UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the
Fiscal Year Ended December 31, 2008





 ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
transition period from _____ to _____





Commission
file number 005-82677




IMMUNOSYN
CORPORATION


(Exact
Name of Registrant as Specified in its Charter)





Delaware
              20-5322896(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer
                Identification
      No.)





4225
      Executive Square, Suite 260, La Jolla, CA 92037
            92037(Address
      of Principal Executive Offices)
            (Zip
      Code)





(888)
853-3663


(Registrant’s
Telephone Number, Including Area Code)




Securities
registered pursuant to Section 12(b) of the Act:  None




Securities
registered pursuant to Section 12(g) of the Act:  Common
Stock




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈ No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes  ̈ No x




Note—Checking the box above
will not relieve any registrant required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act from their obligations under those
Sections.




Indicate
by check mark if the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities 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  ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the Registrant’s knowledge, in definitive proxy or information
statements  incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.    ̈











Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of  “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):





Large
Accelerated Filer   ̈         Accelerated
Filer  x         Non-Accelerated
Filer   ̈         Smaller
reporting Company  x





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




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of
June 30, 2008 was approximately $140,434,214.




As of
March 12, 2009, the Company had 272,200,976 issued and outstanding shares of
Common Stock.




DOCUMENTS
INCORPORATED BY REFERENCE




The
following documents of the Issuer are incorporated by reference in this Report:
NONE





2




CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION




This
report includes “forward-looking statements” within the meaning of Section 27A
of the Securities Act, and Section 21E of the Exchange Act.  All
statements other than statements of  historical facts included in this
report, regarding the Company’s financial position, business
strategy,  plans and objectives, are forward-looking
statements.  Although the Company believes that the expectations
reflected in the forward-looking statements and the assumptions upon which such
forward-looking statements are based are reasonable, it can give no assurance
that such expectations and assumptions will prove to have been
correct.




In
addition, from time to time in the future, the Company may publish
“forward-looking statements” within the meaning of Section 27A of the Securities
Act, and Section 21E of the Exchange Act or make oral statements that constitute
forward-looking statements. These forward-looking statements may relate to such
matters as anticipated financial performance, future revenues or earnings,
business prospects, projected ventures, new products, anticipated market
performance, and similar matters.





The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company cautions readers that a variety of factors could cause the
Company’s actual results to differ materially from the anticipated results or
other expectations expressed in the Company’s forward-looking statements. These
risks and uncertainties, many of which are beyond the Company’s control,
include, but are not limited to: (i) the Company’s ability to raise financing to
fund its development; (ii) the effects of the economy on the Company’s ability
to find and maintain financing options and liquidity; (iii) general economic
conditions, both domestic and international; (iv) the Company’s ability to
obtain FDA and other regulatory approvals for SF-1019 and other products it my
acquire or develop; (v) competition from existing pharmaceutical, chemical and
biotech companies and other participants in the drug markets; (vi) legal
developments affecting the litigation experience of the Company, (vii) the
effectiveness of the Company’s efforts to hire qualified personnel, (viii)
changes in regulatory requirements which could affect the cost and method of
doing business, (ix) the Company’s ability to achieve its business plan, (x)
corporate governance issues, (xi) credit, operations, legal and regulatory
risks; and (xii) risks related to foreign operations. There can be no assurance
that the Company has correctly or completely identified and assessed all of the
factors affecting the Company’s business. The Company does not undertake any
obligation to publicly update or revise any forward-looking statements. See also
Item 1A – Risk Factors.





3




PART
I




Item
      1.
              Business.




About
Immunosyn Corporation; Background and History




Immunosyn
Corporation (“Immunosyn” or the “Company”) is a Delaware corporation
headquartered in La Jolla, California that owns an exclusive worldwide license
to market, distribute and sell a biopharmaceutical drug product, currently
referred to as SF-1019, for multiple uses including the treatment of any and all
diseases and pathological conditions, subject to receipt of appropriate
regulatory approval in each jurisdiction where SF-1019 will be
marketed.  Under the terms of its exclusive license, the Company is
further granted the rights to any improvement of SF-1019 and other compounds
which are developed under the same technology platform and which are chemically
similar to SF-1019.  The Company is in the development stage and, to
date, has no revenues from SF-1019 or otherwise.




The
exclusive license for SF-1019 has been granted to Immunosyn by Argyll
Biotechnologies, LLC (“Argyll Biotech”).  Argyll Biotech is a
closely-held Delaware limited liability company, headquartered in La Jolla,
California, that owns and controls worldwide rights to
SF-1019.  SF-1019 has not been approved for human use in any
jurisdiction.  Argyll Biotech is preparing to conduct clinical trials,
develop manufacturing protocols and, if possible, apply for regulatory approval
of SF-1019’s use.  Through a series of private investments, Argyll
Biotech and its affiliates and other persons have provided the funding to bring
SF-1019 from its inception to preliminary experimental
research.  Argyll Biotech intends to continue to manage and fund the
process for research, product development, clinical testing and regulatory
approval of SF-1019, including refinement for additional
uses.  SF-1019 is the first such product that Argyll Biotech hopes to
bring into the marketplace through these efforts.  Argyll Biotech
received 147,000,000 shares of Common Stock of the Company for its license fee
and is the Company’s largest shareholder




Immunosyn’s
primary asset is its exclusive worldwide license from Argyll Biotech to market,
distribute and sell SF-1019.  The Company also has the right of first
offer to enter into additional license agreements for uses of other compounds
which are not already covered under the existing license
agreement.  Argyll Biotech has also retained Professors Jonathan
Heeney, Professor of Comparative Pathology at University of Cambridge, England,
and Angus Dalgleish, Chair of Oncology, Gastroenterology and Endocrinology at
St. George’s Hospital Medical School, London, England, who are both well known
anti-viral researchers and immuno-pathology specialists, as its scientific
advisors.  We believe that the combined experience of all of Argyll
Biotech’s scientific advisory board members should provide substantial guidance
toward achieving approval of SF-1019 for marketing, distribution and sale to the
target market.




SF-1019
is an experimental extract from caprine (goat) serum containing a number of
unique lipopeptide molecules.  Argyll Biotech’s consultants first
identified the precursor to SF-1019 in the mid-1990’s, which they believed to be
an effective booster and modulator of an individual’s immune
system.  Subsequent research by such consultants revealed that the
precursor to SF-1019 had potential efficacy in the regulation and normalization
of an individual’s immune system response to multiple viral pathologies,
including Human Immunodeficiency Virus (“HIV”).  Argyll Biotech
intends to develop SF-1019 for treatment of diabetes and Chronic Inflammatory
Demyelinating Polyneuropathy (“CIDP”) first and then other diseases, and
Immunosyn will be responsible for commercializing SF-1019 when and as approval
for such treatment is procured.




Argyll
Biotech is responsible for all research and product development, clinical
testing, regulatory approvals, production and product support.  Argyll
Biotech anticipates that it will commence clinical trials and studies of SF-1019
and prepare and submit all filings required for regulatory approval of that
product for treatment of various diseases including CIDP, RSD, diabetic
neuropathy and diabetic ulcers, both in the United States and in other countries
that are targeted for distribution and sale of the product.  The
Company believes that a limited proof of concept trial began in Europe for
treatment of diabetic ulcers with SF-1019.  It is expected that
larger-scale independently-managed formal clinical trials will begin in the
second half of 2009.  The Company believes that a limited feasibility
clinical study of SF-1019 was conducted in the U.S. for treatment of CIDP and
RSD as well.  Argyll Biotech has also retained a consulting firm to
provide clinical and regulatory consulting services in support of the marketing
authorization process by the US FDA.




Immunosyn’s
exclusive license agreement with Argyll Biotech shall remain in full force and
effect for the later of 10 years from the date when SF-1019 is first
commercially sold or the date when the patent coverage for SF-1019 expires,
which in most jurisdictions is generally for twenty (20) years from the date of
filing.  Either party may terminate the agreement only on account of
an uncured material breach by the other party.  Immunosyn may
terminate the agreement if a non-rebuttable regulatory or patient safety issue
is raised.  Any fees paid prior to termination are
non-refundable.




Immunosyn
is a development stage company that was incorporated in August 2006 in order to
work as Argyll Biotech’s sales, marketing and distribution channel for
SF-1019.  Although Immunosyn cannot guarantee that Argyll Biotech will
successfully conclude development of SF-1019, Immunosyn is hopeful that its
initial product offering based on SF-1019 will be an effective and affordable
treatment for the maintenance and enhancement of the quality of life for
patients suffering from CIDP, diabetic neuropathy, diabetic ulcers and other
diseases.




4


As a
sales, marketing, and distribution channel for Argyll Biotech’s treatment for
various diseases including CIDP, diabetic neuropathy and diabetic ulcers,
Immunosyn’s primary business strategy is to build a sales and marketing force
and related resources so that if and when SF-1019 is approved for human use it
can be sold; and secondly, to increase awareness and acceptance of SF-1019 in
the CIDP and diabetes treatment communities.




Business




CIDP is a
neurological disorder characterized by slowly progressive weakness and a loss of
sensation in the legs and arms.  CIDP is more common in young adults,
and it affects men more than women.  Symptoms include tingling or
numbness (beginning in the toes and fingers); weakness of the arms and legs;
aching pain in the muscles; loss of deep tendon reflexes; fatigue; and abnormal
sensation.  CIDP is similar to Guillain-Barré-Strohl-Landry syndrome,
which appears suddenly and generally improves spontaneously.  Although
CIDP was once called “chronic Guillain-Barré syndrome,” it is now regarded as a
related, but distinct condition.  The course of CIDP varies widely
among individuals.  Some may have a bout of CIDP followed by
spontaneous recovery, while others may have many bouts with partial recovery in
between relapses.




Diabetes mellitus refers to a family of
diseases featuring high glucose levels caused by the body’s inability to produce
and/or utilize insulin.  According to National Diabetes Education
Program, the July 2008 estimate of prevalence or total number of cases of
diabetes in adults in the U.S. is 23.6 million, or 7.8 percent of the U.S.
population, including 5.7 million undiagnosed cases.  According to the
same source, it is estimated that an additional 1.6 million adults are diagnosed
with diabetes each year.  See http://www.ndep.nih.gov/diabetes/pubs/FS_GenSnapshot.pdf.





One of
the most severe complications of diabetes is lower-limb amputation, which is
caused by diabetic ulcers.  These ulcers form as a result of diabetic
neuropathy, or peripheral neuropathy, a nervous system disease evident in 60% of
diabetic patients (Caring For Diabetes Educational
Forum;  http://www.caringfordiabetes.com/T&P/MicroComplications/T_P_Neuropathy.cfm).  According
to the National Diabetes Education Program, diabetic neuropathy causes
micro-vascular damage that can result in loss of protective sensation in the
feet, poor circulation and foot ulcers.




According
to Diabetes Atlas, third edition © International Diabetes Federation, 2006 and
www.diabetes.niddk.nih.gov , globally, an approximated 246 million people have
diabetes mellitus, of which an estimated 50% have diabetic neuropathy (DN) and
one in six will develop a foot ulcer.




We
believe that SF-1019 is a new category of drug that may be characterized as an
“Immunomodulator.”  Many disease pathologies that affect individuals
are the result of an over-active immune system.  Specifically, when a
viral agent begins to adversely affect an individual’s cells, the immune system
frequently becomes overactive, which destroys the viral agent but also injures
surrounding healthy cell structures.  Other disease pathologies
suppress an individual’s immune system, which allows other diseases and agents
to kill healthy cells.  We believe that SF-1019 regulates an
individual’s immune system to prevent it from both over-reacting and
under-reacting to a viral invasion of an individual’s body systems.




We
believe that SF-1019 contains a number of unique lipopeptide molecules which
neutralize viral pathogens and their inhibitory properties by activation of a
cytokine system.  This, in turn, enhances an individual’s cell
mediated immunity and augments the individual’s humoral immune system by
eliminating negative inhibitory cytokine factors and eliminates pathogenic
free-floating organisms, while simultaneously sparing normal and healthy
cells.




Argyll
Biotech’s core objective is the continued development of SF-1019 and its
cognates and variants for treatment of multiple medical
conditions.  Rather than detract from its core proficiency, Argyll
Biotech’s founders and its scientific and advisory team elected to license the
marketing, distribution and sale of SF-1019 and other products to another
entity, whose strategy would be to target key markets and demographics for
treatment with SF-1019 and its cognates and variants.  The exclusive
license agreement between Argyll Biotech, as the licensor, and Immunosyn, as the
licensee, is a result of that decision.




The
Argyll Biotech License Agreement




The
Company is in the development stage and has only engaged in organizational and
fundraisingactivities to
date.  Its principal asset is the exclusive worldwide license with
Argyll Biotech.  The Company intends to develop its operations so that
it is in a position to market, distribute and sell SF-1019 as soon as
appropriate regulatory approvals are received by Argyll Biotech for
SF-1019.  The key terms of the exclusive license agreement with Argyll
Biotech are as follows:




5


Grant
of Rights




Argyll
Biotech has granted Immunosyn the exclusive worldwide right to market, sell,
distribute and promote SF-1019 in its current form for multiple uses including
the treatment of any and all diseases and pathological conditions, including
Chronic Inflammatory Demyelinating Polyneuropathy (CIDP), Diabetic Neuropathy
(DN) and diabetic ulcers (DU).  Argyll Biotech has also licensed its
trademarks to Immunosyn.  Immunosyn is further granted the rights to
any improvement of SF-1019 and other compounds, which are developed using the
same technology platform and which are chemically similar to
SF-1019.  Finally, during the first five years of the term of the
exclusive license agreement, Immunosyn has a right to enter into partnering
arrangements with Argyll Biotech for development of other novel drug treatment
products.




Development
and Regulatory Matters




Argyll
Biotech expects to commence clinical trials of SF-1019 both in the United States
and in selected other countries around the world and in connection therewith to
prepare and submit filings necessary to conduct clinical trials at least
initially for the treatment of one or more of CIDP, diabetic neuropathy and
diabetic ulcers in those countries that are targeted for distribution and sale
of the product.  After commencement of a clinical trial, Argyll
Biotech expects to provide periodic reports to Immunosyn documenting its efforts
toward procuring regulatory approval of SF-1019, as well as clinical budgets and
strategic plans for obtaining approval for sale of the product and thereafter
for each year during which development efforts are conducted.  Argyll
Biotech will remain responsible for preparation and implementation of the
clinical trials including trial protocols and regulatory activities, and for
costs associated with those activities.




Distribution
and Promotion




Immunosyn
will assume responsibility for the promotion and sale of SF-1019 for its
approved uses.  To accomplish this, Immunosyn expects to establish a
sales force and an order processing and distribution network for each country in
which Argyll Biotech receives appropriate regulatory approval for the sale of
SF-1019.  Immunosyn will also develop marketing plans for sales and
distribution of SF-1019 in each such country, although Argyll Biotech will
retain a right to participate in all marketing and promotion
activities.  Each party is responsible for its own costs associated
with these activities.




License
Fees




Immunosyn
issued 147,000,000 shares of its Common Stock to Argyll Biotech in 2006 which
Argyll Biotech has sold or expects to sell to raise funds for product
development and regulatory approval for SF-1019 and other uses.  The
license fee was earned when paid and there are no restrictions on the release or
use of the proceeds received by Argyll Biotech from the sale of Immunosyn’s
shares, and these proceeds may be used at Argyll Biotech’s sole discretion for
any purpose.  No refund will be owed by Argyll Biotech in the event
the cost of development and regulatory approval is substantially less than the
fee, nor are there any penalties owed by Argyll Biotech if it fails to complete
product development or obtain regulatory approval for its
distribution.




Payments
and Reports




Argyll
Biotech is not obligated to provide to Immunosyn an accounting for its use of
proceeds, nor does Immunosyn have any audit rights to inspect Argyll Biotech’s
use of the license proceeds.




Manufacture
and Supply




Argyll
Biotech retains responsibility for manufacturing and supplying all of
Immunosyn’s requirements of SF-1019.  Argyll Biotech and Immunosyn
have agreed that the purchase price of SF-1019 sold by Argyll Biotech to
Immunosyn will be forty percent (40%) of the gross sales price that Immunosyn
sells SF-1019 to a third party consumer for.  Argyll Biotech shall
also confirm through testing and other programs that the commercial quantities
of SF-1019 that it manufactures are fully compliant with all manufacturing and
laboratory standards applicable to drug products which are intended for use in
humans.




Intellectual
Property Ownership




Argyll
Biotech retains ownership of its intellectual property either through assignment
or exclusive license and, under the exclusive license agreement with Immunosyn,
ownership of including intellectual property jointly-developed by the
parties.  Argyll Biotech will take reasonable and necessary steps to
protect its intellectual property from third-party infringement, and will defend
Immunosyn against charges of infringement that refer, relate or pertain to
Immunosyn’s marketing, sale and distribution of SF-1019.




Publication
and Confidentiality




Argyll
Biotech and Immunosyn have agreed to share information on scientific and medical
reports relating to the business, operations, research and development and
clinical trial results of SF-1019.




6


Recall
and Indemnification




The
exclusive worldwide license agreement provides that Argyll Biotech is to retain
responsibility for costs and activities relating to any recall of SF-1019, and
will defend, indemnify and hold Immunosyn harmless for, from and against damages
associated therewith.




Term
and Termination




The
exclusive worldwide license agreement provides that, unless sooner terminated,
it is to remain in full force and effect for the later of 10 years from the date
when SF-1019 is first commercially sold or the date when the patent coverage for
SF-1019 expires in any country, which in most jurisdictions is twenty (20) years
from the date of filing of a patent application on a country-by-country
basis.  Either party may terminate the agreement only on account of an
uncured material breach by the other party.  Immunosyn may terminate
the agreement if a non-rebuttable regulatory or patient safety issue is raised,
in which event all remaining license fee obligations will immediately be
cancelled.





Government
Regulations




The
United States Federal Food and Drug Administration (the “FDA”) and comparable
regulatory agencies in foreign countries, as well as drug regulators in state
and local jurisdictions, impose substantial requirements upon clinical
development, manufacture and marketing of pharmaceutical
products.  These agencies and other federal, state and local entities
regulate research and development activities and the human testing, manufacture,
quality control, storage, records and reports, conditions of approval and
marketing, including claims, labeling, and advertising and promotion of Argyll
Biotech’s SF-1019, as well as any other products that either Argyll Biotech or
Immunosyn may independently develop or may otherwise license for marketing and
distribution.




The
process required by the FDA under the drug provisions of the United States Food,
Drug, and Cosmetic Act before any initial products may be marketed in the United
States generally involves the following:




·
            Preclinical
      laboratory and animal tests;




·
            Submission
      of an Investigational New Drug Application (“IND”), which must become
      effective before human clinical trials may
  begin;




·
            Adequate
      and well-controlled human clinical trials to provide substantial evidence
      of the safety and efficacy of the product candidate for its intended
      use;




·
            Submission
      to the FDA of a New Drug Application (“NDA”);
  and




·
            FDA
      review and approval of a NDA and final product
  labeling.




The
testing and approval process requires substantial time.  Preclinical
tests include laboratory evaluation of the product candidate, its chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of the product candidate.  Certain preclinical
tests must be conducted in compliance with good laboratory practice
regulations.  Failure to conduct preclinical studies not in accord
with good laboratory practice regulations can, in some circumstances, lead the
FDA to require such studies to be replicated.  Often, long-term
preclinical studies required for NDA approval are conducted while clinical
studies are ongoing.




Argyll
Biotech must submit the results of preclinical tests, together with
manufacturing information and analytical data and a complete clinical
investigational plan, to the FDA as part of an IND, which must become effective
before any clinical trials can begin in the United States.  Analogous
requirements are in place in the countries of the European Union and in the
United Kingdom, where Argyll Biotech is preparing to conduct preclinical and
clinical studies.  If the FDA or its foreign equivalent raises
questions about an IND within a certain period of time after its submission,
that regulatory body may impose a clinical hold, thereby delaying the initiation
of the study.  In such a case, the IND sponsor and the regulatory
authority must resolve any outstanding scientific questions before clinical
trials can begin.  All clinical trials must be conducted under the
supervision of a qualified investigator in accordance with good clinical
practice regulations for the protection of human subjects.  These
regulations include the requirement that all subjects be provided with adequate
information for informed consent.  Further, an independent
Institutional Review Board (“IRB”) must review and approve any clinical
investigational plan prior to study initiation.  The IRB also
continues to monitor the study and must be kept aware of the study’s progress,
particularly as to adverse events and changes in the research
program.  Certain adverse events that may occur in an on-going
clinical trial must be reported promptly to the FDA and progress reports
detailing the status and results of the clinical trials, and any new information
of which the sponsor becomes aware, must be submitted at least annually to the
FDA or its foreign equivalent.




7




Clinical
trials are typically conducted in three sequential phases that may
overlap:




·
              Phase
      I:  The drug is initially introduced into healthy human subjects
      or patients and tested for safety, dosage tolerance, absorption,
      metabolism, distribution and
excretion.
  ·
              Phase
      II:  The drug is studied in a limited patient population to
      identify possible adverse effects and safety risks, to determine the
      efficacy of the product for specific targeted diseases and to determine
      dosage tolerance and optimal
dosage.
  ·
              Phase
      III:  When Phase II evaluations demonstrate that a dosage range
      of the drug is effective and has an acceptable safety profile, Phase III
      trials are undertaken to further evaluate dosage and clinical efficacy and
      to further test for safety in an expanded patient population, often at
      geographically dispersed clinical study
sites.


Concurrent
with preclinical studies and clinical trials, Argyll Biotech must develop
information about the chemistry and physical characteristics of SF-1019 and must
finalize a process for manufacturing this product in accordance with current
good manufacturing practice (“cGMP”) requirements.  The manufacturing
process must be capable of consistently producing quality batches of SF-1019 and
Argyll Biotech must develop validated methods for testing the identity, quality,
purity and potency of the drug candidate.  Additionally, appropriate
packaging must be selected and tested and chemistry stability studies must be
conducted to demonstrate that the SF-1019 product does not undergo unacceptable
deterioration over its shelf life.




In August
2008, the Company announced that it had elected to delay pursuit of agreements
for the administration and distribution of SF-1019 in the State of
Utah.  In addition, the Company subsequently elected to delay the
pursuit of agreements for the administration and distribution of SF-1019 to all
populations in Malaysia.





In
November 2008, a physician submitted a physician-sponsored IND application to
the US Food and Drug Administration for a Phase II clinical trial for Multiple
Sclerosis utilizing SF-1019.  If the submitting doctor is successful
in gaining approval for his clinical trial, Argyll Biotech intends to supply
SF-1019 at no cost to the physician for use in the trial.




We
understand that Argyll Biotech intends to submit the results of SF-1019 product
development, pre-clinical studies and clinical studies to the FDA or its foreign
equivalent as part of an NDA for approval of the marketing and commercial
shipment of the product.  The appropriate regulatory authority will
review each NDA submitted and may request additional information, rather than
accept the NDA for filing.  In this event, the application must be
resubmitted with additional information.  The resubmitted application
is also subject to review before the regulatory body accepts it for
filing.  Once the NDA is accepted, the regulatory agency begins an
in-depth review of the NDA.  Regulatory agencies have substantial
discretion in the approval process and may disagree with Argyll Biotech’s
interpretation of the data submitted in the NDA.  The review process
may be significantly extended by the regulatory agency’s requests for additional
information or clarification regarding information already
provided.  Also, as part of the review, the regulatory agency may
refer the application to an appropriate advisory committee, typically a panel of
clinicians, for review, evaluation and a
recommendation.  Manufacturing establishments also are often subject
to inspections prior to NDA approval to assure compliance with GMPs and with
manufacturing commitments made in relevant marketing applications.




In the
United States, under the Prescription Drug User Fee Act (“PDUFA”), submission of
an NDA with clinical data requires payment of a user fee.  For fiscal
year 2008, that fee was $1,178,000 for applications requiring clinical
data.  Similar fees and requirements are in place in foreign
jurisdictions.  In return, the relevant regulatory agencies assign
time goals for reviewing NDAs prior to issuing a “complete response” in which an
NDA may be approved, or denied if the regulatory agency’s criteria are not
satisfied, or require additional clinical data.  Even if these data
are submitted, the regulatory agency may ultimately decide that the NDA does not
satisfy the criteria for approval.  If the regulatory agency approves
the NDA, the product becomes available for physicians to prescribe, but even
after approval, a regulatory agency may later decide to withdraw product
approval if compliance with regulatory standards is not maintained or if safety
problems occur after the product reaches the market.  A regulatory
agency may also require post-marketing studies, known as Phase IV studies, as a
condition to approval to develop additional information regarding the safety of
a product.  In addition, a regulatory agency can require surveillance
programs to monitor approved products that have been commercialized, and such
agencies have the power to require changes in labeling or to prevent further
marketing of a product based on the results of these post-marketing
programs.




Regulatory
agencies also regulate drug labeling and promotion activities.  As
marketing and distribution will be the primary and substantial business function
of Immunosyn, the Company anticipates that it will experience a significant
burden as a result of these regulatory activities.  Regulatory
agencies actively enforce regulations prohibiting the marketing of products for
unapproved or “off-label” uses.  Further regulations on certain
pharmaceutical marketing practices are imposed in the United States by the
United States Federal Trade Commission and Office of the Inspector General of
the United States Department of Health and Human
Services.  Reimbursement practices and HHS coverage of medicine will
be important to the success of procurement and utilization of Argyll Biotech’s
SF-1019 and other products and product candidates, if they are ever approved for
marketing.




8


European
Regulations




The initial preclinical trials and
clinical studies of SF-1019 are expected to be conducted by Argyll Biotech under
European auspices and jurisdiction.  Prior regulatory approval in order to
initiate Phase I (human volunteer) studies is required in many of the European
Union member states.  Following successful completion of Phase I studies,
data must be submitted in a summarized format to the applicable regulatory
authority in the member state in respect of applications for the conduct of
later Phase II and Phase III studies.  It is expected that the first
submission for clinical trial approval will be made in the United Kingdom to the
Medicines and Healthcare products Regulatory Agency (MHRA) which acts on behalf
of the European Medicines Agency (EMEA) to ensure uniformity amongst the member
states and that the first set of clinical trials will take place under their
jurisdiction. European Union regulatory authorities typically are required to
raise objections within one to three months after receipt of a proposal for a
study, but they often have a right to extend this review period at their
discretion.  In addition, one or more independent ethics committees, which
typically operate similarly to an Institutional Review Board in the United
States, will review the research proposal, prior to authorizing its
commencement.




In
order to gain marketing approval in the European Union, Argyll Biotech must
submit a comprehensive dossier to the relevant authority for review, which, in
the European Union, is known as a Marketing Authorization Application
(“MAA”).  The format of the MAA is specific and is laid out by each
applicable regulatory authority, although in general it will contain information
on the quality of the chemistry, manufacturing and pharmaceutical aspects of the
product as well as non-clinical and clinical data.




For many products, the European Union
provides a choice of a centralized or decentralized authorization route. 
Under the centralized route, one marketing authorization is granted for the
entire European Union, while under the decentralized route, a series of national
marketing authorizations are granted.  In the centralized system, an
application will be reviewed by the members of the Committee for Proprietary
Medicinal Products (“CPMP”), on behalf of the European Medicines Agency
(“EMEA”). The EMEA will, based upon the review of the CPMP, provide an
opinion to the European Commission on the safety, quality and efficacy of the
product.  The decision to grant or refuse an authorization is made by the
European Commission.  In circumstances where use of the centralized route
is not mandatory, Argyll Biotech can choose to use the decentralized route, in
which case an application will be reviewed by each member state’s regulatory
agency.  If a regulatory agency grants authorization, other member states’
regulatory agencies and authorities are asked to “mutually recognize” the
authorization granted by the first member state’s regulatory
agency.




Failure to comply with the terms of the
license after obtaining marketing approval can, among other things, result in
the suspension of regulatory approval, as well as possible civil and criminal
sanctions.  The European Union will require Argyll Biotech to participate
in the "Yellow Card" system which enables the rapid and efficient reporting of
adverse events and side effects. If any major events are reported, this may
result in the license being withdrawn.  Regulators have the authority
if they fail to comply with the license to revoke, suspend or withdraw approvals
of previously-approved products and can also prevent companies and individuals
from participating in the drug approval process. They are permitted to seize
products which are in breach of the license and close manufacturing plants not
operating in conformity with the licensed manufacturing agreements, storage, or
distribution protocols and stop the shipment of such products.




Pricing
Controls




Before a
pharmaceutical product may be marketed and sold in certain foreign countries the
proposed pricing for the product must be approved.  The requirements
governing product pricing vary widely from country to country and can be
implemented disparately at a national level.




The
European Union generally provides options for its member states to control the
prices of medicinal products for human use.  A member state may
approve a specific price for the medicinal product or it may instead adopt a
system of direct or indirect controls on the profitability of the company
placing the medicinal product on the market.  For example, the
regulation of prices of pharmaceuticals in the United Kingdom is generally
designed to provide controls on the overall profits that pharmaceutical
companies may derive from their sales to the United Kingdom National Health
Service.  The United Kingdom system is generally based on
profitability targets or limits for individual companies which are normally
assessed as a return on capital employed by the company in servicing the
National Health Service market, comparing capital employed and
profits.




In
comparison, Italy generally establishes prices for pharmaceuticals based on a
price monitoring system.  The reference price is the European average
price calculated on the basis of the prices in four reference markets: France,
Spain, Germany and the United Kingdom.  Italy generally establishes
the price of medicines belonging to the same therapeutic class on the lowest
price for a medicine belonging to that category.  Spain generally
establishes the selling price for new pharmaceuticals based on the prime cost,
plus a profit margin within a range established each year by the Spanish
Commission for Economic Affairs.




Third
Party Reimbursements




In the
United States, European Union, and elsewhere, sales of therapeutic and other
pharmaceutical products are dependent in part on the availability and adequacy
of reimbursement to the consumer or the health care provider from third party
payors, such as government and private insurance plans.  Third party
payors are increasingly challenging the prices charged for medical products and
services and new products that are more expensive than existing treatments may
have difficulty finding ready acceptance unless there is a clear therapeutic
benefit.




9


Patent
Restoration and Marketing Activity




The Drug
Price Competition and Patent Term Restoration Act of 1984, known as the
Hatch-Waxman Amendments (“Hatch-Waxman”), permits the FDA to approve an
abbreviated NDA for generic versions of innovator drugs, as well as NDAs with
less original clinical data.  Hatch-Waxman also provides certain
patent restoration and exclusivity protections to innovator drug
manufacturers.




The
abbreviated NDA process permits competitor companies to obtain marketing
approval for a drug with the same active ingredient for the same uses as an
innovator drug but does not require the conduct and submission of clinical
studies demonstrating safety and efficacy for that product.  Instead
of safety and efficacy data, a competitor could make a copy of any of Argyll
Biotech’s drugs and only submit data demonstrating that the copy is a
bioequivalent to the SF-1019 product, which may allow the competitor to obtain
marketing approval from the FDA.




Hatch-Waxman
also provides competitors with the ability to market copies of innovator
products with the submission of significantly less clinical data outside of the
abbreviated NDA context.  Such applications are known as “505(b)(2)
NDAs,” or “paper NDAs.”  They may rely on clinical investigations not
conducted by or for that applicant and for which the applicant has not obtained
a right of reference or use.  Such products are subject to the same
patent notification procedures as for abbreviated NDAs.




Hatch-Waxman
also provides for the restoration of a portion of a product’s United States
patent term that is lost during a drug’s clinical development and NDA review by
the FDA, and further provides for the statutory protection, known as
exclusivity, against the FDA’s approval or acceptance of certain competitor
applications.  Patent term restoration can return up to five years of
a patent term for a patent that covers a new product or its use to compensate
for time lost during product development and the regulatory review
process.  This period is generally one-half the time between the
effective date of an IND and the submission date of an NDA, plus the time
between the submission date of the NDA and the approval of that application,
subject to a maximum extension of five years.  No extension can extend
the patent life beyond fourteen years after the drug approval
date.  The application for patent term restoration is subject to
approval by the United States Patent and Trademark Office in conjunction with
the FDA.




Hatch-Waxman
also provides for differing periods of statutory protection for new drugs
approved under an NDA.  Among the types of exclusivity are those for a
new chemical entity and those for a new formulation or a new indication for a
previously-approved drug.  Marketing exclusivity in the United States
for the type of product that Immunosyn intends to market and distribute, if
granted by the FDA, would prohibit that agency from approving the application of
another company that submits an abbreviated NDA or a paper NDA for five
years.  This marketing exclusivity protection does not prohibit the
FDA from approving a full NDA.




Competition




Competition
in the biotechnology industry is intense.  Potential competitors in
the United States and Europe are numerous and include pharmaceutical, chemical
and biotechnology companies, most of which have substantially greater capital
resources, marketing experience, research and development staffs and facilities
than Immunosyn.  Among others, Eli Lilly & Company and Wyeth
Pharmaceuticals, Inc. market antidepressants, and Pfizer, Inc. markets
anticonvulsants that are prescribed for treating diabetic
neuropathy.  In addition, Daval International Limited, a United
Kingdom company (“Daval”), is also testing a caprine serum product, called
Aimspro, for treating multiple sclerosis and other neurological
disorders.  GTC Biotherapeutics, Inc., a Nasdaq company, develops,
supplies and commercializes therapeutic proteins produced through transgenic
animal technology.  GTC’s clot busting biotherapeutic, ATyrn®, produced in
goats, was recently approved by the FDA for the prevention of peri-operative and
peri-partum thromboembolic events in hereditary antithrombin deficient
patients.




Argyll
Biotech intends to seek to limit potential sources of competition by developing
products that are eligible for orphan drug designation and approval or other
forms of protection.  Specifically, Argyll Biotech intends to target
CIDP as a potential candidate for treatment with SF-1019 and to seek orphan drug
status for SF-1019 in the treatment of CIDP.  CIDP is listed by the
National Organization for Rare Disorders ( http://www.rarediseases.org /) as an
orphan disease with less than 200,000 cases in the United States.  The
only available treatment is IVIG (intravenous gamma globulin) at a cost of
$2,000-$6,000 per month depending on dosage.  The mechanism of action
of IVIG is to block release of inflammatory cytokines directly and therefore
lasts only about 1-2 weeks.  However, due to their substantially
greater resources, competitors may develop similar technologies and products
more rapidly or may market them more effectively.  Competing
technologies or products may be more effective than any of those that are being
or will be developed by Argyll Biotech.  In addition, existing
competitors enjoy the strategic advantages of existing brand recognition,
marketing and distribution networks, thus enabling them to introduce new
products much more rapidly than Immunosyn.




10


Employees




As of
December 31, 2008, we had two executive officers, Mr. Stephen D. Ferrone,
President and CEO, and Mr. Douglas McClain, Jr., our Chief Financial and
Accounting Officer and Corporate Secretary.  Stephen D. Ferrone is
currently our only full-time employee.   The Company expects to hire
additional executive staff and employees, including potentially a full-time CFO,
as needed.




Where You
Can Find More Information





Our annual report on Form
10-K,  quarterly reports on Form 10-Q,  current reports on
Form 8-K  and all amendments to those reports are available without
charge from us on our website at http://www.immunosyn.com,  as
soon as reasonably practicable following the time they are filed with or
furnished to the SEC. Reports filed with the SEC may also be viewed at www.sec.gov or
obtained at the SEC Public Reference Room in Washington, D.C. Information
regarding the operation of the Public Reference Room may be obtained by calling
the SEC at 1-800-SEC-0330.




Item
      1A.
                Risk
      Factors




The
risks and uncertainties described below are not the only ones we may
face.  The following risks, together with additional risks and
uncertainties not currently known to us or that we currently deem immaterial,
could impair our business, financial condition and results of
operation.




Risks
Related to the Company’s Business




Our
independent auditor has issued a going concern opinion which raises doubts about
our ability to continue as a going concern.




Our
independent auditor has expressed doubt about our ability to continue as a going
concern.  Note 2 to our financial statements includes an explanatory
paragraph expressing doubt about our ability to continue as a going
concern.  Our ability to continue as a going concern is dependent on
our ability to implement our business plan, raise capital and generate
revenues.  Since inception, we have borrowed $893,663from Argyll
Equities, LLC and Argyll Biotech who together own approximately 60% of
Immunosyn’s Common Stock.  These advances are unsecured and are to be
repaid on demand.  In addition, the Company had accounts payable and
accrued expenses of $320,352 and $14,268, respectively, as of December 31,
2008.




As of
December 31, 2008, Immunosyn had an accumulated deficit of $1,934,939 and a
working capital deficit of $1,219,881 which is considered insufficient to fund
operations over the next 12 months.




Immunosyn
or Argyll Biotech may not be able to secure financing, which in turn could
affect Immunosyn’s and Argyll Biotech’s respective abilities to operate as a
going concern.




As of
December 31, 2008, Argyll Biotech had an accumulated deficit of approximately
$1,722,504 and a working capital deficit of approximately
$1,331,497.  Argyll Biotech does not anticipate any revenues in the
foreseeable future but continues to incur significant losses from
operations.  This raises substantial doubt about Argyll Biotech’s
ability to continue as a going concern.  Argyll will require
substantial additional financing to bring SF-1019 to market.  If
adequate financing is not available to Argyll Biotech, it may be required to
delay, scale back or eliminate some of its research and development programs or
the proposed clinical trials of SF-1019, to relinquish rights to certain
technologies or products or to license third parties to commercialize
technologies and products that Immunosyn might otherwise seek to
license.  Argyll Biotech’s inability to obtain financing, if required,
would have a material adverse effect on the value of Immunosyn’s exclusive
license and Immunosyn’s ability to develop its operations and implement its
business plan.




Argyll
Biotech and Immunosyn have no operating history, which makes it impossible to
evaluate their business and to predict any future operating
results.




To date,
Immunosyn’s founders and Argyll Biotech have been primarily engaged in
organizational and fundraising
activities, including obtaining various consulting agreements for the
development of products and technologies and developing and testing
products.  Immunosyn has not generated any revenues to date and does
not anticipate generating any revenues until such time as SF-1019 is approved
for distribution by applicable regulatory authorities.  Accordingly,
neither Argyll Biotech nor the Company has any operating history upon which an
evaluation of their performance and prospects can be made.




Immunosyn
expects to incur substantial losses for the foreseeable future and may never
achieve profitability.




Immunosyn
anticipates that it will continue to incur significant operating losses for the
foreseeable future.  We may never generate revenues or achieve
profitability and, if we ever achieve profitability, we may not be able to
maintain profitability.




11


Immunosyn
and Argyll Biotech have no experience in completing development, obtaining
regulatory approval or marketing a novel biopharmaceutical product and, to be
successful, both organizations will need qualified personnel to complete
development, successfully complete trials and launch SF-1019 in the
marketplace.




Both
Argyll Biotech and Immunosyn are recently formed entities and, consequently,
lack the requisite personnel, facilities, equipment or experience to execute
their product development, testing, regulatory approval and marketing
objectives.  Argyll Biotech will be required to hire additional
qualified scientific and technical personnel as well as personnel with expertise
in clinical testing and government regulation, to expand various research and
development programs and to pursue product development, regulatory approval and
marketing plans.  Immunosyn will also have to hire marketing and
administrative personnel to promote its presence in the portion of the medical
community that treats maladies associated with CIDP and
diabetes.  There is intense competition for qualified personnel in the
areas of Argyll Biotech’s and the Company’s respective activities, and there can
be no assurances that Argyll Biotech or the Company will be able to attract and
retain the qualified personnel necessary for the development of its and their
respective businesses.




The
Company and Argyll Biotech face competition for qualified individuals from
numerous pharmaceutical and biotechnology companies, universities and research
institutions.  The failure to attract and retain key scientific,
marketing and technical personnel would have a material adverse effect on the
development of the Company’s and Argyll Biotech’s respective businesses and our
and their abilities to develop, market and sell products.




The
Company may not be successful in identifying and attracting executive officers,
and even if it were to do so, it may not be successful in retaining such
individuals.




The
Company intends to identify and attract individuals to fill permanent key
executive positions.  Based on its current cash balance, management
believes the Company cannot attract individuals to fill permanent key management
positions and cannot build its operations.  There is intense
competition of qualified personnel in the Company’s field and there can be no
assurances that the Company will be able to attract and retain the qualified
personnel necessary for the development of its business.  Instead, the
Company may chose to retain executives with other backgrounds, including persons
previously or currently affiliated with its affiliates, which could have a
material adverse effect on the development of the Company’s
business.  The failure to attract and retain executive officers would
have a material adverse effect on the development of the Company’s
business.




The
Company and its affiliates, including Argyll Biotech, are recipients of several
subpoenas issued by the United States Securities and Exchange Commission to
investigate their business practices and the offering of investments in the
Company’s predecessor.




Pursuant
to a subpoena dated January 20, 2006 issued by the Securities and Exchange
Commission (“SEC”) to an affiliate of Argyll Biotech in proceedings captioned In
the Matter of Directors Financial Group, Ltd. and In The Matter of Prime Bank
Securities, and pursuant to subpoenas issued by the SEC to affiliates of Argyll
Biotech on March 30, 2006 and to Immunosyn on December 15, 2006 in a proceeding
captioned In The Matter of The Argyll Group, LLC, the Company and its affiliates
have been asked to produce all documents concerning a wide variety of topics
including many related directly to a prior licensee of SF-1019, Nurovysn Merger
Corporation, and the Company.  Pursuant to a third subpoena, dated
December 15, 2006, issued by the SEC to the Company, the Company has been asked
to produce documents concerning private placements of the Company’s stock and
other matters disclosed in this report.  The Company and Argyll
Biotech’s affiliates actively cooperated with the SEC and produced documents
responsive to these subpoenas, completing their responses in early August
2007.  The Directors Financial Group matter was resolved in June 2006
through a settlement between the SEC and the parties to the proceeding and,
accordingly, Immunosyn will not be required to respond further to that
subpoena.  The Company has had no further communication with the SEC
regarding the subpoenas since January 2007.  Although Immunosyn and
its affiliates believe they have complied with the SEC’s subpoenas, there can be
no assurance that the Company and its affiliates will not receive additional
subpoenas from the SEC or be found liable for one or more violations of law
which could expose the Company and its affiliates, including Argyll Biotech, to
liability for fines and penalties, as well as injunctive or other sanctions that
might prohibit or restrict the Company’s or Argyll Biotech’s ability to proceed
with financing its operations.  Even if the Company and its affiliates
are fully in compliance with all of their legal obligations, the existence of
these proceedings may delay or otherwise negatively impact their ability to
conduct their operations.  Furthermore, the existence of these
proceedings may discourage future investors from acquiring the securities of the
Company or Argyll Biotech.




Litigation
involving Argyll Biotech and its research scientists could have an adverse
effect on the development of SF-1019 and the Company.





On or
about July 27, 2006, Daval International Ltd. filed suit in the High Court of
Justice, Chancery Division in London, England against Argyll Biotech and five of
Argyll Biotech’s research scientists and others, including Douglas McClain, Sr.,
seeking an injunction and damages or an account of profits based on allegations
of breach by the scientists and Mr. McClain of confidentiality agreements with
Daval, breaches by such persons of their fiduciary duties and conspiracy by
Argyll Biotech and certain of its shareholders to wrongfully disclose and use
Daval’s alleged trade secrets.  These proceedings do not allege
infringement of any Daval patent whether by Argyll Biotech or any of the other
defendants.  Argyll Biotech has filed its defenses and continues to
investigate the merits of the suit and the basis of its defenses including,
among other grounds, that one of the active ingredients in SF-1019 disclosed in
Argyll Biotech’s 603 Application is based on independent research by Argyll
Biotech’s research scientists, and the method of producing SF-1019 is materially
different from Daval’s process.  The action had been listed for trial
in the UK in January 2009 but, in December 2008, the High Court in London
ordered that the trial be rescheduled for a later date likely to be late 2009 or
early 2010.  Immunosyn is not involved in this
litigation.  Even if Daval’s claims are found to have no merit, these
proceedings may delay or otherwise negatively impact Argyll Biotech’s ability to
conduct its operations, which could have a negative impact on the development of
SF-1019, which would adversely affect the Company.





12


SF-1019
has not been approved for any human use nor for treatment of any particular
disease, and such approval may never be obtained.




The
Company is entirely dependent upon Argyll Biotech’s sole experimental drug,
SF-1019, which has not been tested in any clinical trials.  Argyll
Biotech is the assignee of a number of issued patents and pending patent
applications filed in selected countries around the world.  Argyll
Biotech has no issued patent on SF-1019 and the rights which Argyll Biotech has
received from its pending patents and patent applications may not offer
sufficient protection to allow it to manufacture, market and/or sell its
products.  Argyll Biotech has not received regulatory approval of
SF-1019’s use in clinical trials.  Argyll Biotech and the Company
cannot guarantee that SF-1019 will ever receive regulatory approval for the uses
for which it may be licensed to Immunosyn, namely, treatment of various diseases
including, without limitation, CIDP, diabetic neuropathy and diabetic
ulcers.  No clinical trials have been conducted anywhere and following
commencement of any clinical trials, completion and evaluation of those trials
may not occur or a substantial period of time may elapse before Immunosyn has a
product that may be sold and distributed for human use.




Even if a
new drug product is well along the path of a clinical trial and the trial is
close to completion, regulatory authorities have the ability to shut down any
trials due to safety, efficacy or other concerns; to request additional trials
or data to verify results; or to force any portion or all of a trial to be
repeated for any number of reasons.  Any such action by the regulatory
authorities or any delay of a clinical trial could materially and adversely
affect the Company’s exclusive license from Argyll Biotech.  Even if
Argyll Biotech is successful in bringing SF-1019 into a clinical trial for
treatment of various diseases including, without limitation, CIDP, diabetic
neuropathy or diabetic ulcers, there can be no assurances that those trials will
successfully demonstrate that SF-1019 is efficacious against various diseases
including, without limitation, CIDP, diabetic neuropathy or diabetic
ulcers.  Unless and until the appropriate regulatory authority
provides a final approval for the use of SF-1019 for treating various diseases
including, without limitation, CIDP, diabetic neuropathy or diabetic ulcers, the
licensed rights will be of no value.




Immunosyn
has been informed that Argyll Biotech is implementing controls to prevent
unregulated use of SF-1019 but if Argyll Biotech is unable to do so or the FDA
takes any action to prevent the export or experimental use of unapproved drugs
such as SF-1019, the Company’s licensed rights will be of diminished
value.




Prior to
Argyll Biotech’s development of SF-1019, caprine serum had been the subject of
unregulated use by parties unrelated to Argyll Biotech and the
Company.  In 2007, the Company learned that research samples of
SF-1019 have been used by several individuals in the United States and Mexico,
and such uses have been publicized as “testimonials” on a shareholder’s web
site.  To the extent unapproved research samples of SF-1019 have been
exported from the United States or used in the United States, the FDA may issue
cease and desist letters and take other action to prevent any further export,
use or promotion within the United States although no such letters or action
have been received or taken to date.  Such actions by the FDA, if any,
may delay or affect Argyll Biotech’s ability to obtain FDA approval for SF-1019
and will have a material adverse effect on the Company’s exclusive license from
Argyll Biotech.




The
Company has been informed that Argyll Biotech has taken steps to prevent
distribution or export of SF-1019 for unapproved human use in any country,
including the United States.  In addition, the Company has informed
all of its shareholders to discontinue all further promotion of SF-1019 that
does not comply with FDA regulations.  The Company’s Board of
Directors has assumed responsibility for coordinating these controls with Argyll
Biotech and monitoring their implementation. However,
there can be no assurance that the Company or Argyll Biotech will be able to
effectively monitor and control the activities of third-party shareholders of
the Company.




The
Company depends on Argyll Biotech’s ongoing research and growing intellectual
property portfolio to develop and protect technologies and
products.




Argyll
Biotech is developing pharmaceutical compositions directed to a new class of
biological response modifiers it refers to as immune cell proliferating factors
(“ICPF”).  These factors, derived from mammalian cells, have shown
preliminary promise in laboratory testing by stimulating the immune system of
otherwise healthy, but infected test animals.  SF-1019 is believed by
Argyll Biotech to contain one or more such factors and Argyll Biotech is
currently performing research to confirm this.  Argyll Biotech is working
closely with one of the original developers of ICPF therapy, Professor Kenneth
Willeford, of Mississippi State University (“MSU”).  Dr. Willeford is
a named inventor of a number of Argyll Biotech’s pending patent applications,
all of which are exclusively licensed by MSU to Argyll Biotech.  US
Patent Application No. 10/825,603 (the “603 Application”), entitled “Prophylactic and therapeutic
benefits of a new class of immune stimulating peptides ,” has recently
been allowed by the United States Patent and Trademark Office, and issued in
April 2008.




13


Argyll
Biotech has transferred its worldwide rights to market and distribute SF-1019 to
Immunosyn by way of an exclusive licensing agreement.  Argyll Biotech
and Immunosyn together intend to pursue regulatory approval for SF-1019 and
related technologies in the United States.  Neither Immunosyn nor
Argyll can guarantee that any applications for additional patents will be
granted in the United States Patent and Trademark Office or in any other patent
offices, or that their proprietary compositions and/or treatments will receive
regulatory approval from the United States Food and Drug Administration or any
other regulatory body either within or outside the United States.




The
pharmaceutical industry places considerable importance on obtaining patent and
trade secret protection for new technologies, products and
processes.  Argyll Biotech’s vigorous pursuit of patent protection
will be balanced with a prudent preservation of trade secrets, assertive
enforcement of intellectual property, and a sensible respect for the proprietary
rights of others.  Predictions cannot be made at this time about
results that future research may yield with regard to SF-1019 and related
treatments, or about the viability of the prospective patent portfolio
surrounding this technology.  Nevertheless, the Company’s success in
the biological response modifiers market will depend on Argyll Biotech’s ability
to obtain and enforce its intellectual property rights in the United States and
abroad for the products and treatments that the Company is continually
developing and that it intends to market and distribute.




Immunosyn’s
exclusive license from Argyll Biotech is the Company’s primary asset and the
exclusive license agreement, including, without limitation, the fee established
in that agreement, is between related entities and does not bear any
relationship to established or traditional methods of valuing such fees and, as
such, may be unfair to the Company.




Pursuant
to our exclusive license agreement with Argyll Biotech, the Company issued
147,000,000 shares of Common Stock to Argyll Biotech at par value of $0.0001 per
share in payment of the exclusive world-wide license rights to SF-1019 for a
term that will last for the later of 10 years from the date when SF-1019 is
first commercially sold or the date when the patent covering SF-1019 expires,
which in most jurisdictions is twenty years from the date of
filing.  On October 25, 2007, Immunosyn entered into an Amended and
Restated License Agreement with Argyll Biotech.  The amended license
agreement expands the grant of rights to Immunosyn to include the exclusive
worldwide right to market, sell, distribute and promote SF-1019 in its current
form for multiple uses including the treatment of any and all diseases and
pathological conditions (not just Chronic Inflammatory Demyelinating
Polyneuropathy (CIDP), Diabetic Neuropathy (DN) and diabetic ulcers
(DU)).  Immunosyn is further granted the rights to any improvement of
SF-1019 and other compounds, which are developed under the same technology
platform and which are chemically similar to SF-1019.  In conjunction,
Immunosyn also obtained an exclusive, worldwide license to all intellectual
property owned by or assigned to Argyll Biotechnologies, LLC for the purpose of
marketing, distribution, sale and promotion of SF-1019.  Immunosyn
continues to have the right of first offer to enter into additional license
agreements for uses of other compounds that are developed and which are not
already covered under the amended license agreement.  The exclusive
license agreement is between related entities, was not negotiated in an
arms-length transaction, and does not bear any relationship to established or
traditional methods of valuing such fees.  Instead, the license rights
were recorded at Argyll Biotech’s cost basis of the underlying patents licensed
to Immunosyn.




Argyll
Biotech may use the proceeds from the sale of our Common Stock for purposes
other than the development and regulatory approval of SF-1019; the terms of
Immunosyn’s exclusive license agreement do not provide the Company with any
oversight or right to control Argyll Biotech’s use of such license
fees.




Argyll
Biotech reserves the right to use the cash and other proceeds it receives from
the sale of the Company’s stock received as payment of its license fee for
purposes other than development and regulatory approval of SF-1019, including
corporate purposes of its other affiliates.  Furthermore, under the
terms of the exclusive license agreement between Argyll Biotech and Immunosyn,
the license fee was deemed earned by Argyll Biotech when Immunosyn issued its
shares of Common Stock and non-refundable, regardless of the true cost of
completing development and obtaining regulatory approval of
SF-1019.  The Company has no right to control the proceeds received by
Argyll Biotech from its sale of the Company’s stock, and the Company has no
audit or other rights to require that all of these proceeds be applied solely to
the development and regulatory approval of SF-1019.  If the amount
required to achieve these goals is less than the amount of the proceeds received
from Argyll Biotech’s sale of the Company’s stock, the Company will not be
entitled to any refund.  In the event Argyll Biotech is unsuccessful
in completing product development or obtaining regulatory approval, the Company
has no right to make any claim with respect to Argyll Biotech’s use of the
proceeds.




Argyll
Biotech will be our sole supplier of SF-1019; the exclusive license agreement
provides that the cost of SF-1019 to Immunosyn shall be equal to 40%
of the “gross sale price” (as defined) of SF-1019 as sold to a third party
customer by Immunosyn.  In the event Argyll Biotech succeeds in
obtaining regulatory approval for distribution and sale of SF-1019, Argyll
Biotech will be the sole supplier of SF-1019 to the Company.  In the
event of any disruption in the manufacturing process of Argyll Biotech and its
contractors, the Company will have no other source for purchasing SF-1019 and
satisfying its customer commitments.  Argyll Biotech will determine
the purchase price for SF-1019 in its reasonable discretion based on its
manufacturing costs, development expenses, overhead and customary industry
mark-up.




14


The
safety and efficacy profiles for SF-1019 that emerge from controlled clinical
trials may be substantially less favorable than in prior uncontrolled
observations of SF-1019’s precursors which may materially and adversely affect
our business.




Argyll
Biotech’s only data regarding the safety and efficacy of SF-1019 is based on
uncontrolled observations of a precursor to SF-1019 among a small group of
individuals, not SF-1019 itself.  If and when formal and controlled
clinical trials are conducted using SF-1019 over broad populations and
geographic areas, it is possible that heretofore unknown adverse safety and
unfavorable efficacy effects may be observed, in which case the Company’s
ability to market SF-1019 for its intended use may be materially and
substantially reduced or eliminated.  Moreover, formal clinical trials
are expensive and Argyll Biotech may have severely underestimated the cost of
conducting and concluding such trials.  If the Company is unable to
commence the marketing, distribution and sale of SF-1019 because formal clinical
trials reveal adverse safety or lack of efficacy information, or if the clinical
trials last longer or sustain substantially higher costs than are currently
projected, the Company’s business will be severely and adversely
diminished.




A
decrease in the projected prices that Immunosyn may charge for SF-1019 and the
level of third party reimbursement that Immunosyn may receive from third party
payors may adversely impact our business.




To the
extent that SF-1019 becomes approved for distribution in the United States or in
any foreign markets, Immunosyn’s ability to commercialize SF-1019 successfully
will depend in part on the price Immunosyn may charge for that product and on
the extent to which reimbursement for the cost of that product will be available
from government health administration authorities, private health insurance and
other third-party payers.  Government officials and private health
insurers are increasingly challenging the price of medical products and
services.  Significant uncertainty exists as to the pricing
flexibility which distributors will have with respect to newly approved health
care products as well as their reimbursement.  There can be no
assurance that the Company’s assumptions concerning product pricing will be
achieved.




Third-party
payers may attempt to control costs further by selecting exclusive providers of
their pharmaceuticals products.  If third-party payers were to make
this type of arrangement with one or more of Immunosyn’s competitors, those
payers would not reimburse patients for purchasing SF-1019.




Argyll
Biotech may not apply for or be successful in receiving orphan/special drug
status on any products.




Under the
Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to
treat a rare disease or condition.  A disease or condition that
affects populations of fewer than 200,000 people in the United States generally
constitutes a rare disease or condition.  Argyll Biotech may seek
orphan drug approval for certain aspects or treatment modalities of SF-1019 in
an attempt to get SF-1019 into the marketplace more quickly and
competitively.  There can be no assurances that SF-1019 is entitled to
orphan drug status, that Argyll Biotech will proceed with this strategy or that,
if it does proceed, any orphan drug designation will be approved or
authorized.




If
Argyll Biotech fails to keep up with rapid technological change and evolving
therapies, the proprietary technologies that form the substance of SF-1019 could
become less competitive or obsolete.




The
pharmaceutical industry is characterized by rapid and significant technological
change.  Immunosyn expects that pharmaceutical technology will
continue to develop rapidly and the Company’s future success will depend on
Argyll Biotech’s ability to develop and maintain a competitive
position.  Technological development by others may result in products
developed by Argyll Biotech or the Company, both branded or generic, becoming
obsolete before they are marketed or before Immunosyn or Argyll Biotech recover
any portion of their expenses incurred with respect to such
product.  Alternative therapies or new medical treatments could alter
existing treatment regimes, and thereby reduce the need for one or more of the
products developed by Argyll Biotech, which would adversely affect Immunosyn’s
business.




Many
of Immunosyn’s competitors have substantially greater capabilities and resources
and may be able to market products more effectively, which would limit
Immunosyn’s ability to generate revenue and cash flow.




Competition
in Immunosyn’s industry is intense.  Potential competitors in the
United States and Europe are numerous and include pharmaceutical, chemical and
biotechnology companies, most of which have substantially greater capital
resources, marketing experience, research and development staffs and facilities
than does Immunosyn.  Among others, Eli Lilly & Company and Wyeth
Pharmaceuticals, Inc. market antidepressants, and Pfizer, Inc. markets
anticonvulsants that are prescribed for treating diabetic
neuropathy.  In addition, Daval is also testing a caprine serum
product, called Aimspro, for treating multiple sclerosis and other neurological
disorders




Argyll
Biotech intends to seek to limit potential sources of competition by developing
products that are eligible for orphan drug designation and NDA approval or other
forms of protection, but Argyll Biotech’s and Immunosyn’s competitors may
develop similar technologies and products more rapidly or may market them more
effectively.  Competing technologies or products may be more effective
than any of those that are being or will be developed by Argyll
Biotech.




15


Immunosyn
will depend on Argyll Biotech and other third parties for clinical testing of
SF-1019.  Any disruption in such third party relationship could delay
the Company’s ability to distribute and market products on a timely basis or at
all.




Neither
Immunosyn nor Argyll Biotech currently has any internal product testing
capabilities.  Argyll Biotech’s inability to retain third parties for
the clinical testing of products on acceptable terms, or at all, would adversely
affect their ability to develop, distribute and market products.  It
will be Argyll Biotech’s responsibility to arrange for and supervise clinical
testing.  Any failures by third parties to adequately perform their
responsibilities may delay the submission of products for regulatory approval,
impair Immunosyn’s ability to deliver products on a timely basis or otherwise
impair Immunosyn’s competitive position.  The Company’s dependence on
third parties for the development of products may adversely affect its potential
profit margins and its ability to deliver products on a timely
basis.




Argyll
Biotech and Immunosyn will depend on others to manufacture their products and
any disruption in manufacturing could have a material adverse effect on our
business.




Argyll
Biotech and Immunosyn have never manufactured any products and SF-1019 may not
be suitable for commercial manufacturing in a cost-effective
manner.  Manufacturers of products developed by Argyll Biotech will be
subject to current good manufacturing practices prescribed by the FDA and other
rules and regulations prescribed by applicable regulatory
authorities.  Argyll Biotech may not be able to enter into or maintain
relationships either domestically or abroad with manufacturers whose facilities
and procedures comply or will continue to comply with current good manufacturing
practices or applicable foreign requirements.  Failure by a
manufacturer to comply with current good manufacturing practices or applicable
foreign requirements could result in significant time delays or Immunosyn’s
inability to commercialize or continue to market a product and could have a
material adverse effect on Immunosyn’s sales of products and, therefore, its
cash flow.




In the
United States, failure to comply with current good manufacturing practices or
other applicable legal requirements can lead to federal seizure of violating
products, injunctive actions brought by the federal government and potential
criminal and civil liability on part of a company and its officers and
employees.  Argyll Biotech’s or Immunosyn’s failure to satisfy any of
these legal requirements prior to attempting to market or distribute any
products will place the Company and its resources and assets at substantial
risk.




Immunosyn
has limited sales and marketing capability and may not be successful in selling
or marketing any products.




Immunosyn
currently has no sales and marketing capability.  The creation of
infrastructure to commercialize medical products is a difficult, expensive and
time-consuming process.  Immunosyn may not be able to establish direct
or indirect sales and distribution capabilities anywhere in the world or be
successful in gaining market acceptance for any products, including
SF-1019.




Some
of the concepts that are inherent in Argyll Biotech’s technologies have been
known, in various forms, for several years, and at least one other party is
developing similar drug products based on those concepts which, if approved for
human use, may adversely affect Immunosyn’s exclusive license from Argyll
Biotech.




Some of
the basic biochemistry behind SF-1019, specifically the concept of using
extracts from caprine serum, is in the public domain.  Because the
basic biochemistry may be in the public domain, third parties may be developing
similar technologies and techniques which would compete with
SF-1019.  Argyll Biotech is aware of at least one potential
competitor, Daval, which is developing and/or marketing a product extracted from
caprine serum in the United Kingdom.  Neither Argyll Biotech nor
Immunosyn can determine whether any other entities have made similar progress
with this biochemistry or if another competitor is currently poised to enter the
market with a competing product.  In the event that this does occur,
the value of Immunosyn’s exclusive license from Argyll Biotech may be severely
diminished.




Third
parties may assert claims against Argyll Biotech and the Company for
infringement of patents and other intellectual property rights, which could harm
our business.




Parties
not affiliated with either Immunosyn or Argyll Biotech have obtained or may
obtain United States or foreign patents or possess or may possess proprietary
rights relating to products being developed or to be developed by Immunosyn or
Argyll Biotech.  Patents now in existence or hereafter issued to
others may adversely affect the development or commercialization of products
developed or to be developed by Immunosyn or Argyll Biotech.  Further,
Immunosyn’s or Argyll Biotech’s activities may infringe patents owned by
others.  Under its exclusive license agreement, Argyll Biotech is
obligated to defend Immunosyn against charges of infringement that refer, relate
or pertain to Immunosyn’s marketing, sale and distribution of
SF-1019.  Immunosyn and Argyll Biotech could incur substantial costs
in defending infringement suits brought against them or in asserting any
infringement claims against others, which they may not have the funds or
insurance to cover.




16


The
concept of using extracts from caprine serum to treat Acquired Immune Deficiency
Syndrome (AIDS), as well as other diseases, was pioneered by the late Dr. Gary
R. Davis.  A number of applications and provisional applications for
patents have been filed on his behalf, including at least two provisional
applications whose status as of the date of this report is
undetermined.  The late Dr. Davis executed a Technology Assignment
Agreement in favor of Argyll Biotech that purportedly transfers all of his
rights in his intellectual property related to the development of treatments for
AIDS.  However, Argyll Biotech is also aware of previous assignments
by the late Dr. Davis to third parties covering his intellectual property, and
Argyll Biotech has not determined to what extent those assignments conflict with
or render the late Dr. Davis’ agreement with Argyll Biotech
invalid.




Argyll
Biotech is aware of the existence of several pending patent applications by a
prospective competitor, Daval, based on work previously conducted by some of
Argyll Biotech’s scientific consultants.  It is the Company’s belief
that the invention disclosed in U.S. Patent Application No. 10/825,603 (the “603
Application”) licensed by Argyll Biotech is different from what is described in
these disclosures, regardless of whether these disclosures describe patentable
inventions.  As of the date of this report, Argyll Biotech has not
received an opinion of non-infringement with respect to these patent claims nor
has any analysis been conducted to determine whether any of these disclosures,
or the prior work by the late Dr. Davis, cover Argyll Biotech’s development,
manufacture or sale of SF-1019.




On or
about July 27, 2006, Daval filed suit in the High Court of Justice, Chancery
Division in London, England against Argyll Biotech and five of Argyll Biotech’s
research scientists and others, including Douglas McClain, Sr., seeking an
injunction and damages or an account of profits based on allegations of breach
by the scientists and Mr. McClain of confidentiality agreements with Daval,
breaches by such persons of their fiduciary duties and conspiracy by Argyll
Biotech and certain of its shareholders to wrongfully disclose and use Daval’s
alleged trade secrets.  These proceedings do not allege infringement
of any Daval patent whether by Argyll Biotech or any of the other
defendants.  Argyll Biotech has filed its defenses and continues to
investigate the merits of the suit and the basis of its defenses including,
among other grounds, that one of the active ingredients in SF-1019 disclosed in
Argyll Biotech’s 603 Application is based on independent research by Argyll
Biotech’s research scientists, and the method of producing SF-1019 is materially
different from Daval’s process.  The action had been listed for trial
in the UK in January 2009 but, in December 2008, the High Court in London
ordered that the trial be rescheduled for a later date likely to be late 2009 or
early 2010.  Immunosyn is not involved in this
litigation.




Immunosyn
could incur substantial costs in connection with any suits relating to matters
for which it may agree to indemnify Argyll Biotech.  An adverse
outcome in any litigation could have a material adverse effect on Immunosyn’s
ability to market and distribute products or on Argyll Biotech to utilize
relevant patents in the future.  In addition, Argyll Biotech or
Immunosyn could be required to obtain licenses under patents or other
proprietary rights of third parties.  These licenses may not be made
available on terms acceptable to Argyll Biotech and Immunosyn, or at
all.  If Argyll Biotech or Immunosyn is required to, and does not
obtain any required licenses, Argyll Biotech or Immunosyn could be prevented
from, or encounter delays in, developing, manufacturing or marketing SF-1019 or
other products.




SF-1019
and other products which may be marketed and distributed by the Company may be
subject to recall which would likely harm our business.




If
SF-1019 is approved for distribution and Immunosyn is successful in marketing
SF-1019, product recalls may be issued at Immunosyn’s or Argyll Biotech’s
discretion or by the FDA, the Federal Trade Commission or other government
agencies having regulatory authority over distribution and sales of
pharmaceutical products.  The Company’s products may need to be
recalled due to disputed labeling claims, manufacturing issues, quality defects,
or other reasons.  Under its exclusive license agreement, Argyll
Biotech is responsible for costs and activities relating to any recall of
SF-1019, and must defend, indemnify and hold Immunosyn harmless for, from and
against damages associated with those recalls.  Product recalls, if
any in the future, may harm Argyll Biotech and Immunosyn’s reputations and cause
Argyll Biotech and Immunosyn to lose opportunities or customers, or force Argyll
Biotech and Immunosyn to pay refunds.  Immunosyn does not carry any
insurance to cover the risk of potential product recall.  Any product
recall will have a material adverse affect on Argyll Biotech and Immunosyn,
their prospects, financial condition and results of operations.




Argyll
Biotech and Immunosyn may face exposure from product liability claims and
product liability insurance may not be available or may not be sufficient to
cover the costs of liability claims related to their technologies or
products.




If
Immunosyn has a product in distribution, Argyll Biotech and Immunosyn will face
exposure to product liability claims if the use of SF-1019 is alleged to have
resulted in adverse effects to users of such products related to those
technologies.  Product liability claims may also be brought by
clinical trial participants, although to date, no such claims have been brought
against Argyll Biotech and neither Argyll Biotech nor Immunosyn have any
knowledge of any such pending claims.  If any such claims were brought
against Immunosyn or Argyll Biotech, the cost of defending such claims may
adversely affect Immunosyn’s or Argyll Biotech’s business.




Regulatory
approval for commercial sale of SF-1019 or any other products that the Company
intends to market and distribute does not mitigate product liability
risks.  Any precautions that Argyll Biotech or Immunosyn takes may not
be sufficient to avoid significant product liability
exposure.  Although Argyll Biotech anticipates obtaining product
liability and clinical trials insurance on their technologies and products at
levels with which their management deems reasonable, no assurance can be given
that this insurance will cover any particular claim or that Argyll Biotech has
or will have obtained an appropriate level of liability insurance coverage for
development activities.




17


If
SF-1019 is brought to market, Argyll Biotech and Immunosyn intend to seek up to
$3 million per year, claims-made product liability insurance
coverage.  However, such coverage may not be adequate.  In
the future, adequate insurance coverage or indemnification by collaborative
partners may not be available in sufficient amounts, or at acceptable costs, if
at all.




To the
extent that product liability insurance, if available, does not cover potential
claims, Argyll Biotech and Immunosyn will be required to self-insure the risks
associated with those claims.  The successful assertion of an
uninsured product liability or other claim against Argyll Biotech or Immunosyn
could limit their ability to market and distribute any products or could cause
monetary damages.  In addition, future product labeling may include
disclosure of additional adverse effects, precautions and contra indications,
which may adversely impact product sales.




If
Argyll Biotech loses key management or scientific staff, or if Immunosyn or
Argyll Biotech are unable to protect their respective rights in their trade
secrets, the Company’s business will suffer.




Immunosyn
is entirely dependent on Argyll Biotech’s scientific consultants for
continuation and completion of all testing and development of
SF-1019.  Argyll Biotech’s scientific consultants and advisory staff
members have accepted profit and incentive packages and formal consulting
arrangements have been either accepted or are under negotiation.  Such
persons maintain positions of management and are responsible for all drug
development activities relating to SF-1019 and have been instrumental in the
development and maintenance of key relationships within the scientific research
and medical communities as well as with inventors, co-development partners and
others.  Nonetheless, Immunosyn has no management or other control
over those persons or any of their activities, and their failure to accomplish
any goals established for Argyll Biotech or Immunosyn will substantially and
adversely affect Immunosyn’s business prospects.




Immunosyn
and Argyll Biotech also rely upon the maintenance of trade secret protection for
confidential and proprietary information.  Others may independently
develop substantially equivalent proprietary information and techniques or gain
access to both our trade secrets or disclose Argyll Biotech’s proprietary
technology.  Immunosyn and Argyll Biotech may not be able to
meaningfully protect their trade secrets, which could limit Immunosyn’s ability
to benefit from its exclusive license to market and distribute SF-1019 for its
intended uses.




Immunosyn
requires, and has been informed that Argyll Biotech requires, their respective
employees, consultants, members of the scientific advisory board and parties to
collaborative agreements to execute confidentiality agreements upon the
commencement of employment or consulting relationships.  These
agreements may not provide meaningful protection of relevant trade secrets or
adequate remedies in the event of unauthorized use or disclosures of
confidential and proprietary information.




The
Company’s management and internal systems might be inadequate to handle its
potential growth.




The
Company’s success will depend in significant part on the development of its
operations and the effective management of growth.  Any growth will
place a significant strain on the Company’s systems and resources.  To
manage future growth, the Company’s management must build operational and
financial systems and expand, train, retain and manage its employee
base.  The Company’s management may not be able to manage its growth
effectively if its systems, procedures, controls and resources are inadequate to
support operations.  In such case, the Company’s expansion would be
halted or delayed and the Company may lose its opportunity to gain significant
market share or the timing with which it would otherwise gain significant market
share.  Any inability to manage growth effectively may harm the
Company’s ability to institute its current or any subsequent business
plans.  The strain on the Company’s systems, procedures, controls and
resources is further heightened by the fact that its executive offices and the
operational development facilities of Argyll Biotech are located in separate
time zones, namely, San Diego, California, Chicago, Illinois, Hardwick,
Massachusetts, and London, England.




To
the extent that Argyll Biotech and the Company have international operations, it
will be subject to risks associated with conducting business in foreign
countries.




The
Company expects to have rights to market, distribute and sell SF-1019 in
territories outside of the United States to the extent that SF-1019 will be
approved by local regulatory authorities for distribution in such
territories.  Approval for SF-1019 is being sought in Malaysia, for
example.  To the extent that it develops these international
operations, the Company and Argyll Biotech will be subject to the risks of
conducting business in foreign countries including:




·
              difficulty
      in establishing or managing distribution
  relationships;
 
 ·
              different
      standards for the development, use, packaging, pricing and marketing of
      products and technologies;
  18
  ·
              inability
      to locate qualified local employees, partners, distributors and
      suppliers;
 
 ·
              the
      potential burden of complying with a variety of foreign laws, trade
      standards and regulatory requirements, including the regulations of
      pharmaceutical products and treatment and foreign intellectual property
      laws and regulations; and
 
 ·
              general
      geopolitical risks, such a political and economic instability, changes in
      diplomatic and trade relations, and foreign currency
  risks.




The
Company does not expect to engage in forward currency transactions, which means
that the Company may be susceptible to fluctuations in the United States dollar
against foreign currencies.




Clinical
trials for SF-1019 will be expensive and time consuming, and their outcome is
uncertain.  Any delay or other factor which negatively affects Argyll
Biotech’s ability to fund clinical trials will adversely affect the Company’s
operations and revenues.




Before
obtaining regulatory approval for the commercial sale of a product, Argyll
Biotech must demonstrate through pre-clinical testing and clinical trials that
SF-1019 is safe and effective for use in humans.  Conducting clinical
trials is a lengthy, time-consuming and expensive process.  The
proceeds received by Argyll Biotech from sale of the Common Stock issued by
Immunosyn in payment for the exclusive license are anticipated to pay only a
minor part of these expenses, and it is almost certain that those proceeds will
not be adequate to cover the entire amount of testing and trials that will be
required.  In addition, we cannot assure that such license fees will
be utilized to pay for clinical trials for SF-1019.  In addition,
regulatory authorities may require additional clinical trials, which could
result in increased costs and significant development delays.




Completion
of clinical trials for any product, including SF-1019, will generally take
several years or more.  The length of time varies substantially
according to the type, complexity, novelty and intended use of the product
candidate.  Argyll Biotech’s commencement and rate of completion of
clinical trials may be delayed or affected by many factors,
including:




·
            inability
      of vendors to manufacture sufficient quantities of materials for use in
      clinical trials;




·
            slower
      than expected rate of patient recruitment of variability in the number and
      types of patients in a study;




·
            inability
      to adequately follow patients after
treatment;




·
            safety
      issues, side effects or other adverse
effects;




·
            lack
      of efficacy during the clinical trials;
and




·
            government
      or regulatory delays.




Any delay
in the commencement or completion of testing and trials will result in
additional delays in Immunosyn’s ability to market and distribute SF-1019, which
will adversely affect Immunosyn’s ability to generate any revenues.




SF-1019
or its variants may never be successfully commercialized.




SF-1019
or its variants are not expected to be available for commercial sale for at
least two years, if at all.  Potential products that appear to be
promising at early stages of development may not reach the market for a number
of reasons, including:




·
              discovery
      during pre-clinical testing or clinical trials that the products are
      ineffective or cause harmful side
effects;
  ·
              failure
      to receive necessary regulatory
approvals;
  ·
              inability
      to manufacture on a large or economically feasible
  scale;
  ·
              failure
      to achieve market acceptance; and
  19
  ·
              preclusion
      from commercialization due to proprietary rights of third
      parties.




Any
products and technologies, including SF-1019, developed by Argyll Biotech will
require extensive additional development, including pre-clinical testing and
clinical trials, as well as regulatory approvals, prior to
commercialization.  Argyll Biotech’s product development efforts may
not be successful; may fail to receive required regulatory approvals from United
States or foreign authorities for any indication; and any products, if
introduced, may not be capable of being produced in commercial quantities at
reasonable costs or being successfully marketed.  The failure of
Argyll Biotech’s research and development activities to result in any
commercially viable products or technologies would materially adversely affect
Immunosyn’s future prospects, as those prospects are linked entirely to Argyll
Biotech’s success through the exclusive license between the two
companies.




The
industry in which we operate is subject to extensive government regulation and
SF-1019 requires regulatory approvals, which makes it more expensive for us and
Argyll Biotech to operate our businesses.




Virtually
all aspects of Immunosyn’s and Argyll Biotech’s business are regulated by
federal and state statutes and governmental agencies in the United States and
other countries.  Failure to comply with applicable statutes and
government regulations could have a material adverse affect on Immunosyn’s and
Argyll Biotech’s ability to develop and sell SF-1019, which will have a negative
impact on Immunosyn’s cash flow.  The development, testing,
manufacturing, processing, quality, safety, efficacy, packaging, labeling,
record-keeping, distribution, storage and advertising of pharmaceutical
products, and disposal of waste products arising from these activities, are
subject to regulation by one or more federal agencies.  These
activities are also regulated by similar state and local agencies and equivalent
foreign authorities.  Even if regulatory approval is obtained, a
marketed product, its manufacturer and its manufacturing facilities are subject
to continual review and periodic inspections.  Subsequent discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions on the product or manufacturer, including withdrawal of the
product from the market.




The
regulatory requirements applicable to any product may be modified in the
future.  Immunosyn cannot determine what effect changes in regulations
or statutes or legal interpretations may have on its or Argyll Biotech’s
business in the future.  Regulatory changes could require
modifications to manufacturing methods, expanded or different labeling, the
recall, replacement or discontinuation of certain products, additional record
keeping and expanded documentation of the properties of certain products and
scientific substantiation.  Any changes or new legislation could have
a material adverse effect on Argyll Biotech’s or Immunosyn’s ability to develop
and sell SF-1019 and therefore, generate revenue and cash flow.




Even
after Argyll Biotech expends substantial resources on research, clinical
development and the preparation and processing of regulatory applications, it
may not be able to obtain regulatory approval for any of the products that
Immunosyn intends to license from it.  Moreover, regulatory approval
for marketing a proposed pharmaceutical product in any jurisdiction may not
result in similar approval in other jurisdictions.  The failure to
obtain and maintain regulatory approvals for SF-1019 would have a material
adverse effect on Immunosyn’s ability to distribute and sell products and,
therefore, generate revenue and cash flow.




The
Company may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have the operating effectiveness of our
internal controls attested by our independent auditors.




As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the SEC
adopted rules requiring public companies to include a report of management on
the company’s internal controls over financial reporting in their annual
reports, including in their Form 10-K.  We are subject to this
requirement commencing with our fiscal year ending December 31, 2007 and a
report of our management is included under Item 9A of this Annual Report on Form
10-K.  In addition, SOX 404 requires the independent registered public
accounting firm auditing a company’s financial statements to also attest to and
report on the operating effectiveness of such company’s internal
controls.  This annual report includes an attestation report
under Item 8 of this Annual Report on Form 10-K.  Such
report indicates the Company had material weaknesses resulting in a conclusion
that our control over financial reporting as of December 31, 2008 was not
effective.




Risks
Related to the Company’s Securities




There
is not now nor may there ever be an active market for the Company’s Common
Stock.




The
Company’s Common Stock is currently quoted on the Over-The-Counter Bulletin
Board.  Trading of the Company’s Common Stock on such exchange has
been light and sporadic.  Further, although the Company intends to
seek to have its Common Stock listed on the NASDAQ Capital Market in the future,
it can make no representation nor provide any assurance that its Common Stock
will ever be able to meet the initial listing standards of this or any other
stock exchange.  Even if the Company’s Common Stock becomes listed on
the NASDAQ Capital Market, at any given time, several days or weeks may elapse
with no trading whatsoever of the Common Stock.  The Company is
providing no assurances of any kind or nature whatsoever that an active market
for its Common Stock will ever develop.  Any investor in the Company
should understand that there may be no alternative exit strategy for them to
recover or liquidate their investments in the Common
Stock.  Accordingly, investors must be prepared to bear the entire
economic risk of an investment in the Common Stock for an indefinite period of
time.




20


Additional
uncertainty will be experienced with respect to the price of the Common Stock
because the Company is a biotechnology entity and the market price of the
securities of biotechnology companies is especially volatile.  The
Company is in the development stage.  If the Company’s operations do
not develop and its revenues do not grow or grow more slowly than the Company
anticipates, if operating or capital expenditures exceed the Company’s
expectations and cannot be adjusted accordingly or if some other event adversely
affects the Company, the market price of its Common Stock will
decline.




Even
if the Company were to become a NASDAQ Capital Market company, it may not be
able to attract the attention of major brokerage firms or securities
analysts.




Security
analysts and major brokerage houses may not provide coverage of the
Company.  The Company may also not be able to attract any brokerage
houses to conduct secondary offerings and other capital raising transactions
with respect to its securities.  The Company’s business and ability to
continue as a going concern would be adversely affected if it is unable to raise
funds.




Our
Common Stock is a penny stock. Trading of our Common Stock may be restricted by
the SEC’s penny stock regulations and FINRA’s sales practice requirements, which
may limit a stockholder’s ability to buy and sell our Common Stock.




Our Common Stock is a penny stock. The
Securities and Exchange Commission has adopted Rule 3a51-1 which generally defines “penny
stock” to be any equity security that has a market price (as defined) less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Our securities are covered by the penny stock rules,
including Rule 15g-9, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
“accredited investors.”  The term “accredited investor” refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth, or joint net worth with the person’s spouse, that exceeds
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
spouse. The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document in a form prepared by the SEC which provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer’s account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer’s confirmation. In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from these
rules, the broker-dealer must make a special written determination that
thepenny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the
transaction. These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for the stock that is subject
to these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We believe that the penny
stock rules discourage investor interest in and limit the marketability of our
Common Stock, and some investors may perceive our securities to be less
attractive because they are traded in the over-the-counter
market.




In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our Common
Stock, which may limit your ability to buy and sell our stock.





Immunosyn
has never paid dividends and has no plans to pay dividends at any time in the
near or distant future.




Immunosyn
has never paid dividends on its capital stock, and the Company does not
anticipate paying any dividends for the foreseeable or distant
future.  The Company’s present business plan does not include, for the
foreseeable future and beyond, any payments of dividends to
stockholders.  Stockholders’ sole strategy for any return on their
investments will be the potential for the increase in the value of their stock
and the possibility of liquidating their stock positions.




Item
      1B.
              Unresolved
      Staff Comments.





None.




21




Item
      2.
              Properties.




The
Company has been provided with rent-free office space for two executive offices
under a monthly oral agreement with no specific term from its affiliate and
shareholder, Argyll Equities LLC (“Argyll Equities”).  It is uncertain
how long Argyll Equities will continue providing office space or on what terms
space will continue to be provided to the Company in the future.  At
present, we do not require dedicated office space.  We believe that
our existing facilities are adequate for our current needs and that additional
space will be available as needed.




Item
      3.
              Legal
      Proceedings.




Pursuant
to a subpoena dated January 20, 2006 issued by the Securities and Exchange
Commission (“SEC”) to an affiliate of Argyll Biotech in proceedings captioned In
the Matter of Directors Financial Group, Ltd. and In The Matter of Prime Bank
Securities, and pursuant to subpoenas issued by the SEC to affiliates of Argyll
Biotech on March 30, 2006 and to Immunosyn on December 15, 2006 in a proceeding
captioned In The Matter of The Argyll Group, LLC, the Company and its affiliates
have been asked to produce all documents concerning a wide variety of topics
including many related directly to the Company.  Pursuant to a third
subpoena dated December 15, 2006 issued by the SEC to the Company, the Company
has been asked to produce documents concerning private placements of the
Company’s stock and other matters disclosed in this report.  The
Company and Argyll Biotech’s affiliates actively cooperated with the SEC and
produced documents responsive to these subpoenas, completing their responses in
early August 2007.  The Directors Financial Group matter was resolved
in June 2006 through a settlement between the SEC and the parties to the
proceeding and, accordingly, Immunosyn will not be required to respond further
to that subpoena.  Immunosyn has had no further communication with the
SEC regarding the subpoenas since January 2007.  Although Immunosyn
and its affiliates believe they have complied with the SEC’s subpoenas, there
can be no assurance that the Company or the Company’s affiliates will not
receive additional subpoenas from the SEC or be found liable for one or more
violations of law which could expose the Company or the Company’s affiliates,
including Argyll Biotech, to liability for fines and penalties, as well as
injunctive or other sanctions that might prohibit or restrict the Company’s or
Argyll Biotech’s ability to proceed with financing its operations or listing its
Common Stock.




On or
about July 27, 2006, Daval filed suit in the High Court of Justice, Chancery
Division in London, England against Argyll Biotech and five of Argyll Biotech’s
research scientists and others, including Douglas McClain, Sr., seeking an
injunction and damages or an account of profits based on allegations of breach
by the scientists and Mr. McClain of confidentiality agreements with Daval,
breaches by such persons of their fiduciary duties and conspiracy by Argyll
Biotech and certain of its shareholders to wrongfully disclose and use Daval’s
alleged trade secrets.  These proceedings do not allege infringement
of any Daval patent whether by Argyll Biotech or any of the other
defendants.  Argyll Biotech has filed its defenses and continues to
investigate the merits of the suit and the basis of its defenses including,
among other grounds, that one of the active ingredients in SF-1019 disclosed in
Argyll Biotech’s 603 Application is based on independent research by Argyll
Biotech’s research scientists, and the method of producing SF-1019 is materially
different from Daval’s process.  The action had been listed for trial
in the UK in January 2009 but, in December 2008, the High Court in London
ordered that the trial be rescheduled for a later date likely to be late 2009 or
early 2010.  Immunosyn is not involved in this
litigation.




On March 16, 2007, Frank Bramante and
Salvatore Bramante commenced an action in the United Stated District Court for
the Southern District of California against various defendants including
Immunosyn seeking amongst other relief an injunction to prevent the transfer
and/or sale of the patents and/or proprietary information relating to SF-1019 to
third parties.  The case was stayed by Order dated January 17,
2008 pending resolution of a largely duplicative action filed in the
United Stated District Court for the Western District of Texas, San Antonio
Division, by the same plaintiffs against the same defendants excludingImmunosyn on July 28,
2006.  The Texas action was dismissed with prejudice in September 2008
and a formal dismissal in the California action is in the process of
being submitted to the Court in order to formally close this
case.  The Company does not have any liability in this
matter.





On
December 19, 2007, a shareholder of the Company, Leon S. Segen, commenced an
action in the U.S. District Court for the Southern District of New York
derivatively on behalf of the Company to recover alleged short-swing profits
from several alleged statutory insiders of the Company, including Company
officer and director Douglas A. McClain, Jr.  This action is in the
discovery phase.  The action includes the Company as a nominal
defendant only and does not allege any claims of liability against the
Company.




On March
19, 2008, a shareholder of the Company, Deborah Donoghue, commenced two actions
– one in the U.S. District Court for the Southern District of California and the
other in the U.S. District Court for the Southern District of New York —
derivatively on behalf of the Company to recover alleged short-swing profits
from several alleged statutory insiders of the Company, including Company office
and director Douglas A. McClain, Jr.  The actions include the Company
as a nominal defendant only and do not allege any claims of liability against
the Company.  Donoghue withdrew the New York action in April 2008 and
the California action has been stayed pending resolution of the related
earlier-filed action by shareholder Leon Segen currently pending in the Southern
District of New York.




Item
      4.
              Submission
      of Matters to a Vote of Security
Holders.




None.




22




PART
II




Item
      5.
                Market
      for Common Equity, Related Stockholder Matters and Small Business Issuer
      Purchases of Equity
Securities.




Market
for Common Equity




Our
Common Stock began trading on the Over-The-Counter Bulletin Board (the “OTCBB”)
on Friday, October 26, 2007, under the symbol “IMYN.”





The
following tables set forth the high and low bid prices of our Common Stock on
the OTCBB during the 2007 and 2008 fiscal years according to Yahoo!
Finance.





High
                      
                      
                      Low2008Fourth
      Quarter
                      
                      $
                      1.00
                      
                      
                      $
                      0.12Third
      Quarter
                      
                      
                      2.63
                      
                      
                      
                      0.55Second
      Quarter
                      
                      
                      4.40
                      
                      
                      
                      1.80First
      Quarter
                      
                      
                      5.10
                      
                      
                      
                      1.402007Fourth
      Quarter(1)
                      
                      $
                      6.69
                      
                      
                      $
                      2.55





(1)
From October 26, 2007 to December 31, 2007





These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.  Prior to
October 26, 2007, there was no public trading market for our
securities.




As of
March 12, 2009, 425,000,000 shares of our Common Stock were authorized for
issuance, 272,200,976 shares of Common Stock were issued and outstanding and
there were approximately 300 holders of record of our Common
Stock.  As of March 12, 2009, 25,000,000 shares of our Preferred Stock
were authorized for issuance and no shares of Preferred Stock were issued and
outstanding.  No options or warrants to purchase Common Stock have
been granted.




Dividends




The
Company has not paid any dividends on its capital stock and does not expect to
pay dividends for the foreseeable future.




Securities
Authorized for Issuance Under Equity Compensation Plans




The
Company has established the 2006 Stock Option Plan (the “Plan”) under which the
Board of Directors of the Company may grant options to purchase Common Stock to
employees, directors and consultants of the Company.  The Company has
reserved 7,450,000 shares of Common Stock for issuance under this
Plan.  No such options have been granted to date.  The Plan
is described in Note 6 to the Company’s consolidated financial
statements.




23


The
following table provides information as of December 31, 2008 relating to the
Plan, the only compensation plan under which equity securities of the Company
are authorized for issuance:




EQUITY
COMPENSATION PLAN INFORMATION




Number of securities
                  to be issued upon
                  exercise of
                  outstanding options,
                  warrants and rights
                  (a)
                
                
                Weighted-average
                  exercise price of
                  outstanding options,
                  warrants and rights
                  (b)
                
                
                Number of securities
                  remaining available for
                  future issuance under
                  equity compensation plans
                  (excluding securities
                  reflected in column (a))
                  (c)Equity
      compensation plans approved by security holders
                
                
                0
                
                
                
                0
                
                
                
                7,450,000Equity
      compensation plans not approved by security holders
                
                
                0
                
                
                
                0
                
                
                
                0Total
                
                
                0
                
                
                
                0
                
                
                
                7,450,000




Recent
Sales of Unregistered Securities




On
October 12, 2007, Immunosyn agreed to pay The Blaine Group, Inc. $1,500 per
month in restricted stock.  As a result, a total of  20,976 shares of
Immunosyn Common Stock were allocated to be issued to The Blaine Group, Inc. in
2008. Pursuant to a contract with Basic Investors, Inc., dated October 15,
2007, Immunosyn allocated 10,000 shares of restricted Immunosyn Common Stock to
Basic Investors in 2007.  On April 23, 2008, Immunosyn agreed to issue
150,000 shares of restricted Common Stock to First Montauk Securities Corp. or
its designated affiliates.  Such shares were issued in August
2008.  On September 29, 2008, Immunosyn entered into an agreement with
Bear Creek Advisors, LLC which called for Immunosyn to pay Bear Creek Advisors,
LLC a total of 30,000 shares of restricted Common Stock of
Immunosyn.  Immunosyn issued 10,000 of these shares to Bear Creek on
September 29, 2008 and allocated another 10,000 shares to be issued on November
28, 2008.  See Note 6 to the consolidated financial
statements.





In
issuing these securities, we relied on the exemptions from registration provided
in Regulation D and Section 4(2) under the Securities Act.




Purchases
of Equity Securities by the Issuer and Affiliated Purchasers




There
were no purchases made by or on behalf of the Company or any “affiliated
purchaser,” as defined, of shares of Common Stock of the Company in
2008.





Share
Performance Graph





The following graph shows changes over
the fourteen month period of US $100 invested in (1) the Company’s Common Stock,
(2) the S&P 500 Index and (3) the S&P Biotechnology Index.










Item
      6.
              Selected
      Financial Data.





This Item
6 is not applicable to us as, pursuant to Item 301(c) of Regulation S-k, a
smaller reporting company is not required to provide the information required by
Item 301 of Regulation S-K.







Item
      7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.




Overview




Immunosyn
is a development stage company that was formed in August 2006 and is
headquartered in La Jolla, California.  In September 2006, it executed
an exclusive license agreement with an affiliated company, Argyll Biotech, in
exchange for 147,000,000 shares of its Common Stock or approximately 54% of the
outstanding shares of the Company’s Common Stock.  The license
agreement was amended and restated in October 2007.  Pursuant to the
terms of the license agreement, as amended, the Company has an exclusive
worldwide license to market, distribute and sell a biopharmaceutical drug
product, currently referred to as SF-1019, for multiple uses including the
treatment of a variety of diseases, subject to the receipt of appropriate
regulatory approval in each jurisdiction where SF-1019 will be
marketed.  Under the terms of its exclusive license, Immunosyn also
has a right of first offer to extend its exclusive license to include variants
of SF-1019 that may be approved by various regulatory authorities for treatment
of other diseases and pathologies.  Argyll Biotech is responsible for
all research and product development, clinical testing, regulatory approvals,
production and product support.  In accordance with the amended
license agreement, the parties agreed that the cost of SF-1019 to the Company
will be 40% of the gross sales price of SF-1019 as sold to a third party
customer by the Company.




As a
sales, marketing, and distribution channel for SF-1019, Immunosyn’s primary
business strategy is to build a sales and marketing force and related resources
so that if SF-1019 is approved for human use it can be sold; and secondly, to
increase awareness and acceptance of SF-1019 in the medical
community.




24


As of the
date of this report, we have no revenue and limited operations.  Our
ability to obtain additional funding will determine our ability to continue as a
going concern.  We have one principal asset, our exclusive license
from Argyll Biotech, and one full-time and one part-time employee.  We
do not expect to commence full scale operations or generate revenues unless and
until Argyll Biotech completes development and obtains regulatory approval for
SF-1019.  Since incorporation, we have not made any significant
purchases or sale of assets, nor have we been involved in any mergers,
acquisitions or consolidations.




Results
of Operations




At
December 31, 2008, the Company had an accumulated deficit of $1,934,939 and a
working capital deficit of $1,219,881.  Currently, an affiliated
company provides general support services to the Company, without
charge.  In addition, since inception, Immunosyn has borrowed $893,663
from Argyll Equities, LLC and Argyll Biotech who together own approximately 60%
of Immunosyn’s Common Stock.  These advances are unsecured and will be
repaid on demand.  In October 2007, the Company hired a Chief
Executive Officer.  The Company has advances from the CEO as
well.  The Company needs additional financing to continue its
operations and may raise funds in the future privately or
publicly.  The Company has listed its Common Stock on the
Over-The-Counter Bulletin Board and trading commenced on October 26,
2007.





Liquidity
and Capital Resources




The
Company intends to raise working capital through one or more financings to meet
the following requirements:




·
              Paying
      current administrative staff;
 
 ·
              hiring
      staff, a full-time controller and five sales and marketing
      personnel;
 
 ·
              purchasing
      capital equipment, including securing its principal offices, both
      executive and sales, and distribution
  facilities;
 
 ·
              monitoring
      the progress of the research and development effort conducted by Argyll
      Biotech;
 
 ·
              developing
      a marketing plan for the sale and distribution of
  SF-1019;
 
 ·
              hiring
      industry consultants to assist in developing a channel strategy for sales
      and marketing of SF-1019, including direct sales, third party
      distributors, and strategic
partnerships;
 
 ·
              developing
      market awareness in the patient and medical community and educating those
      effected with various diseases including CIDP, diabetic neuropathy and
      diabetic ulcers and other diseases;
and
 
 ·
              selecting
      and compensating board
members.




The
Company requires substantial future sources of capital in order to meet such
anticipated expenditures and to continue its operations during the period Argyll
Biotech seeks regulatory approval from the United States Food and Drug
Administration (the “FDA”) and foreign regulatory authorities.  The
Company currently anticipates this process to be between three and five years
and the amount of funds required to be between $14 million and $24
million.




The
Company believes that significant funding will be required to provide adequate
sources of working capital during that period.  There can be no
assurance that the Company will be able to raise any or all the capital required
for its operations.  Failure to obtain future financing will require
the Company to delay or substantially curtail its operations or close its
business, resulting in a material adverse effect on the Company.




Off
Balance Sheet Arrangements




None.




25




Item
      7A.
              Quantitative
      and Qualitative Disclosures About Market
Risk.





We do not presently enter into any
transactions involving derivative financial instruments for risk management or
other purposes.





Our
available cash balances are held in our corporate bank account which is
non-interest bearing but is insured by the FDIC. We do not currently have any
cash flows that arise outside of the United States and today we are not subject
to market risk associated with changes in foreign exchange rates.




26


Item
      8.
                    Financial
      Statements and Supplementary
Data.
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors
 Immunosyn
Corporation
 La
Jolla, California
 (A
Development Stage Company)
 
 We have
audited Immunosyn Corporation (“Immunosyn” or the “Company”) internal control
over financial reporting as of December 31, 2008, based on criteria established
in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Immunosyn management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in
Management’s Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express an opinion on the effectiveness of
Immunosyn’s internal control over financial reporting based upon our
audit.
 
 We
conducted our audit of internal control over financial reporting in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we consider necessary in the circumstances.
We believe that our audit provides a reasonable basis for our
opinion.
 
 A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, the Company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
Company’s board of directors, management, and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
(iii)
 provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
 
 Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.
 
 The
following material weaknesses have been identified at December 31, 2008 and
included in management’s assessment:
 
 1.
                The
      control environment, which is the responsibility of senior management,
      sets the tone of the organization, influences the control consciousness of
      its people, and is the foundation for all other components of internal
      control over financial reporting. The Company did not maintain an
      effective control environment due to the aggregate effect of multiple
      deficiencies in internal controls, which affect the Company’s control
      environment, including:
 
 a) the
ineffective implementation and enforcement of the limits on the delegation of
authority for expenditure from the Board of Directors to management, including
the failure by management to obtain the requisite Board of Director’s approvals
for certain expenditures; b) the lack of an effective process for identification
of fraud risks; c) a failure to implement and ensure consistent acknowledgment
of the Company’s Code of Ethics; d) the lack of an internal audit function or
other effective mechanism for ongoing monitoring of the effectiveness of
internal controls; and e) lack of documentation and communication of Immunosyn’s
accounting policies and procedures.
 
 2.
                Limited
      number of qualified accounting personnel with expertise with SEC reporting
      and generally accepted accounting
principles.
 
 27
 3.
                Lack
      of effective segregation of duties, resulting in the inability of the
      Chief Financial Officer and the Chief Executive Officer to perform an
      independent review and quality assurance function within the accounting
      and financial reporting group. Additionally, management and accounting
      personnel have widespread access to create and post entries within the
      Company’s accounting system without the appropriate level of
      review.
   These
material weaknesses were considered in determining the nature, timing and extent
of audit tests applied in our audit of the financial statements as of and for
the year ended December 31, 2008, and this report does not affect our report
dated March 16, 2009 on those financial statements.
 
 In our
opinion, because of the effects of the material weaknesses described above on
the achievement of the criteria established in Internal Control-Integrated
Framework issued by COSO, Immunosyn’s control over financial
reporting as of December 31, 2008 was not effective.
  We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the balance sheets of Immunosyn Corporation as
of December 31, 2008 and 2007, and the related statements of income, changes in
stockholders’ equity and cash flows for the years ended December 31, 2008 and
2007 and for the period from August 3, 2006 (inception) through December 31,
2008 and our report dated March 16, 2009 expressed an unqualified opinion
thereon.
 /s/
Malone & Bailey, P.C.
 www.malone-bailey.com
 Houston,
TX
 March
16, 2009
  28
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors
 Immunosyn
Corporation
 La
Jolla, California
 (A
Development Stage Company)
  We have
audited the accompanying balance sheets of Immunosyn Corporation (a development
stage company) as of December 31, 2008 and 2007 and the related statements
of expenses, changes in shareholders’ equity (deficit),
and cash flows for the years then ended and for the period from August 3, 2006
(inception) through December 31, 2008. These financial statements are the
responsibility of Immunosyn Corporation’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 an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Immunosyn Corporation as of
December 31, 2008 and 2007, and the results of operations and cash flows for the
years then ended and for the period from August 3, 2006 (inception) through
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.
  We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company’s internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated March 16, 2009 expressed an
adverse opinion.
  The
accompanying financial statements have been prepared assuming that Immunosyn
Corporation will continue as a going concern. As discussed in Note 2 to the
financial statements, Immunosyn Corporation suffered losses from operations and
has a working capital deficiency, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
  /s/
Malone & Bailey, P.C.
 www.malone-bailey.com
 Houston,
TX
 March
16, 2009
  29
  Immunosyn
Corporation
  (A
Development Stage Company)
  Balance
Sheets
  December
      31, 2008
                
                
                December
      31, 2007ASSETSCurrent
      AssetsCash
                
                $
                2,052
                
                
                $
                24,115Prepaid
      expenses
                
                
                41,455
                
                
                
                51,480Total
      Current Assets
                
                
                43,507
                
                
                
                75,595Property
      and equipment
                
                
                6,433
                
                
                
                6,433Accumulated
      depreciation
                
                
                (2,466
                )
                
                
                (1,179
                )License
      rights
                
                
                400,000
                
                
                
                400,000Deposits
                
                
                2,825
                
                
                
                4,642Total
      Assets
                
                $
                450,299
                
                
                $
                485,491LIABILITIES
      AND SHAREHOLDERS’ EQUITY (DEFICIT)Current
      LiabilitiesNote payable
                
                $
                35,105
                
                
                $
                -Accounts
      payable
                
                
                320,352
                
                
                
                151,693Accrued
      expenses
                
                
                -
                
                
                
                16,717Accrued
      compensation
                
                
                14,268
                
                
                
                -Advances
      from affiliates
                
                
                893,663
                
                
                
                640,708Total
      Current Liabilities
                
                
                1,263,388
                
                
                
                809,118Shareholders’
      Equity (Deficit)Common
      stock, $0.0001 par value, 425,000,000 shares authorized,272,200,976 and
      272,000,000 shares issued and outstanding at December 31, 2008 and 2007,
      respectively
                
                
                27,220
                
                
                
                27,200Additional
      paid-in capital
                
                
                1,094,630
                
                
                
                477,773Deficit
      accumulated during the development stage
                
                
                (1,934,939
                )
                
                
                (828,600
                )Total
      Shareholders’ Deficit
                
                
                (813,089
                )
                
                
                (323,627
                )Total
      Liabilities and Shareholders’ Deficit
                
                $
                450,299
                
                
                $
                485,491
  See
accompanying summary of accounting policies
 and
notes to financial statements.
  30
  Immunosyn
Corporation
  (A
Development Stage Company)
  Statements
of Expenses
  Year
                                  Ended
                                  December 31, 2008
                                
                                
                                Year
                                  Ended
                                  December 31, 2007
                                
                                
                                August 3, 2006
                                  (inception)
                                  Through
                                  December31,2008EXPENSESGeneral
      & administrative
                                
                                $
                                1,045,013
                                
                                
                                $
                                646,777
                                
                                
                                $
                                1,847,553Interest
      expense
                                
                                
                                61,326
                                
                                
                                
                                26,060
                                
                                
                                
                                87,386NET
      LOSS
                                
                                $
                                (1,106,339
                                )
                                
                                $
                                (672,837
                                )
                                
                                $
                                (1,934,939
                                )Net
      loss per share, basic and diluted
                                
                                $
                                -
                                
                                
                                $
                                -Weighted
      average number of common shares outstanding
                                
                                
                                272,112,566
                                
                                
                                
                                272,000,000
  See
accompanying summary of accounting policies
 and
notes to financial statements.
  31
  Immunosyn
Corporation
  (A
Development Stage Company)
  Statements
of Cash Flows
  Year
      Ended
                      December
      31,
                      2008
                    
                    
                    Year
      Ended
                        December
      31,
                        2007
                    
                    
                    August
      3, 2006
                      (inception)
      through
                      December
      31, 2008Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (1,106,339
                    )
                    
                    $
                    (672,837
                    )
                    
                    $
                    (1,934,939
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                    
                    
                    1,287
                    
                    
                    
                    1,179
                    
                    
                    
                    2,466Imputed
      interest on advances from affiliates
                    
                    
                    61,326
                    
                    
                    
                    26,060
                    
                    
                    
                    87,386Services
      rendered for stock
                    
                    
                    555,551
                    
                    
                    
                    66,413
                    
                    
                    
                    62,964Changes
      in:
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -Prepaid
      expenses
                    
                    
                    10,025
                    
                    
                    
                    (51,480
                    )
                    
                    
                    (41,455
                    )Other
      assets
                    
                    
                    1,817
                    
                    
                    
                    (2,500
                    )
                    
                    
                    (2,825
                    )Accounts
      payable
                    
                    
                    195,072
                    
                    
                    
                    151693
                    
                    
                    
                    346,765Accrued
      expenses
                    
                    
                    (2,449
                    )
                    
                    
                    2,671
                    
                    
                    
                    14,268Net
      cash used in operating activities
                    
                    
                    (283,710
                    )
                    
                    
                    (478,801
                    )
                    
                    
                    (906,370
                    )Cash
      flows from investing activities:Purchase
      of property and equipment
                    
                    
                    -
                    
                    
                    
                    (6,433
                    )
                    
                    
                    (6,433
                    )Net
      cash used in investing activities
                    
                    
                    -
                    
                    
                    
                    (6,433
                    )
                    
                    
                    (6,433
                    )Cash
      flows from financing activities:Net
      advances from affiliates
                    
                    
                    261,647
                    
                    
                    
                    500,117
                    
                    
                    
                    902,355Sale
      of common stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    12,500Net
      cash provided by financing activities
                    
                    
                    261,647
                    
                    
                    
                    500,117
                    
                    
                    
                    914,855Net
      change in cash
                    
                    
                    (22,063
                    )
                    
                    
                    14,883
                    
                    
                    
                    2,025Cash
      at beginning of period
                    
                    
                    24,115
                    
                    
                    
                    9,232
                    
                    
                    
                    -Cash
      at end of period
                    
                    $
                    2,05215
                    
                    
                    $
                    24,115
                    
                    
                    $
                    2,052Supplemental
      DisclosuresCash
      paid for interest
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Cash
      paid for income taxes
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Non-Cash
      Investing and Financing ActivitiesStock
      issued for license rights
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    400,000
  See
accompanying summary of accounting policies
 and
notes to financial statements.
  32
  Immunosyn
Corporation
 (A
Development Stage Company)
 STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
 For
The Period From August 3, 2006 (Inception) through December 31,
2008
  Common
      StockShares
                                              
                                              
                                              Par
      Value
                                              
                                              
                                              Additional
                                                Paid-in
      Capital
                                              
                                              
                                              Development
                                                Stage
                                                Accumulated
                                                Deficit
                                              
                                              
                                              TotalBalance
      at August 3, 2006 (Inception)
                                              
                                              
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Stock
      issued
                                              
                                              
                                              125,000,000
                                              
                                              
                                              
                                              12,500
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              12,500Stock
      issued for license agreement
                                              
                                              
                                              147,000,000
                                              
                                              
                                              
                                              14,700
                                              
                                              
                                              
                                              385,300
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              400,000Net
      loss
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (155,763
                                              )
                                              
                                              
                                              (155,763
                                              )Balance
      at December 31, 2006
                                              
                                              
                                              272,000,000
                                              
                                              
                                              
                                              27,200
                                              
                                              
                                              
                                              385,300
                                              
                                              
                                              
                                              (155,763
                                              )
                                              
                                              
                                              256,737Imputed
      interest on advances from affiliate
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              26,060
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              26,060Shares
      issued for services
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              66,413
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              66,413Net
      loss
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (672,837
                                              )
                                              
                                              
                                              (672,837
                                              )Balance
      at December 31, 2007
                                              
                                              
                                              272,000,000
                                              
                                              
                                              
                                              27,200
                                              
                                              
                                              
                                              477,773
                                              
                                              
                                              
                                              (828,600
                                              )
                                              
                                              
                                              (323,627
                                              )Imputed
      interest on advances from affiliate
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              61,326
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              61,326Shares
      issued for services
                                              
                                              
                                              200,976
                                              
                                              
                                              
                                              20
                                              
                                              
                                              
                                              555,531
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              555,551Net
      loss
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (1,106,339
                                              )
                                              
                                              
                                              (1,106,339
                                              )Balance
      at December 31, 2008
                                              
                                              
                                              272,200,976
                                              
                                              
                                              $
                                              27,220
                                              
                                              
                                              $
                                              1,094,630
                                              
                                              
                                              $
                                              (1,934,939
                                              )
                                              
                                              $
                                              (813,089
                                              )
 
 See
accompanying summary of accounting policies
 and
notes to financial statements.
  33
  Immunosyn
Corporation
 (A
Development Stage Company)
 Notes
To Financial Statements
  Note
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Background
  Immunosyn
Corporation is a Delaware corporation formed on August 3, 2006 and headquartered
in La Jolla, California that has been granted an exclusive worldwide license to
market, distribute and sell a biopharmaceutical drug product, currently referred
to as SF-1019, in its current form.  Its current form has multiple
uses including the treatment of any and all diseases and pathological conditions
(not just Chronic Inflammatory Demyelinating Polyneuropathy (CIDP), Diabetic
Neuropathy (DN) and diabetic ulcers (DU)). This license was granted from an
affiliated company, Argyll Biotechnologies, LLC (“Argyll
Biotech”).  Immunosyn is further granted the rights to any
improvements of SF-1019 and other compounds, which are developed under the same
technology platform and which are chemically similar to SF-1019.
  Cash and Cash
Equivalents
  For
purposes of the statement of cash flows, Immunosyn considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
  Long-Lived
Assets
  Long-lived
assets to be held and used are reviewed for impairment whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. The carrying amount is not recoverable if it exceeds the sum of the
undiscounted cash flows expected to result from the use and eventual disposition
of the asset. If the carrying amount is not recoverable, an impairment loss is
recognized for the amount by which the carrying amount of the asset exceeds its
fair value.  Impairment testing was conducted as of December 31,
2008 with no impairment found.
  Property and
Equipment
  Property
and equipment are stated at cost, net of accumulated depreciation. Depreciation
is computed using the straight –line method over the estimated useful lives of
the respective assets, generally five years.
  Income
Taxes
  Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amount of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
  Stock-Based
Compensation
 
 Stock
based compensation is accounted for under SFAS No. 123R, “Share-Based
Payment.” SFAS No. 123R requires recognition in the financial statements of the
cost of employee services received in exchange for an award of equity
instruments over the period the employee is required to perform the services in
exchange for the award (presumptively the vesting period). SFAS No. 123R also
requires measurement of the cost of employee services received in exchange for
an award based on the grant-date fair value of the award. We account for
non-employee share-based awards in accordance with EITF No. 96-18, “Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquisition,
or in Conjunction with Selling, Goods or Services.”
 Basic and Diluted Net Loss
per Share
  Basic and
diluted net loss per share calculations are presented in accordance with
Financial Accounting Standards Statement 128, and are calculated on the basis of
the weighted average number of common shares outstanding during the year. They
include the dilutive effect of common stock equivalents in years with net
income. Basic and diluted loss per share are the same due to the absence of
common stock equivalents.
  34
  Estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
  Recent Accounting
Pronouncements
  Immunosyn
does not expect any recent accounting pronouncements to have a material effect
on its financial position or results of operations.
  Note
2.  GOING CONCERN UNCERTAINTY
  The
accompanying financial statements have been prepared assuming that Immunosyn
will continue as a going concern. Immunosyn was formed in August 2006 with an
initial source of financing from issuance of common stock and an advance from an
affiliate. As shown in the financial statements, Immunosyn had an accumulated
deficit of $1,934,939 and a working capital deficit of $1,219,881 as of December
31, 2008 which is considered insufficient to fund operations over the next 12
months. Management is trying to raise additional capital through sales of common
stock and is seeking financing from third parties. These conditions raise
substantial doubt about Immunosyn’s ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
  Note
3.  LICENSE RIGHTS
  Grant of
Rights
  Under the
terms of the license agreement executed on September 28, 2006, Immunosyn was
granted the exclusive worldwide right to market, distribute, sell and promote
SF-1019 for treatment of Chronic Inflammatory Demyelinating Polyneuropathy
(CIDP), diabetic neuropathy (DN) and diabetic ulcers (DU) by Argyll Biotech, in
exchange for 147,000,000 shares of the common stock of the Company. On October
25, 2007, Immunosyn and Argyll Biotech amended the license agreement to expand
the grant of rights to Immunosyn to include the exclusive worldwide right to
market, sell, distribute and promote SF-1019 in its current form for multiple
uses including the treatment of any and all diseases and pathological conditions
(not just CIDP, DN and DU).  Immunosyn is further granted the rights
in this amended license agreement to any improvements of SF-1019 and other
compounds, which are developed under the same technology platform and which are
chemically similar to SF-1019. Argyll Biotech purchased a group of patents for
$5,000,000 which, along with other intellectual property, is included in the
license agreement. Also, during the first five years of the term of the license
agreement, Immunosyn has the right to enter into partnering arrangements with
Argyll Biotech for development of other novel drug treatment
products.
  35
  License
Fees
  As
consideration to Argyll Biotech for the rights granted to Immunosyn under the
agreement, Immunosyn issued 147,000,000 shares of common stock to Argyll
Biotech.
  Payments and
Reports
  Argyll
Biotech is not obligated to provide any accounting for its use of proceeds, nor
does Immunosyn have any audit rights to inspect Argyll Biotech’s use of the
license proceeds. Immunosyn is required to submit periodic sales reports to
Argyll Biotech.
  Manufacture and
Supply
  Argyll
Biotech retains responsibility for manufacturing and supplying all of
Immunosyn’s requirements of SF-1019. Argyll Biotech and Immunosyn have agreed
that the cost of SF-1019 to Immunosyn shall be equal to forty percent (40%) of
the gross sales price of SF-1019 as sold to a third party customer by
Immunosyn.  Argyll Biotech shall also confirm through testing and
other programs that the commercial quantities of SF-1019 that it manufactures
are fully compliant with all manufacturing and laboratory standards applicable
to drug products which are intended for use in humans.
  Ownership, Patents and
Trademarks
  Argyll
Biotech retains full ownership of its intellectual property, including
intellectual property that is jointly-developed by the parties. Argyll Biotech
must take reasonable steps to protect its intellectual property from third-party
infringement, and to defend Immunosyn against charges of infringement that
refer, relate or pertain to Immunosyn’s marketing, sale and distribution of
SF-1019.
  Publication and
Confidentiality
  Argyll
Biotech and Immunosyn must collaborate on all publications of scientific or
medical reports relating to either company’s business, operations, research and
development or clinical trial results.
  Recall and
Indemnification
  Argyll
Biotech retains full responsibility for costs and activities relating to any
recall of SF-1019, and is required to defend, indemnify and hold Immunosyn
harmless for, from and against damages associated with those
recalls.
  Term and
Termination
  The
license agreement is in full force and effect for as long as any patent coverage
remains in place for SF-1019 in any country. Either party may terminate the
agreement only on account of an uncured material breach by the other party.
Immunosyn may terminate the agreement if a non-rebuttable regulatory or patient
safety issue is raised, in which event all remaining license fee obligations
will immediately be cancelled. Any fees paid prior to termination are
non-refundable.
  Valuation
  The
license rights are recorded at Argyll Biotech’s cost basis of the underlying
patents licensed to Immunosyn due to Argyll Biotech being a related party. The cost
basis was determined using a discounted cash flow model prepared by a third
party valuation firm at the time the license was granted and such valuation is
updated annually to determine whether the carrying value exceeds the estimated
fair value of the license.  No impairment was recorded in 2008 or
2007.
  36
  Note
4.  ADVANCES FROM AFFILIATES
  Since
inception, Immunosyn was advanced $885,105 from Argyll Equities, LLC and Argyll
Biotech who together own approximately 60% of Immunosyn’s common stock. These
advances are unsecured and are to be repaid on demand. Interest expense in the
amount of $87,386 since inception, $61,326 in 2008 and $26,060 in 2007 was
accrued using an annual rate of 7.5%. Advances from Stephen D. Ferrone, CEO and
President of Immunosyn, in the amount of $8,559 as of
December 31, 2008 and $7,936 as of December 31, 2007are due and payable
as
of December 31, 2008 are included in advanced from
affiliates.
  Note
5.  NOTE PAYABLE
  During
October 2008, Immunosyn entered into an agreement with First Insurance Funding
Corp. of California to finance $44,000 of the annual insurance
premium.  The note is due August 26, 2009, carries an interest rate of
6.15% and has monthly payments of principal and interest of $5,015.
 Note
6.  STOCKHOLDERS’ EQUITY
  Between
August 3, 2006 and August 31, 2006, Immunosyn sold a total of
125,000,000 shares of Common Stock, at a purchase price of $0.0001 per share, to
various investors, resulting in gross proceeds to the Company of
$12,500.
  In
September 2006, a total of 147,000,000 shares of Common Stock were issued
to Argyll Biotech as a non-refundable payment of the license fee for
Immunosyn's exclusive license to SF-1019.
  Immunosyn
entered into a 12 month contract with The Blaine Group, Inc. (TBG) on October
12, 2007 for TBG to undertake a national financial public relations and
investors relations campaign for Immunosyn.  As part of this contract,
TBG agreed to handle all public relations matters for Immunosyn.  This
contract shall continue until terminated by either party with thirty days
written notice.  Immunosyn agreed to pay TBG $1,500 per month in
restricted stock.  As a result, a total of 743 and 20,213 shares
of common stock were earned by TBG in 2007 and 2008, respectively, and a
total of 20,976 shares of common stock were issued to TBG in 2008.
  Immunosyn
entered into a contract with Basic Investors, Inc. (Basic) on October 15, 2007
to engage Basic to provide management and financial consulting services to
Immunosyn.  The term of this contract was from October 15, 2007
through October 15, 2008.  Pursuant to this contract,
Immunosyn issued 10,000 shares of common stock to Basic on April 29,
2008.
  Immunosyn
issued 150,000 shares of common stock on August 14, 2008 to First Montauk
Securities Corp. or its designated affiliates pursuant to an advisory agreement
entered into on April 23, 2008 for First Montauk to provide financial advisory
services to Immunosyn.  The total value of such shares is
$524,750.
  On
September 29, 2008, Immunosyn agreed to a 6 month contract with Bear Creek
Advisors, LLC (Bear Creek) to provide consulting services for
Immunosyn.  Immunosyn agreed to pay Bear Creek Advisors 30,000 shares
of common stock for these services. Immunosyn issued 20,000 of these 30,000
restricted shares during 2008.
  Stock
Options
  Immunosyn
has adopted a stock option plan for employees, outside consultants, and
directors. There are 7,450,000 common shares available for grant under the plan.
The plan allows for incentive options with exercise prices of at least 100% of
the fair market value of Immunosyn’s common stock and nonqualified options with
exercise prices of at least 85% of the fair market value of Immunosyn’s common
stock.
  37
  Immunosyn
accounts for stock options using the fair value method. Fair value is determined
at the date of grant for employee options and at the date at which the grantee’s
performance is complete for non-employee options. Compensation cost is
recognized over the vesting period based on the fair value of the options. The
fair value of the options is calculated using the Black-Scholes option pricing
model.
  No
options had been granted as of December 31, 2008.
  Note
7.  INCOME TAXES
  Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amount of assets and liabilities and their tax
basis. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.  Since inception, Immunosyn has incurred net losses
and, therefore, has no tax liability. The net deferred tax asset generated by
the loss carry-forward has been fully reserved. The cumulative net operating
loss carry-forward is approximately $1,900,000 at December 31, 2008
and will expire beginning 2026.
  Deferred
tax assets consisted of the following as of December 31:
  2008
                    
                    
                    2007Net
      Operating Losses
                    $
                    $657,879
                    
                    $
                    281,724Less:  valuation
      allowance
                    
                    (657,879
                    )
                    
                    (281,724
                    )Net
      deferred tax asset
                    
                    -
                    
                    
                    -
  Note
8.  COMMITMENTS AND CONTINGENT LIABILITIES
  On
October 12, 2007, Immunosyn entered into a 12 month contract with The Blaine
Group, Inc. (TBG) for TBG to undertake a national financial public relations and
investors relations campaign for Immunosyn.  As part of this contract,
TBG agreed to handle all public relations matters for Immunosyn.  This
contract shall continue until terminated by either party with thirty days
written notice.  Immunosyn agreed to pay TBG $10,000 as a monthly
retainer fee.  $8,500 of this retainer is payable in cash and $1,500
in restricted stock to be valued at current market value on the date of issue.
See Note 6 for details.
  Pursuant
to a subpoena dated January 20, 2006 issued by the Securities and Exchange
Commission to an affiliate of Argyll Biotech in proceedings captioned In the
Matter of Directors Financial Group, Ltd. and In The Matter of Prime Bank
Securities, and pursuant to subpoenas issued by the SEC to affiliates of Argyll
Biotech on March 30, 2006 and to Immunosyn on December 15, 2006 in a proceeding
captioned In The Matter of The Argyll Group, LLC, Immunosyn and its affiliates
have been asked to produce all documents concerning a wide variety of topics
including many related directly to Immunosyn. Immunosyn and Argyll Biotech’s
affiliates actively cooperated with the SEC and produced documents responsive to
these subpoenas, completing their responses in early August 2007.  The
Directors Financial Group matter was resolved in June 2006 through a settlement
between the SEC and the parties to the proceeding, and, accordingly, Immunosyn
will not be required to respond further to that subpoena.  Immunosyn
has had no further communication with the SEC regarding the remaining subpoenas
since January 2007.
 
 On March 16, 2007, Frank Bramante and
Salvatore Bramante commenced an action in the United Stated District Court for
the Southern District of California against various defendants including
Immunosyn seeking amongst other relief an injunction to prevent the transfer
and/or sale of the patents and/or proprietary information relating to SF-1019 to
third parties.  The case was stayed by Order dated January 17,
2008 pending resolution of a largely duplicative action filed in the
United Stated District Court for the Western District of Texas, San Antonio
Division, by the same plaintiffs against the same defendants excludingImmunosyn on July 28,
2006.  The Texas action was dismissed with prejudice in September 2008
and a formal dismissal in the California action is in the process of
being submitted to the Court in order to formally close this
case.  The Company does not have any liability in this
matter.
 
 38
 
 On
December 19, 2007, a shareholder of Immunosyn, Leon S. Segen, commenced an
action in the Southern District of New York derivatively on behalf of Immunosyn
to recover alleged short-swing profits from several alleged statutory insiders
of Immunosyn, including Immunosyn officer and director Douglas A. McClain Jr.
This action is in the discovery phase.  The action includes Immunosyn
as a nominal defendant only and does not allege any claims of liability against
Immunosyn.
  On March
19, 2008, a shareholder of the Company, Deborah Donoghue, commenced two actions
— one in the U.S. District Court for the Southern District of California and the
other in the U.S. District Court for the Southern District of New York –
derivatively on behalf of the Company to recover alleged short-swing profits
from several alleged statutory insiders of the Company, including Company
officer and director Douglas A. McClain Jr.  The actions include the
Company as a nominal defendant only and do not allege any claims of liability
against the Company.  Donoghue withdrew the New York action in April
2008 and the California action has been stayed pending resolution of the related
earlier-filed action by shareholder Leon Segen currently pending in the
Southern District of New York.
  On or
about July 27, 2006, Daval filed suit in the High Court of Justice, Chancery
Division in London, England against Argyll Biotech and five of Argyll Biotech’s
research scientists and others, including Douglas McClain, Sr., seeking an
injunction and damages or an account of profits based on allegations of breach
by the scientists and Mr. McClain of confidentiality agreements with Daval,
breaches by such persons of their fiduciary duties and conspiracy by Argyll
Biotech and certain of its shareholders to wrongfully disclose and use Daval’s
alleged trade secrets.  These proceedings do not allege infringement
of any Daval patent whether by Argyll Biotech or any of the other
defendants.  Argyll Biotech has filed its defenses and continues to
investigate the merits of the suit and the basis of its defenses including,
among other grounds, that one of the active ingredients in SF-1019 disclosed in
Argyll Biotech’s 603 Application is based on independent research by Argyll
Biotech’s research scientists, and the method of producing SF-1019 is materially
different from Daval’s process. The action had been listed for trial in the UK
in January 2009 but, in December 2008, the High Court in London ordered that the
trial be rescheduled for a later date likely to be late 2009 or early 2010.
Immunosyn is not involved in this litigation.
  Immunosyn
has been provided with rent-free office space for two executive offices under a
monthly oral agreement with no specific term from its affiliate and shareholder,
Argyll Equities LLC. It is uncertain how long Argyll Equities will continue
providing office space or on what terms space will continue to be provided to
Immunosyn in the future. At present, Immunosyn does not require dedicated office
space.
  Item
      9.
                Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.
  None.
  Item
      9A.
                Controls
      and Procedures.
  Controls
and Procedures
  The
Company maintains disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended) that are
designed to ensure that information required to be disclosed by the Company in
reports it files or submits under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and 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 the Company’s Chief
Executive Officer and Chief Financial and Accounting Officer, as appropriate, to
allow timely decisions regarding required disclosures.  In designing
and evaluating the disclosure controls and procedures, management recognizes
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.  As of
the end of the period covered by this report, and under the supervision and with
the participation of management, including its Chief Executive Officer and Chief
Financial and Accounting Officer, who are responsible for establishing and
maintaining adequate internal control over financial reporting as such term is
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, such persons
conducted an evaluation of the effectiveness of the design and operation of
these disclosure controls and procedures. Based on this evaluation and subject
to the foregoing, the Company’s Chief Executive Officer and Chief Financial and
Accounting Officer concluded that these controls are not effective because there
are material weaknesses in our internal control over financial
reporting. To
address the material weakness, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.
  39
  Immunosyn
recognizes the importance of internal controls.  As Immunosyn is
currently a development stage company with limited ongoing financial operations,
management is making an effort to mitigate this material weakness to the fullest
extent possible.  At present this is done by having the Chief
Executive Officer review Immunosyn’s financial statements, account
reconciliations and accounts payable reports that have been prepared by Chief
Financial Officer for reasonableness.  All unexpected results are
investigated.  At any time, if it appears that any control can be
implemented to continue to mitigate such weakness, it will be immediately
implemented.  As Immunosyn grows in size and as its finances allow,
management will hire sufficient accounting staff and implement appropriate
procedures for monitoring and review of work performed by our Chief Financial
Officer.
  Management’s
Annual Report on Internal Control over Financial Reporting
  Section
404 of the Sarbanes-Oxley Act of 2002 requires that management document and test
the Company’s internal control over financial reporting and include in this
Annual Report on Form 10-K a report on management’s assessment of the
effectiveness of our internal control over financial reporting.
  Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rule 13a-15(f) of
the Securities Exchange Act of 1934, as amended.  Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based upon the
framework in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(COSO).
  In order
to evaluate the effectiveness of our internal control over financial reporting
as of December 31, 2008, as required by Section 404 of the Sarbanes-Oxley Act of
2002, our management conducted an assessment, including testing, based on the
criteria set forth in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (the “COSO
Framework”).  A material weakness is a control deficiency, or a
combination of control deficiencies, that results in more than a remote
likelihood that a material misstatement of our annual or interim financial
statements will not be prevented or detected.  In assessing the
effectiveness of our internal control over financial reporting, management
identified the following material weaknesses in internal control over financial
reporting as of December 31, 2008:
 
 1.
                Deficiencies
      in the Company’s Control Environment.  The Company’s control
      environment did not sufficiently promote effective internal control over
      financial reporting throughout the organization. This material weakness
      exists because of the aggregate effect of multiple deficiencies in
      internal control which affect the Company's control environment,
      including: a) a failure to effectively implement, follow, and enforce the
      limits on the delegation of authority for expenditure from the Board of
      Directors to management, including the failure by management to obtain the
      required Board approvals for certain expenditures; b) the lack of an
      effective risk assessment process for the identification of fraud risks;
      c) a failure to implement and ensure the consistent and timely completion
      of employee acknowledgments of the Company's Code of Ethics; d) the lack
      of an internal audit function or other effective mechanism for ongoing
      monitoring of the effectiveness of internal controls; and e) insufficient
      documentation and communication of our accounting policies and
      procedures.
 
 2.
                Deficiencies
      in the staffing of our financial accounting department.  The
      number of qualified accounting personnel with experience in public company
      SEC reporting and GAAP is limited.  This weakness does not
      enable us to maintain adequate controls over our financial accounting and
      reporting processes regarding the accounting for non-routine and
      non-systematic transactions. There is a risk that a material misstatement
      of the financial statements could be caused, or at least not be detected
      in a timely manner, by this shortage of qualified
      resources.
 
 3.
                Deficiencies
      in Segregation of Duties.  The Chief Executive Officer and the
      Chief Financial Officer are actively involved in the preparation of the
      financial statements, and therefore cannot provide an independent review
      and quality assurance function within the accounting and financial
      reporting group.  The limited number of qualified accounting
      personnel discussed above results in an inability to have independent
      review and approval of financial accounting
      entries.  Furthermore, management and financial accounting
      personnel have wide-spread access to create and post entries in the
      Company’s financial accounting system.  There is a risk that a
      material misstatement of the financial statements could be caused, or at
      least not be detected in a timely manner, due to insufficient segregation
      of duties.
 
 Based on
the material weaknesses described above and the criteria set forth by the COSO
Framework, we have concluded that our internal control over financial reporting
at December 31, 2008 was not effective.
 
 The
Company's independent registered public accounting firm, Malone & Bailey,
PC, has issued an attestation report on the Company's internal control over
financial reporting. That report appears on page 27.
  Changes in Internal
Controls
  In our
efforts to continuously improve our internal controls, management intends to
take steps, when funding permits, to enchance controls and procedures subsequent
to December 31, 2008 as part of our remediation efforts in addressing the
material weaknesses above. One of the steps management intends to take is to
increase documentation around certain authorization and review
controls.
  Item
      9B.
                Other
      Information.
  None.
  PART
III
  Item
      10.
                Directors,
      Executive Officers, and Corporate
Governance.
  Set forth
below is information regarding the Company’s current directors and executive
officers.  There are no family relationships between any of our
directors or executive officers.  The directors are elected annually
by stockholders.  The executive officers serve at the pleasure of the
Board of Directors.
  40
  Name
                Age
                TitleStephen
      D. Ferrone
                58
                President
      and Chief Executive Officer, DirectorDouglas
      A. McClain, Jr.
                34
                Chairman
      of the Board, Chief Financial and Accounting Officer, Secretary,
      DirectorMyron
      W. Wentz
                68
                Director
  STEPHEN
D. FERRONE, President and Chief Executive Officer, Director
  Mr.
Ferrone was appointed by the Company to serve as the President and Chief
Executive Officer of the Company and a member of the Board of Directors
effective the opening of business on October 15, 2007.  Mr. Ferrone is
an attorney with more than 20 years of experience in the investment industry,
having held senior leadership and management roles in marketing and sales with a
number of publicly traded financial services companies including Morningstar,
Inc., ABN-AMRO and Charles Schwab & Co., Inc.  From August 2005 to
October 2007, Mr. Ferrone was the founder and principal of SF Consulting, a
private business consulting company.  From May 2005 to August 2005,
Mr. Ferrone served as the Director of Distribution and National Sales of
Morningstar, Inc. and Morningstar Investment Services.  From August
1996 to April 2005, Mr. Ferrone had various roles at ABN-AMRO Asset Management
and ABN-AMRO Investment Fund Services including Senior Managing Director and
National Sales Director.  From May 1991 to August 1996, Mr. Ferrone
served as a Regional Marketing Director of Charles Schwab & Co., Inc. and
Schwab Institutional.  In addition, from September 1977 to May 1983,
Mr. Ferrone served as an Assistant State’s Attorney and felony trial prosecutor
in the Cook County State’s Attorney’s Office in Chicago, Illinois.  He
holds a JD degree from Loyola University School of Law and a BA from
Northwestern University.  He is also a licensed securities broker
holding series 7, 24 and 63 licenses.
  Mr.
Ferrone is not currently a director of any other reporting
company.  There are no family relationships between Mr. Ferrone and
any of the other directors or executive officers of the Company.  Mr.
Ferrone, through SF Consulting, was previously a party to a consulting
arrangement with the Company which called for payments aggregating
$150,000.  Mr. Ferrone served as a director and officer of a
predecessor of the Company, Nurovysn Merger Corporation, which was dissolved in
August 2006.
  DOUGLAS
A. MCCLAIN, JR., Chairman of the Board, Chief Financial and Accounting Officer,
Secretary, Director
  Mr.
McClain is a financial executive with 10 years of experience.  In
2002, Mr. McClain co-founded Argyll Equities, LLC and its affiliates (including
Argyll Biotech), a boutique private equity investment banking and corporate
finance firm, where he serves as an executive officer and
director.  In 1999, he joined International Profit Associates, a
business consulting firm, as a Senior Executive responsible for mergers and
acquisitions and corporate finance, where he was employed until
2001.  From 2001 to 2002, Mr. McClain was a business
consultant.  Mr. McClain graduated with a Bachelor of Business
Administration in Finance from Mercer University’s Stetson School of Business
and Economics in 1996.  Mr. McClain was a founder of the Company and
has been a director and officer since inception in August 2006.  Mr.
McClain resigned as Chief Financial Officer and Chief Accounting Officer of the
Company effective the close of business on Friday, October 19, 2007, but resumed
such positions on February 1, 2008.  He is also Chairman of the Board
of Directors and Secretary of the Company.
  MYRON W.
WENTZ, Director
  Myron W.
Wentz became a director of the Company on March 14, 2008.  Dr. Wentz
is Chairman of the Board of USANA Health Sciences, Incorporated (NASDAQ:
USNA).  Dr. Wentz founded USANA in 1992 and has been the Chairman and,
until 2008,  CEO since its inception.  USANA is a public
company that develops and manufactures nutritional and personal care products
that are sold directly to preferred customers and associates throughout the
world.  In 1974, Dr. Wentz founded Gull Laboratories (the former
parent company of USANA) and served as President and Chairman from 1974 to 1994
during which time Gull developed, manufactured and marketed medical diagnostic
test kits designed to detect infectious diseases, particularly those caused by
viruses, and used in private and hospital laboratories around the
world.  Gull was sold to Fresenius, a German medical products company,
in 1994 although Dr. Wentz continued as Chairman until 1998.  In 1998,
Dr. Wentz founded Sanoviv Medical Institute, a holistic medical facility located
on the Pacific Coast near Rosarito Beach, Mexico.  Dr. Wentz received
his doctorate from North Central College in Illinois.
  As part
of the Stock Purchase and Option Agreement dated March 13, 2008 between Dr.
Wentz and Argyll Biotech, the Company’s largest shareholder, Argyll Biotech
agreed to nominate and/or cause Dr. Wentz (or his designees) to be elected to
the Company’s Board of Directors at each annual meeting of stockholders for so
long as Dr. Wentz owns at least 200,000 shares of the Company’s Common Stock and
Argyll Biotech agreed to vote all, or cause (to the extent within its control)
to be voted all, shares of the Company’s Common Stock owned or controlled by
Argyll Biotech, directly or indirectly, to be voted to elect Dr. Wentz or his
designee to serve on the Company’s Board of Directors for so long as Dr. Wentz
owns at least 200,000 shares of the Company’s Common Stock.  Dr. Wentz
agreed to serve on the Company’s Board of Directors if elected.
  41
  Advisors
and Consultants
  The
following person is serving as an advisor to the Company:
  FRED G.
JAGER – Mr. Jager is founder, president and chief executive officer of Hunter
Wise Financial Group, LLC and Hunter Wise Securities, LLC.  For three
decades he has represented public and privately held companies throughout North
America, and a successful advisor in middle-market corporate
finance.  Formerly president of Geneva Corporate Finance, Inc., Mr.
Jager also founded Denver-based Jager & Company, Inc., which was the largest
corporate finance firm of its kind in the Rocky Mountain region.  He
also was executive vice president of an investment banking firm in Northern
California, and chief operating officer of one of the largest vocational
educational companies in the world.  A former intelligence officer,
Mr. Jager has been a director on numerous public and private companies, is
experienced business speaker and author of numerous published
articles.
  Compliance
with Section 16(a) of the Exchange Act
  Section
16(a) of the Exchange Act, as amended, requires our executive officers,
directors and persons who beneficially own more than 10% of our shares of Common
Stock to file reports of their beneficial ownership and changes in ownership
(Forms 3, 4 and 5, and any amendment thereto) with the SEC.  Executive
officers, directors, and greater-than-ten percent holders are required to
furnish us with copies of all Section 16(a) forms they file.
  Based
solely upon a review of Forms 3, 4 and 5 furnished to us for the fiscal year
ended December 31, 2008, we have determined that our directors, officers and
greater than 10% beneficial owners, except as provided below, complied with all
applicable Section 16 filing requirements.
  Padmore
Holdings, Ltd., Argyll Equities, James T. Miceli and Douglas A. McClain Jr. were
late in filing one or more transactions on Form 4.  We have informed
the above individuals and entities of the status of their filings and understand
that appropriate filings will be made.
  Code
of Ethics
  The
Company has adopted a code of ethics that applies to the Company’s principal
executive officer, principal financial and accounting officer, or persons
performing similar functions.  This code of ethics is available, free
of charge, on our website at  www.immunosyn.com.
  Corporate
Governance
  Nominating
Process
  The
Company’s Board of Directors has no nominating committee.  When the
Company develops its operations, it will create a nominating
committee.  In the meantime, the entire Board of Directors is acting
as the Company’s nominating committee.  There are no material changes
to the procedures by which security holders may recommend nominees to the
Company’s Board of Directors.
  Audit
Committee Financial Expert
  The
Company does not have an audit committee or a compensation committee of its
Board of Directors.  In addition, the Company’s Board of Directors has
determined that the Company does not have an audit committee financial expert
serving on the Board.  When the Company develops its operations, it
will create an audit and a compensation committee and will seek an audit
committee financial expert for its Board and audit committee.  Until
it has such committees and such an expert, the Company will not be able to list
its stock on the Nasdaq or the major securities exchanges.  In the
meantime, the entire Board of Directors is acting as the Company’s audit
committee.
  42
  Item
      11.
                  Executive
      Compensation.
  Compensation
Discussion and Analysis
 
 We do not have a compensation
committee; all decisions regarding compensation are made by our
Directors.
 
 In 2008,
Stephen D. Ferrone, our President and Chief Executive Officer was paid an annual
salary of $3,000 per month pursuant to an amended Employment Agreement with the
Company.  Mr. Ferrone agreed to allow the Company to accrue his
compensation after August 19, 2008.   Mr. Ferrone does not
receive any non-cash compensation. We believe that this salary is below the
market salary for someone of Mr. Ferrone’s qualifications; however in
negotiations between the Company and Mr. Ferrone, this amount was considered
appropriate given the developmental status of the Company. We believe that Mr.
Ferrone’s equity holdings in the Company provide him with an incentive to
improve the Company’s performance.
 
 Douglas
A. McClain, Jr., our Chief Financial and Accounting Officer, did not receive
compensation from the Company in 2008 and does not currently receive any such
compensation. We believe that this is appropriate given the developmental status
of the Company and in light of the Mr. McClain’s significant indirect equity
stake in the Company through Argyll Equities and Argyll Biotech.
 
 We do not
currently believe that it is appropriate to issue equity based compensation,
although the Company has established a stock option plan for employees,
directors and consultants and reserved 7,450,000 shares for issuance under such
plan.
 
 The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the named executive officers
during the 2007 and 2008 fiscal years:
  Summary
Compensation Table – 2008
  Name
      and Position
                                                                                                                          (a)
                                                                                                                        
                                                                                                                        Year
      (b)
                                                                                                                        
                                                                                                                        
                                                                                                                        Salary
                                                                                                                          ($)
      (c)
                                                                                                                        
                                                                                                                        
                                                                                                                        Bonus
                                                                                                                          ($)
      (d)
                                                                                                                        
                                                                                                                        
                                                                                                                        Stock
                                                                                                                          Awards
                                                                                                                          ($)
      (e)
                                                                                                                        
                                                                                                                        
                                                                                                                        Option
                                                                                                                          Awards
                                                                                                                          ($)
      (f)
                                                                                                                        
                                                                                                                        
                                                                                                                        Non-Equity
                                                                                                                          Incentive
      Plan
                                                                                                                          Compensation
                                                                                                                          ($)
      (g)
                                                                                                                        
                                                                                                                        
                                                                                                                        Change
      in
                                                                                                                          Pension
      Value
                                                                                                                          and
      Nonqualified
                                                                                                                          Deferred
                                                                                                                          Compensation
                                                                                                                          Earnings
      ($) (h)
                                                                                                                        
                                                                                                                        
                                                                                                                        All
      Other
                                                                                                                          Compensation
                                                                                                                          ($)
      (i)
                                                                                                                        
                                                                                                                        
                                                                                                                        Total
      ($)
                                                                                                                          (j)D.
      Kent Norton,
                                                                                                                          President
      and CEO
                                                                                                                          (1)
                                                                                                                        
                                                                                                                        2007
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0Stephen
      D. Ferrone,
                                                                                                                          President
      and CEO
                                                                                                                          (2)
                                                                                                                        
                                                                                                                        
                                                                                                                        2007
                                                                                                                          2008
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        7,696
                                                                                                                          22,500
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        7,696
                                                                                                                          22,500Douglas
      A.
                                                                                                                          McClain,
      Jr., Chief
                                                                                                                          Financial
      and
                                                                                                                          Accounting
      Officer
                                                                                                                          (3)
                                                                                                                        
                                                                                                                        
                                                                                                                        2007
                                                                                                                          2008
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0G.
      David Criner,
                                                                                                                          Chief
      Financial and
                                                                                                                          Accounting
      Officer
                                                                                                                          (4)
                                                                                                                        
                                                                                                                        
                                                                                                                        2007
                                                                                                                          2008
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        7,043
                                                                                                                          3,000
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                          0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        7,043
                                                                                                                          3,000
  43
  (1) Mr.
Norton resigned his positions as President and Chief Executive Officer of the
Company and a member of the Board of Directors effective the close of business
on Friday, October 12, 2007.
  (2)
Stephen D. Ferrone was appointed by the Company to serve as the President and
Chief Executive Officer of the Company and a member of the Board of Directors
effective the opening of business on October 15, 2007 to fill the vacancy
created by the resignation of Mr. Norton from such positions.
  (3)
Douglas A. McClain, Jr. resigned as Chief Financial Officer and Chief Accounting
Officer of the Company effective the close of business on Friday, October 19,
2007.  He remained as a member of the Board of Directors and as
Secretary of the Company.  Mr. McClain was appointed by the Company to
serve as the Chairman of the Board of the Company effective the opening of
business on October 22, 2007.  Mr. McClain resumed his role as Chief
Financial and Accounting Officer of the Company effective February 1, 2008 upon
the resignation of Mr. Criner.
  (4) G.
David Criner was appointed by the Company to serve as the Chief Financial
Officer and Chief Accounting Officer of the Company effective the opening of
business on October 22, 2007 to fill the vacancy created by the resignation of
Mr. McClain from such positions.  Mr. Criner resigned his position
effective February 1, 2008.
  Narrative
Disclosure to Summary Compensation Table
  D. Kent
Norton, the Company’s President and Chief Executive Officer until October 12,
2007, was not a party to an employment agreement with the Company.
  Effective
October 15, 2007, Stephen D. Ferrone and the Company entered into an Employment
Agreement (the “Ferrone Employment Agreement”) pursuant to which Mr. Ferrone is
employed by the Company as its President and Chief Executive Officer, as
described below.  In addition, Argyll Biotechnologies, LLC has agreed
to nominate and/or cause Mr. Ferrone to be elected to the Company’s Board of
Directors at each annual meeting of stockholders during the Term.  The
term of the Ferrone Employment Agreement began on October 15, 2007 and will
terminate on December 31, 2009, unless earlier terminated, and will
automatically extend for each succeeding one year period unless either party
provides the other with a written notice at least 30 days prior to the end of
the then current Term advising that the party providing the notice shall not
agree to so extend the Term (the “Term”).
  On
November 15, 2007, Mr. Ferrone and the Company entered into a First Amendment to
the Ferrone Employment Agreement pursuant to which the parties agreed to change
the base compensation Mr. Ferrone is to receive from the Company under the
Ferrone Employment Agreement to a base salary equal to $3,000 per month (or pro
rata portion thereof) payable semi-monthly (less applicable taxes and
withholdings).  Under this Amendment, Mr. Ferrone’s base salary
continues to be subject to annual review by the Company’s Board or the
Compensation Committee thereof for discretionary periodic increases but not
decreases.
  Under the
Ferrone Employment Agreement, Mr. Ferrone is to receive a bonus for each year of
the Term equal to (1) one half of one percent (0.5%) on gross revenues (GR) less
the Company’s cost of product of $0-$500 million dollars, (2) three quarters of
one percent (0.75%) on GR of $500 million to one billion dollars and (3) one
percent (1%) on GR above one billion dollars, paid between January 1 and March
15 of the following year (“Bonus”).
  Mr.
Ferrone is to participate in all of the Company’s employee benefit and incentive
compensation plans and arrangements made available during the Term to its other
senior executives, including health insurance, and is entitled to four weeks of
paid vacation per year and five sick days per year.  The Company is to
promptly reimburse Mr. Ferrone for his reasonable out-of-pocket expenses
incurred in connection with his employment by the Company.  To date,
Mr. Ferrone has advanced these amounts to the Company.
  Under the
Ferrone Employment Agreement, additional amounts are payable to Mr. Ferrone by
the Company under certain circumstances upon the termination of the Ferrone
Employment Agreement.  If the termination is on account of Mr.
Ferrone’s death or “Disability” (all as defined in the Ferrone Employment
Agreement), no additional amount (other than payment of Base Salary and/or Bonus
accrued and due through the date of Mr. Ferrone’s death or termination for
Disability) shall be payable to Mr. Ferrone.  If the termination is on
account of the Company’s termination of Mr. Ferrone’s employment “For Cause” or
Mr. Ferrone’s resignation “Without Good Reason” (all as defined in the Ferrone
Employment Agreement), no additional amount (other than payment of Base Salary
through the date of termination) shall be payable to Mr. Ferrone.  If
the termination is on account of Mr. Ferrone’s resignation “For Good Reason,” or
the Company’s termination of Mr. Ferrone’s employment “Without Cause,” Mr.
Ferrone shall receive, subject to his continued compliance with his
confidentiality and nonsolicitation obligations under the Ferrone Employment
Agreement, continued payments in an amount equal to the greater of (1) 12 months
of his then current monthly Base Salary or (2) $400,000, payable in accordance
with the Company’s normal payroll practices and policies,  accrued
Bonus and benefit plan payments, accrued vacation and continued coverage under
the Company’s medical, dental and life insurance benefits for the 12-month
period immediately following Mr. Ferrone’s resignation or termination, as
applicable.
  44
  Under the
Ferrone Employment Agreement, the Company is required to maintain directors’ and
officers’ liability insurance for Mr. Ferrone during the Term. The Company is
also required to indemnify Mr. Ferrone in certain circumstances.
  Under the
Ferrone Employment Agreement, Mr. Ferrone is eligible to participate in the
Company’s Stock Option Plan; otherwise Mr. Ferrone is to be granted options
subject to approval by the Compensation Committee of the Board of Directors and
in a manner customary for like companies in the industry (such option exercise
price being equal to the fair market value of the stock on December 31st  of the Term year
for which they are being granted).  No such options have yet been
granted to Mr. Ferrone by the Company.
  There has
not been and there is currently no arrangement with Mr. McClain to provide
compensation for his executive services to the Company as Chief Financial and
Accounting Officer.
  Effective
October 22, 2007, G. David Criner and the Company entered into an Employment
Agreement (the “Criner Employment Agreement”) pursuant to which Mr. Criner was
employed by the Company as its Chief Financial Officer and Chief Accounting
Officer, as described below.  The term of the Criner Employment
Agreement began on October 22, 2007 and will terminate on December 31, 2009,
unless earlier terminated, and will automatically extend for each succeeding one
(1) year period unless either party provides the other with a written notice at
least 30 days prior to the end of the then current Term advising that the party
providing the notice shall not agree to so extend the Term (the
“Term”).  Mr. Criner resigned his position on February 1, 2008 for
personal reasons.
  On
November 15, 2007, Mr. Criner and the Company entered into a First Amendment to
the Criner Employment Agreement pursuant to which the parties agreed to change
the base compensation Mr. Criner is to receive from the Company under the Criner
Employment Agreement to a base salary equal to $3,000 per month (or pro rata
portion thereof) payable semi-monthly (less applicable taxes and
withholdings).  Mr. Criner’s base salary is subject to annual review
by the Company’s Board or the Compensation Committee thereof for discretionary
periodic increases but not decreases.
  Under the
Criner Employment Agreement, Mr. Criner is to receive a bonus for each year of
the Term as determined by the Board of Directors, paid between January 1 and
March 15 of the following year (“Bonus”).
  Mr.
Criner is to participate in all of the Company’s employee benefit and incentive
compensation plans and arrangements made available during the Term to its other
senior executives, including health insurance, and is entitled to 4 weeks of
paid vacation per year and 5 sick days per year.  The Company is to
promptly reimburse Mr. Criner for his reasonable out-of-pocket expenses incurred
in connection with his employment by the Company.
  Under the
Criner Employment Agreement, additional amounts are payable to Mr. Criner by the
Company under certain circumstances upon the termination of the Criner
Employment Agreement.  If the termination is on account of Mr.
Criner’s death or “Disability” (all as defined in the Criner Employment
Agreement), no additional amount (other than payment of Base Salary and/or Bonus
accrued and due through the date of Mr. Criner’s death or termination for
Disability) shall be payable to Mr. Criner.  If the termination is on
account of the Company’s termination of Mr. Criner’s employment “For Cause” or
Mr. Criner’s resignation “Without Good Reason” (all as defined in the Criner
Employment Agreement), no additional amount (other than payment of Base Salary
through the date of termination) shall be payable to Mr. Criner.  If
the termination is on account of Mr. Criner’s resignation “For Good Reason,” or
the Company’s termination of Mr. Criner’s employment “Without Cause,” Mr. Criner
shall receive, subject to his continued compliance with his confidentiality and
nonsolicitation obligations under the Criner Employment Agreement, continued
payments in an amount equal to the lesser of (1) 12 months of his then current
monthly Base Salary or (2) $450,000, payable in accordance with the Company’s
normal payroll practices and policies, accrued Bonus and benefit plan payments,
accrued vacation and continued coverage under the Company’s medical, dental and
life insurance benefits for the 12-month period immediately following Mr.
Criner’s resignation or termination, as applicable.
  Under the
Criner Employment Agreement, the Company is required to maintain directors’ and
officers’ liability insurance for Mr. Criner during the Term. The Company is
also required to indemnify Mr. Criner in certain circumstances.
  45
  Outstanding
Equity Awards at Fiscal Year-End
  We did
not award any stock options or other equity incentive plan awards to any above
named executive officer during fiscal 2007 or 2008 and there are no stock
options or other equity incentive plan awards outstanding as of the end of
fiscal 2008.
  Non-Employee
Director Compensation
  For
fiscal 2008, we did not pay any compensation to any of our
directors.  The Company has no formal plan for Director compensation,
but anticipates that it will reimburse the reasonable and customary expenses of
any non-employee Directors associated with their service on the Board, including
travel expenses and standard fees for attending board and committee
meetings.  In addition, the Company has established the Immunosyn 2006
Stock Option Plan (the “Plan”) for employees, directors and consultants and
reserved 7,450,000 shares for issuance under the Plan.  At the date
hereof, no options have been issued under this Plan.
 
 Compensation
Committee Interlocks and Insider Participation
  We do not
have a compensation committee.  Various members of our Board of
Directors participated in deliberations concerning executive officer
compensation. Douglas McClain, Jr., a member of our Board and our Chief
Financial and Accounting Officer, is a shareholder and officer of Argyll
Equities and Argyll Biotech. For more information regarding this relationship,
please see Item 13-Certain Relationships and Related Transactions, and Director
Independence.
  Compensation
Committee Report
  We do not
have a compensation committee. Our Board of Directors has reviewed and discussed
the Compensation Discussion and Analysis above with management and, based on
such review and discussion, has determined that the Compensation Discussion and
Analysis should be included in this Annual Report on Form 10-K.
 
 Stephen
      D. Ferrone
              Douglas
      A. McClain, Jr.
 
  Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
  Securities
Authorized for Issuance Under Equity Compensation Plans
  The
Company has adopted an employee stock option plan, which acts as an incentive
stock and stock option plan, under which the Company’s employees, directors and
consultants will be eligible to receive, in relevant part, either securities or
stock options exercisable for the Company’s securities.  The Company
has reserved 7,450,000 shares of Common Stock for issuance under this
Plan.  No options have been issued under this Plan.
 
 Plan
      Category
                          
                          Number
      of Securities to be
                            issued
      upon exercise of
                            outstanding
      options warrants
                            and
      rights (a)
                          
                          
                          Weighted-average
      exercise
                            price
      of outstanding options,
                            warrants
      and rights (b)
                          
                          
                          Number
      of securities
                            remaining
      available for
                            future
      issuance under equity
                            compensation
      plans
                            (excluding
      securities reflected
                            in
      column (a) (c)Equity
      compensation plans approved by security holders
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0Equity
      compensation plans not approved by security holders
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          7,450,000Total
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          7,450,000
  46
  Security
Ownership of Certain Beneficial Owners and Management
  The
following table lists stock ownership of our Common Stock as of March 12,
2009.  The information includes beneficial ownership by (i) holders of
more than 5% of our Common Stock, (ii) each of our directors and executive
officers and (iii) all of our directors and executive officers as a
group.  Except as noted below, to our knowledge, each person named in
the table has sole voting and investment power with respect to all shares of our
Common Stock beneficially owned by them.
  Name
      and Address
                                          of
      Beneficial Owner
                                        
                                        Director/Officer
                                        
                                        Amount
      and
                                          Nature
      of
                                          Beneficial
                                          Ownership
      (1)
                                        
                                        
                                        Percentage
                                          of
      ClassArgyll
      Biotechnologies LLC (2)
                                          4225
      Executive Square, Suite 260
                                          La
      Jolla, CA 92037
                                        
                                        
                                        
                                        
                                        145,363,798
                                        
                                        
                                        
                                        53.41
                                        %Padmore
      Holdings, Ltd. (3)
                                          1100
      N.W. Loop 410, Suite 207
                                          San
      Antonio, TX 78213
                                        
                                        
                                        
                                        
                                        13,880,550
                                        
                                        
                                        
                                        5.10
                                        %Clairsvelle
      Holdings, Ltd. (4)
                                          1100
      N.W. Loop 410, Suite 207
                                          San
      Antonio, TX 78213
                                        
                                        
                                        
                                        
                                        19,740,000
                                        
                                        
                                        
                                        7.25
                                        %Argyll
      Equities LLC (5)
                                          4225
      Executive Square, Suite 260
                                          La
      Jolla, CA 92037
                                        
                                        
                                        
                                        
                                        14,708,287
                                        
                                        
                                        
                                        5.40
                                        %James
      T. Miceli (7)
                                          4225
      Executive Square, Suite 260
                                          La
      Jolla, CA 92037
                                        
                                        
                                        
                                        
                                        92,782,290
                                        
                                        
                                        
                                        34.09
                                        %Douglas
      A. McClain, Jr. (6)
                                          4225
      Executive Square, Suite 260
                                          La
      Jolla, CA 92037
                                        
                                        Chief
      Financial and Accounting Officer and Secretary, Director
                                        
                                        
                                        110,122,290
                                        
                                        
                                        
                                        40.46
                                        %Stephen
      D. Ferrone (8)
                                          220
      Savanna Court
                                          Lake
      Forest, IL 60045
                                        
                                        President
      and Chief Executive Officer, Director
                                        
                                        
                                        1,450,000
                                        
                                        
                                        
                                        0.53
                                        %Myron
      W. Wentz, Ph.D
                                          2602C
      Transportation Avenue
                                          National
      City, CA 91950
                                        
                                        Director
                                        
                                        
                                        400,000
                                        
                                        
                                        
                                        0.15
                                        %All
      directors and officers as a group (three persons)
                                        
                                        
                                        
                                        
                                        111,972,290
                                        
                                        
                                        
                                        41.14
                                        %
 ____________
 
 (1)
                  Includes
      in each case shares of Common Stock that may be issued upon exercise of
      options or warrants that are exercisable within 60 days for the subject
      individual only, if any.  Percentages are computed on the basis
      of 272,172,347 shares of Common Stock outstanding as of March 12,
      2009.  All shares are directly owned unless otherwise
      indicated.(2)
                  A
      Delaware limited liability company owned 50% by James T. Miceli and 50% by
      Douglas McClain Jr.
  47
  (3)
              A
      British Virgin Islands entity, with Mr. Lynn Booker having voting and
      dispositive control, and owned 45% by James T. Miceli, 45% by Douglas
      McClain Jr., and 10% by Douglas McClain
Sr.
  (4)
              A
      British Virgin Islands entity, with Mr. Lynn Booker having voting and
      dispositive control, and owned by Douglas McClain
  Jr.
  (5)
              A
      Texas limited liability company owned 50% by Douglas McClain Jr. and 50%
      James T. Miceli.
  (6)
              Including
      Mr. McClain’s shares held by Clairsvelle Holdings, Ltd.; his indirect
      beneficial ownership of an aggregate of 100,000 shares held by the
      Bruce McClain Family Trusts 1, 2, 3 and 4 through his role as trustee
      of such trusts; his indirect beneficial ownership of 4,000,000 shares
      held by the GRD Family Trust 2006 through his role as trustee of such
      trust; and his undivided interests in Padmore Holdings, Argyll
      Biotech and Argyll Equities.
  (7)
              Including
      Mr. Miceli’s undivided interests in Argyll Biotech, Padmore Holdings and
      Argyll Equities; his indirect beneficial ownership in 2,000,000 shares
      held by each of the Kaitlyn Miceli Trust, the Ryan Miceli Trust and the
      Steven Miceli Trust through his role as trustee of such
      trusts; and 500,000 shares held directly by Mr. Miceli.  Does
      not include 12,710,000 shares held by Mr. Miceli's wife as to which he
      disclaims beneficial ownership.
  (8)
              Does
      not include 300,000 shares held by Mr. Ferrone's wife as to which he
      disclaims beneficial ownership.
 
 Item
      13.
                Certain
      Relationships and Related Transactions, and Director
      Independence.
  Certain
Relationships and Related Transactions
  Except as
set forth below, there have been no material transactions during the past two
years between us and any officer, director or any stockholder owning greater
than 5% of our outstanding shares, nor any of their immediate family
members.
  The
Company has entered into an exclusive license agreement with Argyll Biotech, an
affiliate of the Company that owns approximately 53.41% of the Company’s issued
and outstanding Common Stock as of March 12, 2009.  The exclusive
license agreement, including, without limitation, the fees established in that
agreement, will be between related entities, was not negotiated in an
arms-length transaction and does not necessarily bear any relationship to
established or traditional methods of valuing such fees.  No
independent audit or verification of the license fee has been made to determine
its fairness to Immunosyn.
  If the
proceeds received by Argyll Biotech from the sale of the Company’s stock are
inadequate to complete development and regulatory approval of SF-1019, we will
pay the deficiency through a fee equal to three and one-half per cent (3-1/2%)
of Immunosyn’s gross sales of SF-1019, in addition to the cost of product
purchases from Argyll Biotech.  The license fee is deemed earned when
paid and there are no restrictions on the release or use of the license fee paid
to Argyll Biotech, which may be used in Argyll Biotech’s discretion for any
purpose.  No refund will be owed by Argyll Biotech in the event the
cost of development and regulatory approval is substantially less than the fee,
nor are there any penalties owed by Argyll Biotech if it fails to complete
product development or obtain regulatory approval for its
distribution.  The Company’s inability or failure to pay any license
fees when due will adversely affect the Company’s licensed rights.  As
those rights will be the Company’s sole and primary asset, if the Company is
unable to maintain those rights, the Company will lose substantially all of its
value.
  Douglas
A. McClain, Jr., our Chief Financial and Accounting Officer, Corporate Secretary
and a Director of the Company, is a shareholder and an officer of Argyll
Equities and Argyll Biotech, shareholders of the Company.  As
discussed above, the Company is a party to the exclusive license agreement with
Argyll Biotech, the Company’s principal asset.
  The
Company has been provided with rent-free office space for two executive offices
under a monthly oral agreement with no specific term from its affiliate and
shareholder, Argyll Equities.  It is uncertain how long Argyll
Equities will continue providing office space or on what terms space will
continue to be provided to the Company in the future.
  48
  In
addition, since inception, Immunosyn has borrowed $885,105 from Argyll Equities,
LLC and Argyll Biotech who together own approximately 60% of Immunosyn’s Common
Stock.  These advances are unsecured and will be repaid on
demand.  Interest expense in the amount of $87,386 since inception and
$61,326 in 2008 was accrued using an annual rate of 7.5%.  Advances
from Stephen D. Ferrone, President and CEO of the Company, in the amount of
$8,559 are due and payable.
  Douglas
A. McClain Sr., the beneficial owner of a 10% interest in Padmore which owns
13,880,550 shares of Common Stock in the Company, is the father of Douglas A.
McClain, Jr., who is a Director, as well as the Chief Financial and Accounting
Officer and Secretary of the Company.  Including Douglas A. McClain
Jr.’s undivided interest in Padmore, Argyll Biotech and Argyll Equities, the
McClain’s control a total of 111,510,345 shares of Common Stock, or
approximately 40.97% of the Company’s Common Stock.  During 2008,
Padmore transferred 150,000 shares of Common Stock of the Company to Bear Creek
Advisors, LLC, a consultant to the Company.
  Director
Independence
  Myron W.
Wentz is an “independent director” as such term is defined in the Nasdaq
Marketplace Rules.  Neither Douglas A. McClain, Jr. nor Stephen D.
Ferrone is an independent director under such Rules.
 
 Item
      14.
                  Principal
      Accountant Fees and
Services.
  The
following table presents the fees for professional audit services rendered by
Malone & Bailey, P.C. for the audit of the Company’s annual financial
statements for the fiscal years ended December 31, 2007 and 2008 and fees for
other services rendered by Malone & Bailey, P.C. during such
periods:
  Fee
      Category
                    
                    Fiscal
      2007
                    
                    
                    Fiscal
      2008Audit
      Fees
                    
                    $
                    20,000
                    
                    
                    $
                    40,000Audit-Related
      Fees
                    
                    $
                    0
                    
                    
                    $
                    0Tax
      Fees
                    
                    $
                    5,000
                    
                    
                    $
                    5,200All
      Other Fees
                    
                    $
                    4,160
                    
                    
                    $
                    -Total
      Fees
                    
                    $
                    29,160
                    
                    
                    $
                    45,200
 
 Audit
fees include fees related to the services rendered in connection with the annual
audit of the Company’s consolidated financial statements and the reviews of and
other services related to registration statements, offering memoranda and
statutory or regulatory filings.
  Audit-related
fees are for assurance and related services by the principal accountants that
are reasonably related to the performance of the audit or review of the
Company’s financial statements.
  Tax Fees
include (i) tax compliance, (ii) tax advice, (iii) tax planning and (iv) tax
reporting.
  All Other
Fees includes fees for all other services provided by the principal accountants
not covered in the other categories such as litigation support,
etc.
  All of
the services for 2007 and 2008 were performed by the full-time, permanent
employees of Malone & Bailey, P.C.
  49
  PART
IV
 
 Item
      15.
                  Exhibits
      and Financial Statement
Schedules.
  (a)           The
following documents are filed as part of this Report:
  1.
              Financial
      Statements:
  Report
      of Independent Registered Public Accounting FirmBalance
      SheetStatement
      of ExpensesStatement
      of Cash FlowsStatement
      of Changes in Shareholders’ Equity (Deficit)Notes to Financial Statements
  2.
              Financial
      Statement Schedules:
 
 None
 
 3.
              Exhibits
 
 The
following exhibits are filed with, or incorporated by reference into, this
Report.
 
 Exhibit
      Number
                            Description3.1(a)
                            Certificate
      of Incorporation of Immunosyn Corporation, filed with the Secretary of
      State of the State of Delaware on August 3, 2006.3.2(a)
                            By-laws
      of Immunosyn Corporation.10.1(a)
                            License
      Agreement between Immunosyn Corporation and Argyll Biotechnologies, LLC,
      dated as of September 28, 2006.10.2(b)
                            Amended
      and Restated License Agreement between Immunosyn Corporation and Argyll
      Biotechnologies, LLC, dated as of October 25, 2007, effective as of
      September 26, 2006.10.3(a)
                            Form
      of Lock-Up Agreement.10.4(e)
                            Form
      of Amended and Restated Lock-Up Agreement.10.5(a)
                            Immunosyn
      2006 Stock Option Plan.10.6(c)
                            Employment
      Agreement effective as of October 15, 2007 between Stephen Ferrone and the
      Company.10.7(d)
                            First
      Amendment to Employment Agreement of Stephen Ferrone effective November
      15, 2007 between the Company and Stephen Ferrone.10.8(c)
                            Employment
      Agreement effective as of October 22, 2007 between David Criner and the
      Company.10.9(d)
                            First
      Amendment to Employment Agreement of David Criner effective November 15,
      2007 between the Company and David Criner.14.1(e)
                            Code
      of
Ethics.
 
 23.1*
                        Consent
      of Malone & Bailey, P.C.31.1*
                        Certification
      of Stephen D. Ferrone, Chief Executive Officer, pursuant to Section 302 of
      the Sarbanes-Oxley Act of
2002.
  50
  31.2*
                      Certification
      of Douglas A. McClain, Jr., Chief Financial and Accounting Officer,
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1*
                      Certification
      of Stephen D. Ferrone, Chief Executive Officer, pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002.32.2*
                      Certification
      of Douglas A. McClain, Jr., Chief Financial and Accounting Officer,
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002
 ____________________________
 
 *
                      Exhibit
      filed with this Report.(a)
                      Incorporated
      by reference to the Company’s Registration Statement on Form SB-2 (File
      No. 333-137881) filed with the Securities and Exchange Commission
      (the “SEC”) on October 6, 2006, as amended November 3, 2006 and
      December 22,
2006.
  (b)
              Incorporated
      by reference to the Company’s Current Report on Form 8-K, filed with the
      SEC on October 25, 2007.
  (c)
              Incorporated
      by reference to the Company’s Current Report on Form 8-K, filed with the
      SEC on October 23, 2007.
  (d)
              Incorporated
      by reference to the Company’s Current Report on Form 8-K, filed with the
      SEC on November 19, 2007.
  (e)
              Incorporated
      by reference to the Company’s Annual Report on Form 10-KSB for the fiscal
      year ended December 31, 2006, filed with the SEC on March 30,
      2007.
  51
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  Dated:  March
16, 2009
  IMMUNOSYN
      CORPORATIONBy:
                /s/
      Douglas A. McClain, Jr.Douglas
      A. McClain, Jr.
                  Chief
      Financial and Accounting
Officer
  Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
 
 Signature
                                        
                                        Title
                                        
                                        Date/s/
      Stephen
      D. Ferrone
                                        
                                        President,
      Chief Executive Officer, Director (Principal Executive
      Officer)
                                        
                                        March
      16, 2009Stephen
      D. Ferrone/s/ Douglas
      A. McClain, Jr.
                                        
                                        Chief
      Financial and Accounting Officer, Director (Principal
      Financial
                                        
                                        March
      16, 2009Douglas
      A. McClain, Jr.
                                        
                                        and
      Accounting Officer)Director
                                        
                                        March
      16, 2009Myron
      W. Wentz, Ph.D.
  52