enhancements to the Company's web sites were completed in 2006, with
optimization continuing through 2007.

The Company expects to show steady and important increases in future
sales on its Internet site. During the third quarter of fiscal 2006
(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.


                                 7
<PAGE>

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.

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 eight 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. This location will significantly reduce the duplicity of
handling and its related costs as well as reduce overhead. It will
also simplify inventory controls.

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. 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:

                                 8
<PAGE>

The Company would make cash payments to Global aggregating $200,000
through March 1, 2005, and would issue to Global an aggregate of
400,000 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 510,000 shares of
common stock on or before January 15, 2005, and should it not due so
an additional 25,000 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 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.

During the period ended June 30, 2006, the Company recorded an
additional $43,770 of post judgment interest.
During April 2006 the Company settled the litigation by agreeing to
the following:

*   A cash payment of $300,000
*   29 monthly payments of $31,667
*   The issuance of 15,000,000 common shares subject to registration
    rights.

The holders of the shares shall have the right beginning on the
effective date of the registration statement for a period of two years
to require the Company at the Company's discretion to sell the shares
back to the Company for $200,000 or require the Company to issue
additional shares so that the value of the shares held by the holders
is $200,000.

As a result of the settlement the Company's obligation related to the
litigation was reduced by $782,848 which has been recorded as a gain
on the settlement date.


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

On June 5th, 2006 the Company received the certified tally of the
proxy solicitation which authorized the increase of the issued and
outstanding shares from 500,000,000 to 2,500,000,000 million. The
authorized is comprised of 2,495,000,000 common shares and 5,000,000
preferred shares.

The vote was as follows:

     For:                 36,430,177
     Against:    	     913,489
     Abstain:     	      11,446

The Company  amended its certificate of incorporation in Nevada.

The second proposal to approve the Board of Directors for a term of
five years was approved by the shareholders as follows:

     For:                 36,795,914
     Against:    	     257,925
     Abstain:    	     301,273



                                 9
<PAGE>


                              PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of September 30, 2006, there were approximately 3111 Common Stock
shareholders consisting of both registered shareholders and those
being held by the Deposit Trust Corporation in street name. Of the
231,849,471 shares outstanding, 25,865,761 were restricted and
205,984,123 were non-restricted.

As of December 29th, 2006,the latest date pre-filing of this report
the Company, as a result of additional stock issuances and option
exercises, has 289,311,265 shares outstanding 25,841,971 are
restricted and 263,469,294 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.

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
October    2005                         0.061       0.035
November   2005                         0.055       0.027
December   2005 (end first quarter)     0.036       0.0008
</TABLE>


                                 10
<PAGE>

<TABLE>
<CAPTION>
<S>                                     <C>         <C>
January    2006                         0.030       0.0009
February   2006                         0.025       0.0009
March      2006 (end second quarter)    0.057       0.010
April      2006                         0.039       0.022
May        2006                         0.032       0.012
June       2006 (end third quarter)     0.051       0.011
July       2006                         0.028       0.010
August     2006                         0.013       0.005
September  2006                         0.023       0.005
</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, 2006, the bid price of MDGN shares was $0.006 and the
asked price was $0.0061

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.

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, 2006
Compared with twelve months ended September 30, 2005
----------------------------------------------------

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, 2006, net sales decreased
66.24% to $270,801 from $802,127 in the prior fiscal year. The
decrease in sales was due primarily to one factor: The Company ceased
its distribution thru retail stores and began a direct to consumer
marketing program on the internet .During the last fiscal year the
Company spent money on improving the mechanical aspects of its website
and focused little efforts into selling its products to retail
consumers.

Gross profit for the twelve months ended September 30, 2006 was
$(27,359) versus $472,058 for the same period a year ago, a decrease
of 100%. This decrease relates to a substantial decrease in total
sales volume for the fiscal year. Gross profit margins for the years
2006 were (10.10)% and 2005 were 58.85%,respectively. The Company had
lower cost of sales which is directly attributable to the substantial
loss in revenue volume over the last twelve months of operations in
fiscal 2006.

For the twelve-month period ended September 30, 2006 operating
expenses were $2,982,931 as compared to $9,368,644 a decrease of
68.17% from the prior fiscal year. The large decrease is due to the
elimination of expensing of the costs of the litigation which amounted
to $-0- in this fiscal year as compared to $1,181,191 in the prior
fiscal year. This expense resulted from the adverse judicial ruling


                                 11
<PAGE>


related to the settlement of the above referenced litigation. Non-cash
stock compensation of $753,920 in 2006 as compared to $6,551,800 in
fiscal 2005 also lowered the operating costs.

Excluding these expenses in fiscal 2006 the SG&A was $2,229,011 as
compared to $1,635,653 in fiscal 2005. This represents an actual
increase of 36.62%. Management hired two new employees and several
consultants in fiscal 2006 to develop and revise its internet and
direct to consumer marketing programs. These factors contributed to
the increase in the selling, general and administrative expenses.

The operating loss decreased to $(3,010,290) as opposed to a loss of
$(8,896,586) for the same twelve months period, in the prior year.

For the twelve-month periods interest expense increased to $720,521
from $253,992 primarily as a result of an increase in borrowings. The
Company owes its lender approximately $4,285,440 at an 8% coupon rate
as of September 30, 2006. This figure is based upon the gross
conversions made by the lender through the date of the filing,
(approximately $1,204,560).

For the twelve months ended September 30, 2006, the Company reported a
loss of $7,906,737 ($0.10 per share) versus a loss of $12,214,900
($7.12 per share) for the same fiscal period, a year ago.

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

Net cash used in operating activities was $2,841,831 during the twelve
months ended September 30, 2006 as compared to $1,219,999 in the year
earlier. This increase is attributed principally to a combination of
substantially lower revenues which increased cash outlays throughout
the fiscal year and the addition of two new computer personnel. The
Company intends to attempt to lower monthly cash outlays in fiscal
2007 and conserve cash until additional financing is secured. The net
loss for the year was $7,906,737 compared to $12,214,900 a year ago.
The loss was adjusted for non-cash stock compensation of $753,920.
This item is a non-cash outlays and affected the fiscal results for
2006.

Net cash used in investing activities was $19,845 during the twelve
months ended September 30, 2006.

Net cash provided by financing activities was $3,450,350 during the
twelve months ended September 30, 2006, which consisted principally of
proceeds from convertible debentures ($3,450,000).

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] brands at retail store levels. Other
advertising campaigns were launched in fiscal 2005 to support the
company's DRTV and DTC marketing plans. Throughout 2005 and 2006 the
company directed its efforts and capital to its new marketing
direction and in publishing several new web sites. In 2006 the company
launched a series of test commercials featuring its UNDIET[R] System.
The test results were positive, to the extent that the company has now
proceeded to contract with Intellivision, Inc. to produce two
commercials that would start airing in late January and/or early
February.

The Company intends to seek additional funding in 2007 through the
sale of Common stock in order to air these commercials. 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.

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
2007.

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, 2006 and 2005, the Company incurred net losses of
$7,906,737 and $12,214,900.

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


                                 12
<PAGE>

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 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.

In December 2004, the FASB issued SFAS 123R "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 became
effective during the fiscal year ended September 30, 2006

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


                                 13
<PAGE>

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, 2006 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

The Company is seeking additional funding of approximately $2,000,000
dollars to continue its business plan of operations.  This may include
borrowing additional capital from its lender under similar terms and
conditions as prior loan agreements and or authorizing a reverse or
forward split in the second quarter of 2006.




                                 14
<PAGE>


                               PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS

<TABLE>
<CAPTION>
     Name              Age               Position
     ----              ---               --------
<S>                    <C>         <C>
Paul B. Kravitz        75          Chairman; Chief Executive Officer
                                   Secretary and Director

Paul S. Mitchell       54          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 2006 at the Annual shareholders meeting the shareholders elected
the Board of Directors for a five 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 (75) 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

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 (54) 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, 2004, September 30, 2005 and September 30, 2006 the cash and other
compensation paid to each of the executive officers and directors of
the Company.


                                 15
<PAGE>

                          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,      2006    $33,000   -0-    Options       10,000,000    175,000
Chairman & CEO,       2005    $65,000   -0-    Options          -0-           -0-
 Director             2004    $65,000   -0-    Options          -0-           -0-

Paul S. Mitchell      2006    $33,000   -0-    Options          -0-        175,000
President & COO,      2005    $65,000   -0-    Options          -0-           -0-
 Director             2004    $65,000   -0-    Options          -0-           -0-
</TABLE>


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   10,213,685                4.4%
------------------------------------------------------------------------------

Common Stock       Paul S. Mitchell

                   7284 W. Palmetto Pk Rd     178,680                 0.007%
                   Boca Raton, FL  33433
------------------------------------------------------------------------------

                   Directors and Executive
                   Officers as a group
                   (2 persons)              10,392,365               4.407%
------------------------------------------------------------------------------
</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.

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.

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.


                                 16
<PAGE>


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)

(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 06-05-2006, and
       9-12-2006.

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-KSB will
total approximately $32,000 for 2006 and 2005.

(b) 	Audit-Related Fees

During fiscal 2006 we were not required to incur any additional audit-
related fees in preparation of our financial statements or otherwise.

(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
2006 we will pay $1,500.

(d) 	All Other Fees

During fiscal 2006 we did not incur any other fees other than
assurance and tax consulting fees disclosed in items 14 (a) and 14 (c)

(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.


                                 17
<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 4, 2007



By: /s/ Paul B. Kravitz
   ------------------------
        (Signature)
Paul B. Kravitz, Chairman and CEO
(Print name and title of signing officer)

























                                 18
<PAGE>

                            MED GEN, INC.
                        FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2006
                           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-23



<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,  2006,  and  the  related  statements  of
operations, stockholders' (deficit) and cash flows for the  years
ended September 30, 2006 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, 2006, and results  of  its
operations  and its cash flows for the years ended September  30,
2006 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
December 29, 2006


                              F-1

<PAGE>

                          Med Gen, Inc.
                          Balance Sheet
                       September 30, 2006



ASSETS

Current Assets
    Cash and cash equivalents                           $   1,349,608
    Accounts receivable, net of reserve of $15,196             44,770
    Inventory                                                  86,509
    Other current assets                                        5,700
                                                        -------------
      Total Current Assets                                  1,486,587
                                                        -------------

Property and Equipment, net                                    36,524
                                                        -------------

Other Assets
    Deferred financing fees                                   165,955
    Deposits and other                                        194,694
                                                        -------------
                                                        $   1,883,760
                                                        =============


LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current Liabilities
   Accounts payable and accrued expenses                $   1,058,053
   Accrued litigation judgment                                686,676
                                                        -------------
      Total Current Liabilities                             1,744,729
                                                        -------------

Derivative financial instruments                            6,511,411
                                                        -------------

Convertible debentures                                        277,842
                                                        -------------

Redeemable common shares                                      200,000
                                                        -------------

Stockholders' (deficit)
   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, 2,495,000,000
     shares authorized, 231,849,471 shares
     issued and outstanding                                   231,850
   Paid in capital                                         27,244,428
   Accumulated (deficit)                                  (34,326,500)
                                                        -------------
                                                           (6,850,222)
                                                        -------------

                                                        $   1,883,760
                                                        =============


          See accompanying notes to the financial statements.


                              F-2

<PAGE>


                          Med Gen, Inc.
                    Statements of Operations
         For the Years Ended September 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                      2006            2005
                                                  -------------   -------------
<S>                                               <C>             <C>

Net sales                                         $     270,801   $     802,127

Cost of sales                                           298,160         330,069
                                                  -------------   -------------
Gross profit (loss)                                     (27,359)        472,058

Operating expenses:

  Selling, general and administrative expenses -
   non cash stock compensation - not included
   in selling, general and administrative
   expenses below                                       753,920       6,551,800
   Litigation                                                 -       1,181,191

  Selling, general and administrative expenses        2,229,011       1,635,653
                                                  -------------   -------------
                                                      2,982,931       9,368,644
                                                  -------------   -------------

(Loss) from operations                               (3,010,290)     (8,896,586)
                                                  -------------   -------------

Other (income) expense:
    Derivative instrument expense                     4,974,603       3,064,322
    Gain on the settlement of debt                     (782,848)              -
    Interest income                                     (15,829)              -
    Interest expense                                    720,521         253,992
                                                  -------------   -------------
                                                      4,896,447       3,318,314
                                                  -------------   -------------

Net (loss)                                        $  (7,906,737)  $ (12,214,900)
                                                  =============   =============

Per share information - basic and fully diluted:
   Weighted average shares outstanding               78,935,487       1,714,454
                                                  =============   =============

 Net (loss) per share                             $       (0.10)  $       (7.12)
                                                  =============   =============
</TABLE>


          See accompanying notes to the financial statements.


                               F-3

<PAGE>



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



<TABLE>
<CAPTION>
                                        Common Stock                             Receivable
                                  --------------------------     Additional      for Common    Accumulated
                                    Shares          Amount     Paid in Capital     Stock         Deficit         Total
                                  -----------      ---------   ---------------  -----------   -------------   ------------
<S>                               <C>              <C>         <C>              <C>           <C>             <C>

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)

Conversion of convertible
  debentures including embedded
  derivative instruments          163,590,694        163,591         1,814,406            -               -      1,977,997
Common stock issued for services   50,380,000         50,380           668,890            -               -        719,270
Common shares issued for the
  settlement of litigation         15,000,000         15,000           420,000            -               -        435,000
Reduction of option exercise
  price                                     -              -                 -       34,650               -         34,650
Cash payment for options                    -              -                 -          350               -            350
Cancellation of common shares
  related to litigation              (400,000)          (400)              400            -               -              -
Net (loss)                                  -              -                 -            -      (7,906,737)    (7,906,737)
                                  -----------      ---------   ---------------  -----------   -------------   ------------
Balance September 30, 2006        231,849,471      $ 231,850   $    27,244,428  $         -   $ (34,326,500)  $ (6,850,222)
                                  ===========      =========   ===============  ===========   =============   ============
</TABLE>



          See accompanying notes to the financial statements.


                              F-4

<PAGE>

                          Med Gen, Inc.
                    Statements of Cash Flows
         For the Years Ended September 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                      2006            2005
                                                  -------------   -------------
<S>                                               <C>             <C>

Cash flows from operating activities:
Net (loss)                                        $  (7,906,737)  $ (12,214,900)
  Adjustments to reconcile net (loss) to net
  cash (used in) operating activities:
  Depreciation and amortization                          21,320          24,518
  Derivatives                                         5,232,693       4,298,243
  Common shares and options issued for services         719,270       6,551,800
  Gain on the settlement of accrued litigation         (782,848)              -
Changes in assets and liabilities:
  (Increase) decrease in accounts receivable             (1,409)        135,029
  (Increase) decrease in inventory                       42,692          (8,332)
  Decrease in other current assets                            -               -
  (Increase) decrease in deposits and other
    assets                                             (141,959)        (18,963)
  Increase in accounts payable and accrued
    expenses                                            496,814          15,325
  Derivative classification of convertible
    debentures                                                -      (1,308,910)
  Increase (decrease) in accrued litigation            (521,667)      1,306,191
                                                  -------------   -------------
Net cash (used in) operating activities              (2,841,831)     (1,219,999)
                                                  -------------   -------------

Cash flows from investing activities:
  Acquisition of property and equipment                 (19,845)         (5,092)
                                                  -------------   -------------
Net cash (used in) investing activities                 (19,845)         (5,092)
                                                  -------------   -------------

Cash flows from financing activities:
  Proceeds from advances and notes payable
  - related parties                                           -         411,000
  Repayment of advances notes payable
  - related parties                                           -        (586,000)
  Proceeds from convertible debentures                3,450,000       1,935,000
  Financing fees                                              -         (89,670)
  Proceeds from option exercises
  - related parties                                         350         101,987
                                                  -------------   -------------
Net cash provided by financing activities             3,450,350       1,772,317
                                                  -------------   -------------

Net increase in cash                                    588,674         547,226

Beginning - cash balance                                760,934         213,708
                                                  -------------   -------------

Ending - cash balance                             $   1,349,608   $     760,934
                                                  =============   =============

Supplemental cash flow information:
  Cash paid for income taxes                      $           -   $           -
                                                  =============   =============
  Cash paid for interest                                          $      52,267
                                                  =============   =============

Non cash investing and financing activities:
  Common shares issued for accrued litigation     $     435,000   $           -
                                                  =============   =============
  Conversion of notes payable to common stock     $   1,082,236   $     122,324
                                                  =============   =============
  Reclassification of paid in capital to
  accrued litigation                              $           -   $   1,120,000
                                                  =============   =============
</TABLE>




          See accompanying notes to the financial statements.


                              F-5

<PAGE>



                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


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,  2006, the Company's  cash  on  deposit  at  3
financial  institutions exceeded the federally insured limits  by
$992,228.

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, 2006, 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
$15,196.


                              F-6

<PAGE>

                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


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.

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, 2006. 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, 2006


Advertising Costs

Advertising costs are charged to expense as incurred. Advertising
costs  charged  to  expense  included  in  selling,  general  and
administrative  expenses, amounted to $511,368 and  $406,168  for
the  years ended September 30, 2006, 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 incentive plans.

In   December  2004,  the  FASB  issued  SFAS  123R  "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 became effective during the  fiscal


                              F-8
<PAGE>

                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


year ended September 30, 2006

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
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.


                              F-9

<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

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.

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 $165,955  at
September 30, 2006.

Recent Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB)
issued  SFAS151  "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, 2007. 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


                              F-10
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


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 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.

SFAS 155 - "Accounting for Certain Hybrid Financial Instruments--
an  amendment of FASB Statements No. 133 and 140" This Statement,
issued  in  February  2006,  amends  FASB  Statements  No.   133,
"Accounting  for Derivative Instruments and Hedging  Activities",
and No. 140, "Accounting for Transfers and Servicing of Financial
Assets   and  Extinguishments  of  Liabilities".  This  Statement
resolves  issues addressed in Statement 133 Implementation  Issue
No. D1, "Application of Statement 133 to Beneficial Interests  in
Securitized Financial Assets."

This Statement:
      a.    Permits  fair  value  remeasurement  for  any  hybrid
financial  instrument that contains an embedded  derivative  that
otherwise would require bifurcation

     b.   Clarifies which interest-only strips and principal-only
strips are not subject to the requirements of Statement 133

     c.   Establishes  a  requirement  to evaluate  interests  in
securitized  financial  assets to  identify  interests  that  are
freestanding derivatives or that are hybrid financial instruments
that   contain   an             embedded   derivative   requiring
bifurcation

     d.   Clarifies  that  concentrations of credit risk  in  the
form of subordination are not embedded derivatives

     e.   Amends  Statement 140 to eliminate the prohibition on a
qualifying  special-purpose  entity  from  holding  a  derivative
financial instrument that pertains to a beneficial interest other
than another derivative financial instrument.

This   Statement  is  effective  for  all  financial  instruments
acquired  or  issued  after  the beginning  of  our  fiscal  year
beginning October 1, 2007.

The  fair value election provided for in paragraph 4(c)  of  this
Statement may also be applied upon adoption of this Statement for
hybrid  financial  instruments that  had  been  bifurcated  under
paragraph  12  of  Statement 133 prior to the  adoption  of  this
Statement.  Earlier adoption is permitted as of the beginning  of
our  fiscal  year,  provided we have  not  yet  issued  financial
statements,  including  financial  statements  for  any   interim
period, for that fiscal year. Provisions of this Statement may be
applied to instruments that we hold at the date of adoption on an
instrument-by-instrument basis.

The  Company  is currently reviewing the effects of  adoption  of
this  statement but it is not expected to have a material  impact
on our financial statements.


                              F-11
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

SFAS  156  -  "Accounting for Servicing of  Financial  Assets--an
amendment of FASB Statement No. 140"

This  Statement, issued in March 2006, amends FASB Statement  No.
140,  "Accounting for Transfers and Servicing of Financial Assets
and   Extinguishments  of  Liabilities",  with  respect  to   the
accounting   for  separately  recognized  servicing  assets   and
servicing liabilities. This Statement:

      1.  Requires an entity  to recognize  a servicing asset  or
servicing  liability  each time it undertakes  an  obligation  to
service  a financial asset by entering into a servicing  contract
in certain situations.

      2.  Requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value,  if
practicable.

      3.    Permits  an entity to choose either the  amortization
method  or  the fair value measurement method for each  class  of
separately recognized servicing assets and servicing liabilities.

      4.    At   its  initial   adoption,   permits  a   one-time
reclassification  of  available-for-sale  securities  to  trading
securities by entities with recognized servicing rights,  without
calling  into  question the treatment of other available-for-sale
securities  under Statement 115, provided that the available-for-
sale  securities are identified in some manner as offsetting  the
entity's exposure to changes in fair value of servicing assets or
servicing  liabilities  that a servicer  elects  to  subsequently
measure at fair value.

      5.   Requires separate presentation of servicing assets and
servicing liabilities subsequently measured at fair value in  the
statement  of  financial position and additional disclosures  for
all   separately  recognized  servicing  assets   and   servicing
liabilities.

Adoption of this Statement is required as of the beginning of the
first  fiscal  year  that begins after September  15,  2006.  The
adoption  of  this statement is not expected to have  a  material
impact on our financial statements.

In September 2006, the FASB issued Statement No. 157, "Fair Value
Measurements". This Statement defines fair value,  establishes  a
framework   for  measuring  fair  value  in  generally   accepted
accounting  principles and expands disclosure  about  fair  value
measurement. The implementation of this guidance is not  expected
to have any impact on the Company's financial statements.

In  September  2006,  the  Financial Accounting  Standards  Board
issued  Statement  of  Financial Accounting  Standards  No.  158,
"Employers'  Accounting  for Defined Benefit  Pension  and  Other
Postretirement  Plans, an amendment of FASB  Statements  No.  87,
106,  and  132(R)"  ("SFAS  No.  158").  SFAS  No.  158  requires
companies to recognize a net liability or asset and an offsetting
adjustment  to accumulated other comprehensive income  to  report
the   funded  status  of  defined  benefit  pension   and   other
postretirement  benefit plans. SFAS No. 158 requires  prospective
application,  recognition and disclosure  requirements  effective
for   the  Company's  fiscal  year  ending  September  30,  2007.
Additionally,  SFAS No. 158 requires companies  to  measure  plan
assets and obligations at their year-end balance sheet date. This
requirement  is  effective for the Company's fiscal  year  ending
September  30,  2009.  The  Company is currently  evaluating  the
impact  of the adoption of SFAS No. 158 and does not expect  that
it will have a material impact on its financial statements.

In  September  2006,  the United States Securities  and  Exchange
Commission ("SEC") SAB No. 108, "Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year
Financial  Statements."  This  SAB  provides  guidance   on   the
consideration  of  the  effects of prior  year  misstatements  in


                              F-12
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


quantifying  current  year misstatements for  the  purpose  of  a
materiality  assessment.  SAB 108 establishes  an  approach  that
requires  quantification of financial statement errors  based  on
the  effects of each of the company's balance sheet and statement
of  operations  financial statements and  the  related  financial
statement  disclosures. The SAB permits existing public companies
to  record  the  cumulative  effect of  initially  applying  this
approach  in  the first year ending after November  15,  2006  by
recording  the necessary correcting adjustments to  the  carrying
values of assets and liabilities as of the beginning of that year
with the offsetting adjustment recorded to the opening balance of
retained earnings. Additionally, the use of the cumulative effect
transition method requires detailed disclosure of the nature  and
amount  of  each  individual error being  corrected  through  the
cumulative  adjustment and how and when it arose. The Company  is
currently evaluating the impact, if any, that SAB 108 may have on
the Company's results of operations or financial position.

In  July  2006,  the  FASB  issued FASB  Interpretation  No.  48,
"Accounting for Uncertainty in Income Taxes-an interpretation  of
FASB  Statement  No.  109."  This  Interpretation  prescribes   a
recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken  or
expected  to  be taken in a tax return. This Interpretation  also
provides guidance on derecognition, classification, interest  and
penalties,   accounting  in  interim  periods,  disclosure,   and
transition.  The  Interpretation is effective  for  fiscal  years
beginning  after December 15, 2006 and the Company  is  currently
evaluating the impact, if any, that FASB No. 48 may have  on  the
Company's results of operations or financial position.

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, 2006 and  2005,  the
Company incurred net losses of $7,906,737 and $12,214,900 and has
working  capital  and  stockholders'  deficits  of  $258,072  and
$6,850,222 at September 30, 2006.

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 8.
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
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, 2006, consisted  of  the
following:


                              F-13
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

     Furniture and office equipment               $  79,781
     Computer equipment and software                 90,910
     Leasehold improvements                           7,657
                                                  ---------
                                                    178,348
     Accumulated depreciation and amortization     (141,824)
                                                  ---------
                                                  $  36,524
                                                  =========

Depreciation  and  amortization  expense  for  the  years   ended
September 30, 2006, and 2005 was $21,320 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 $10,124 during 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 $0 during  2005,  related  to
these advances.

NOTE 5. 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.

On  October 31, 2005, the Company sold an additional $600,000  of
Convertible  Notes  and  600,000  Warrants  to  the   same   four
investors. The terms of these Convertible Notes and Warrants  are
the  same  as those previously issued, except that the conversion
price  is  $0.04 and the exercise price of the Warrants is  $0.10
per share.


                              F-14
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

On  February 23, 2006, the Company sold an additional $600,000 of
Convertible  Notes  and  600,000  Warrants  to  the   same   four
investors. The terms of these Convertible Notes and Warrants  are
the  same  as those previously issued, except that the conversion
price  is  $0.04 and the exercise price of the Warrants is  $0.05
per share.

On  April  21, 2006, the Company sold an additional  $750,000  of
Convertible Notes to the same four investors. The terms of  these
Convertible  Notes and Warrants are the same as those  previously
issued,  except  that  the conversion  price  is  $0.04  and  the
exercise  price of the Warrants is $0.05 per share.  In addition,
the  Company issued 30,000,000 Warrants, exercisable for a period
of  seven years and with an exercise price of $0.05 per share, to
the same four investors, in lieu of cash interest payments on all
outstanding  convertible notes for the four months  ended  August
31, 2006.

On  August 10, 2006, the Company sold an additional $1,500,000 of
Convertible  Notes  and  15,000,000 warrants  to  the  same  four
investors. The terms of these Convertible Notes and Warrants  are
the  same  as those previously issued, except that the conversion
price  is  $0.04 and the exercise price of the Warrants is  $0.05
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
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 initial fair values of  the
warrants were recorded as derivative instrument liabilities.  The
fair  values  of  the warrants were determined using  the  Black-
Scholes valuation model, based on the market price of the  common
stock on the dates 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
contractual life of the Warrants.

The  Company  is  required to re-measure the fair  value  of  the
warrants  at each reporting period. Accordingly, the Company  re-
measured  the  fair value of the Warrants at September  30,  2006
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


                              F-15
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006


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  $30,673  at
September 30, 2006.

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 values. When
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, 2006, is as
follows:

Callable Secured Convertible Notes; 8% per annum; due        $ 740,000
March 30, 2008

Less: face amount of Notes converted                          (740,000)
                                                             ---------
                                                                     -
                                                             ---------

Callable Secured Convertible Notes; 8% per annum; due        $ 700,000
May 25, 2008

Less: face amount of Notes converted                          (472,950)
                                                               227,050
Less: unamortized discount related to warrants and            (227,050)
                                                             ---------
                                                             $       -
                                                             ---------

Callable Secured Convertible Notes; 8% per annum; due        $ 100,000
August 23, 2008

Less: unamortized discount related to warrants and            (100,000)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $       -
                                                             ---------

Callable Secured Convertible Notes; 8% per annum; due        $ 500,000
August 31, 2008

Less: unamortized discount related to warrants and            (500,000)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $       -
                                                             ---------


                              F-16
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

Callable Secured Convertible Notes; 8% per annum; due        $ 600,000
October 31, 2008

Less: unamortized discount related to warrants and            (322,158)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $ 277,842

Callable Secured Convertible Notes; 8% per annum; due        $ 600,000
February 23, 2009

Less: unamortized discount related to warrants and            (600,000)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $       -
                                                             ---------

Callable Secured Convertible Notes; 8% per annum; due        $ 750,000
April 21, 2009

Less: unamortized discount related to warrants and            (750,000)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $       -
                                                             ---------

Callable Secured Convertible Notes; 8% per annum; due        $ 750,000
April 21, 2009

Less: unamortized discount related to warrants and            (750,000)
bifurcated embedded derivative instruments
                                                             ---------
                                                             $       -
                                                             ---------

Total carrying value at September 30, 2006                   $ 277,842
                                                             =========


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, 2006, 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.

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,  2006,  the following  derivative  liabilities
related   to   common  stock  Warrants  and  embedded  derivative
instruments were outstanding:

<TABLE>
<CAPTION>
Issue         Expiry                         Exercise                   Value-
 Date          Date                          Price Per   Value-Issue   September
                                               Share         Date        2006
--------------------------------------------------------------------------------
<S>         <C>                              <C>         <C>           <C>
03-30-2005  03-30-2010  740,000 warrants     $   0.085    $ 673,400     $    28

05-25-2005  05-25-2010  700,000 warrants         0.085      693,000          33
</TABLE>


                              F-17
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

Contd...

<TABLE>
<CAPTION>
Issue         Expiry                         Exercise                   Value-
 Date          Date                          Price Per   Value-Issue   September
                                               Share         Date        2006
--------------------------------------------------------------------------------
<S>         <C>                              <C>         <C>           <C>
08-23-2005  08-23-2010  100,000 warrants         0.085       31,000           5

08-26-2005  08-26-2010  500,000 warrants         0.090      145,000          28

10-31-2005  10-31-2010  600,000 warrants         0.010        6,000          30

02-23-2006  02-23-2011  600,000 warrants         0.050        2,081         183

04-21-2006  04-21-2011  30,000,000 warrants      0.050      363,005      24,347

08-10-2006  08-10-2013  15,000,000 warrants      0.050       22,196       6,019
                                                                       --------
Fair value of freestanding derivative
instrument liabilities for warrants                                    $ 30,673
                                                                       --------
</TABLE>

<TABLE>
<CAPTION>
                                                                     Value -
Issue Date  Expiry Date                             Value - Issue   September 30,
                                                         Date           2006
<S>         <C>                                     <C>             <C>
05-25-2005  05-25-2006  $700,000 convertible notes     9,451,556      288,531

08-23-2005  08-23-2008  $100,000 convertible notes       413,333      131,609

08-26-2005  08-26-2008  $500,000 convertible notes     1,928,889      769,048

10-31-2005  10-31-2008  $500,000 convertible notes       372,000      915,997

02-23-2006  02-23-2009  $600,000 convertible notes     1,487,973      899,630

04-21-2006  04-21-2009  $750,000 convertible notes     1,758,445    1,113,291

08-10-2006  08-10-2009  $1,500,000 convertible notes   1,975,842    2,362,632
                                                                   ----------
Fair value of bifurcated embedded derivative
instrument liabilities associated with the above
convertible notes                                                  $6,480,738
                                                                   ----------

Total derivative financial instruments                             $6,511,411
                                                                   ==========
</TABLE>


NOTE 6. 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.

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:


                              F-18
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

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

As  of  September 30, 2006, the Company has a net operating  loss
carryforward  of  approximately $10,000,000. This  loss  will  be
available  to  offset future taxable income. If  not  used,  this
carryforward will expire through 2026. The deferred tax asset  of
approximately   $3,400,000  relating  to   the   operating   loss
carryforward has been fully reserved at September 30,  2006.  The
increase  in the valuation allowance related to the deferred  tax
asset  was $700,000 during 2006. 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. The Company may be limited  in  its
use  of  this  operating  loss carryforward  due  to  changes  in
control.

NOTE 7. 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.  In  June  2006  the  Company  amended  its  Articles   of
Incorporation to authorize 2,495,000,000 shares of  common  stock
$.001 par value.

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

Common stock

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. During 2006 these  options  were
again  repriced  which  resulted in a  charge  to  operations  of
$34,650.  The  balance due of $350 was paid as of  September  30,
2006.

At  September  30,  2004, the Company recorded  an  aggregate  of
$1,120,000 related to 400,000 common 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


                              F-19
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

2006 these shares were cancelled.

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 5 converted $122,324 of  debt  into
832,000 shares of the Company's common stock.

During  the  year  ended September 30, 2006, the  holder  of  the
debentures discussed in Note 5 converted $1,082,236 of debt  into
163,590,694 shares of the Company's common stock.

During  the  year  ended September 30, 2006, the  Company  issued
15,000,000  shares  of common stock to settle  litigation.  These
shares  were  valued  at  their fair market  value  of  $435,000.
Pursuant to the settlement agreement the Company agreed to redeem
$200,000  of  these  shares.  These  shares  were  classified  as
redeemable shares at September 30, 2006.

During  the  year  ended September 30, 2006, the  Company  issued
50,380,000 shares of common stock for services. These shares were
valued  at  their fair market value of $719,270. Of these  shares
10,000,000 shares valued at $120,000 were issued to an officer.

Stock-based Compensation

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.

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>
                                         2006           2005
                                     -----------     ------------
<S>                                  <C>             <C>
Net (loss)
   As reported                       $(7,906,737)    $(12,214,900)
   Proforma                          $(7,906,737)    $(12,294,900)

Basic and diluted (loss) per share
   As reported                          $(0.10)         $(7.12)
   Proforma                             $(0.10)         $(7.17)
</TABLE>


                              F-20
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

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, 2004        46,710
     Granted                    100,000       $2.00         $2.00
     Exercised/Forfeited       (137,513)      $0.44         $0.44
                               --------
     Balance at
       September 30, 2005
       And 2006                   9,197      $24.50        $24.50
                               ========
</TABLE>


The  following  table  summarizes information  about  fixed-price
stock options at September 30, 2006:

<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      2.0 years    $25.00      100,000       $25.00
 $1.31           2,600      2.0 years    $26.20        2,600       $26.20
               -------                               -------
                 9,197                                 9,197
               =======                               =======
</TABLE>


NOTE 8. 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
leases  for years ending subsequent to September 30, 2006 are  as
follows:

          2007    $     74,400
          2008          74,400
          2009          18,600
                  ------------
                  $    167,400
                  ============


Rent expense for the years ended September 30, 2006 and 2005  was
$85,988 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-


                              F-21
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

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  400,000 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 510,000 shares of common stock  on  or
before  January 15, 2005, and should it not due so an  additional
25,000 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 charged $1,181,191
to  operations for the difference between the settlement recorded
during  2004  and  the total judgment awarded. 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.

During the year ended September 30, 2006, the Company recorded an
additional $43,770 of post judgment interest.

During  April 2006 the Company settled the litigation by agreeing
to the following:

A cash payment of $300,000
29 monthly payments of $31,667
The  issuance of 15,000,000 common shares subject to registration
rights

The  holders of the shares shall have the right beginning on  the
effective date of the registration statement for a period of  two
years to require the Company at the Company's discretion to  sell
the  shares  back  to  the Company for $200,000  or  require  the
Company  to  issue  additional shares so that the  value  of  the
shares held by the holders is $200,000.

As a result of the settlement the Company's obligation related to
the litigation was reduced by $782,848 which has been recorded as
a gain on the settlement date.

In  December 2005, the Company filed litigation against CVS, Inc.
The  Company sold CVS in excess of $140,000 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 9. CONCENTRATIONS

During  years  ended  September 30, 2006 and  2005,  the  Company
derived  substantially all of its revenue from the  sale  of  one
product,  SNORENZ. Credit is granted to their  customers  in  the


                              F-22
<PAGE>


                          Med Gen, Inc.
                  Notes to Financial Statements
                       September 30, 2006

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 $323,474 in 2005. They represented
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  $91,715  in 2005. They represented  11%  of  the
annual sales volume.

During  2006  the Company made sales aggregating $42,033,  34,876
and  $28,248 to three customers which represent in excess of  10%
of the annual sales volume.

NOTE 10. SUBSEQUENT EVENTS

From  October  1,  2006 through December 29,  2006,  the  Company
issued  55,300,000  shares  of  common  stock  for  services  and
2,161,381  shares  of common stock related to the  conversion  of
convertible notes.



















                              F-23