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

                                   FORM 10-KSB
(Mark One)

|X|  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
     1934

                    For the fiscal year ended March 31, 2007

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
     OF 1934

               For the Transition Period from ________ to ________

                          Commission File No. 001-33088

                            IVIVI TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

              NEW JERSEY                                  22-2956711
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification No.)

                 224-S PEGASUS AVE., NORTHVALE, NEW JERSEY 07647
                    (Address of principal executive offices)

                                 (201) 784-8168
                           (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:

       Title of each class     Name of each exchange on which registered

          COMMON STOCK                THE AMERICAN STOCK EXCHANGE

Securities registered under Section 12(g) of the Exchange Act: NONE

     Check whether the issuer is not required to file reports pursuant to
Section 13 of 15(d) of the Exchange Act. [ ]

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No [ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|

     Indicate by check mark whether the issuer is a shell company (as defined
under Rule 12b-2 of the Exchange Act). Yes [ ] No |X|

     Issuer's revenues for the year ended March 31, 2007: $1,182,340. The
aggregate market value of the common stock of the issuer held by non-affiliates
of the issuer as of June 19, 2007, calculated based on the average of the
closing bid and asked price of the issuer's common stock, without par value, on
such date, as reported on The American Stock Exchange, was $24,419,041.

     At June 19, 2007, 9,588,908 shares of the issuer's common stock, without
par value, were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None
----

     Transitional Small Business Disclosure Format: Yes [ ] No |X|


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                            IVIVI TECHNOLOGIES, INC.

                          ANNUAL REPORT ON FORM 10-KSB
                            YEAR ENDED MARCH 31, 2007

                                TABLE OF CONTENTS


                                                                        PAGE NO.
                                                                        --------
PART I

Item 1.       Description of Business                                       1
Item 2.       Description of Property                                      44
Item 3.       Legal Proceedings                                            44
Item 4.       Submission of Matters to a Vote of Security Holders          45

PART II

Item 5.       Market for Common Equity and Related Stockholder Matters
              and Small Business Issuer Purchases of Equity Securities     45
Item 6.       Management's Discussion and Analysis and Results of
              Operations                                                   48
Item 7.       Financial Statements                                         58
Item 8.       Changes In and Disagreements With Accountants on
              Accounting and Financial Disclosure                          78
Item 8A.      Controls and Procedures                                      80
Item 8B.      Other Information                                            81

PART III

Item 9.       Directors, Executive Officers, Promoters, Control
              Persons and Corporate Governance; Compliance With Section
              16(a) of the Exchange Act                                    82
Item 10.      Executive Compensation                                       91
Item 11.      Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters                   99
Item 12.      Certain Relationships and Related Transactions and
              Director Independence                                       102
Item 13.      Exhibits                                                    106
Item 14.      Principal Accountant Fees and Services                      109


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                                     PART I

     In addition to historical information, this Annual Report on Form 10-KSB
contains "forward-looking statements" (within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that
involve risks and uncertainties. See "Item 1. Business - Risk Factors -
Cautionary Note Regarding Forward-Looking Statements" of this Annual Report on
Form 10-KSB.

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS OVERVIEW

     We are an early-stage medical technology company focusing on designing,
developing and commercializing proprietary electrotherapeutic technologies.
Electrotherapeutic technologies use electric or electromagnetic signals to help
relieve pain, swelling and inflammation and promote healing processes and tissue
regeneration. We have focused our research and development activities on pulsed
electromagnetic field, or PEMF, technology. This technology utilizes a magnetic
field that is turned on and off rapidly to create a therapeutic electrical
current in injured tissue, which then stimulates biochemical and physiological
processes to help repair injured soft tissue and reduce related pain. We are
currently marketing products utilizing our PEMF technology to the chronic wound
and plastic and reconstructive surgery markets. We are developing proprietary
technology for other therapeutic medical markets.

     Based on mathematical modeling, we develop and design proprietary PEMF
signals, which we refer to as "electroceuticalsTM." These signals are intended
to improve specific physiological processes, including those that generate the
body's natural anti-inflammatory response. We are currently utilizing our PEMF
technology to address a wide array of pathological conditions, including acute
and chronic disorders in soft tissue such as chronic wounds, pain and edema,
acute injuries and chronic inflammatory disorders. Chronic wounds include
pressure ulcers, diabetic wounds and arterial and venous insufficiency wounds
(wounds resulting from poor blood flow in the arteries or veins). We are also
developing applications for increasing angiogenesis (new blood vessel growth), a
critical component for tissue regeneration.

     Our SofPulse product, which utilizes our PEMF technology, has been
cleared by the United States Food and Drug Administration, the FDA, for the
adjunctive use in the palliative treatment of post-operative pain and edema in
superficial tissue. In July 2004, the Center for Medicare and Medicaid Services,
or CMS, issued a National Coverage Determination, or NCD, requiring
reimbursement by Medicare for the use of electromagnetic therapy for the
treatment of chronic wounds.

     Our products consist of the following three components:

          o    the electroceutical signals;

          o    a signal generator; and

          o    an applicator.

The signal generator produces a specific electroceutical signal that is pulsed
through a cable and into the applicator. The applicator transmits the
electroceutical signal into the desired area, penetrating medical dressings,
casts, coverings, clothing and virtually all other non-metal materials. Our
products can be used immediately following acute injury, trauma and surgical
wounds, as well as in chronic conditions, and require no alteration of standard
clinical practices to accommodate the therapy provided by our products. We
continue to focus our research and development activities on optimizing the
signal parameters of our PEMF technology in order to produce improved clinical
outcomes and smaller more efficient products utilizing less power.


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     Since the mid-1990s, our products have been used in over 600,000 treatments
by healthcare professionals on medical conditions, such as:

     o    acute or chronic wounds, including post surgical wounds;

     o    edema and pain following plastic and reconstructive surgery; and

     o    pain associated with the inflammatory phase of chronic conditions.

For such purpose, we regard each 15-minute application on a target area of a
patient as one treatment.

     We are currently a party to, and intend to continue to seek, agreements
with distributors to assist us in the marketing and distribution of our
products. As of the date of this report, we have engaged six domestic
third-party distributors to assist us in marketing our products in the United
States chronic wound care market and one distributor in Canada to assist us in
marketing our products in the Canadian chronic wound care market. We are also
actively pursuing exclusive arrangements with strategic partners we believe have
leading positions in our target markets, in order to establish nationwide, and
in some cases worldwide, marketing and distribution channels for our products.
Generally, under these arrangements, the strategic partners would be responsible
for marketing, distributing and selling our products while we continue to
provide the related technology, products and technical support. Through this
approach, we expect to achieve broader marketing and distribution capabilities
in multiple target markets.

     On November 9, 2006, we entered into an exclusive worldwide distribution
agreement with a wholly-owned subsidiary of Allergan, Inc., a global healthcare
company that discovers, develops and commercializes pharmaceutical and medical
device products in specialty markets. Pursuant to the agreement, we granted
Allergan's subsidiary, Inamed Medical Products Corporation, and its affiliates
the exclusive worldwide right to market, sell and distribute certain of our
products, including all improvements, line extensions and future generations
thereof in conjunction with any aesthetic or bariatric medical procedures in the
defined marketing territory. Under the agreement, we also granted Inamed the
right to rebrand such product, with Inamed owning all rights to such brands
developed by Inamed for such purpose.

MARKET OVERVIEW

     Our products can be used for treating a broad spectrum of acute and chronic
disorders of soft tissue, including serious pressure skin ulcers (also known as
bedsores), failed surgical closures, diabetic ulcers, edema and pain following
plastic and reconstructive surgery procedures, as well as pain associated with
the inflammatory phase of chronic conditions. We are considering additional
applications of our products, as well as developing other products using our
PEMF technology. For example, we are currently researching and clinically
testing potential applications of our PEMF technology for therapeutic
angiogenesis (the regeneration of new blood vessels) and vascularization (the
creation of new blood vessels) for use in circulatory and cardiac impairment
conditions and for the proliferation of stem cells. We are also exploring the
possibility of utilizing our PEMF technology in an application to compete as a
non-invasive, non-pharmacologic alternative to other treatments which are used
for pain and edema, such as acetaminophen, without any of the potential known
side-effects or complications that are associated with such products.

     WOUND CARE. According to market analysis published by MX (a trade journal
on business strategies for medical technology) in February 2006, wound care
costs the U.S. healthcare system more than $20 billion each year, including more
than $4 billion spent on wound management products. The MX publication further
states that chronic and severe wounds, the most difficult wounds to treat, have


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been the focus of significant product innovation in recent years. According to
the MX publication, the market for active wound care products, or products that
contribute to wound repair by delivering bioactive compounds or utilizing
materials that facilitate the body's own ability to heal, is anticipated to grow
at 23% per year through 2009, while the market for traditional products, or
products that treat wounds with dry bandages and dressings, is expected to
decline by 2% per year over the same period. Based on the MX publication, it is
estimated that at currently anticipated growth rates, active wound care will
represent a more than $1 billion opportunity within the next five years in the
United States.

     We anticipate that use of our products may be beneficial in a substantial
number of general post-surgery recovery plans in general hospitals, as well as
in long-term care nursing facilities and long-term acute care hospitals, or
LTACHs, rehabilitation hospitals, acute care facilities, and in the home. US.
Census Bureau statistics indicate that, as of March 2004, the 65-and-over age
group was one of the fastest growing population segments and was expected to
reach approximately 40 million by the year 2010. Management of wounds and
circulatory problems is crucial for the elderly. These patients frequently
suffer from deteriorating physical conditions and their wound problems are often
exacerbated by other disorders.

     We expect this market to continue to grow as a result of several factors,
including the continued increase in the incidence of diabetes and the aging
population. Physicians and nurses look for therapies that can promote the
healing process and overcome the obstacles of the patients' compromised
conditions. They also prefer therapies that are non-invasive and are easy to
administer, especially in the home care setting, where full-time skilled care is
generally not available.

     PLASTIC AND RECONSTRUCTIVE SURGERY. More than 11.5 million cosmetic surgery
procedures for a total cost in excess of $12.2 billion were performed in 2006,
according to statistics released by the American Society of Plastic Surgeons, or
ASPS, up 55% from nearly 7.4 million procedures in 2000. According to the ASPS,
cosmetic procedures being conducted in an office-based surgical facility were
46% in 2004, with only 25% of such procedures being conducted in a hospital We
believe this trend reflects the safety of many procedures and the expertise of
board-certified plastic surgeons to conduct them in their accredited
office-based surgical facilities. We seek to leverage these trends by marketing
our PEMF technology in lightweight and disposable products to surgeons who can
then sell the products to their patients.

     POTENTIAL ADDITIONAL MARKETS. We are pursuing development and
commercialization of new products as well as devoting resources to the testing,
validation, and compliance with FDA regulatory requirements of new applications
of our existing products and our PEMF technology to address the needs of the
following potential markets:

     o    ANGIOGENESIS AND VASCULARIZATION. According to the American Heart
          Association in 2007, the cost of coronary heart disease is estimated
          to be approximately $151.6 billion. We believe this market continues
          to grow, despite effective procedures like coronary artery bypass
          grafting and angioplasty and stenting (invasive procedures performed
          to reduce or eliminate blockages in coronary arteries) and that these
          procedure volumes continue to increase in part because cardiovascular
          disease is progressive and in part because the effects of
          cardiovascular procedures are not permanent. We also believe that the
          biggest market for products stimulating angiogenesis will be for
          treatment of coronary artery disease and peripheral vascular disease.
          Based on studies by Dr. Berish Strauch, Chairman of the Plastic and
          Reconstructive Surgery Department of Montefiore Medical Center in New
          York City and a member of our Medical Advisory Board, we believe that
          the non-invasive application of our PEMF technology to permanently
          improve cardiac circulation by creating new blood vessels, known as
          "remodeling," could reduce the need for invasive procedures such as
          angioplasty and bypass surgery and long-term medication for
          atherosclerosis (the hardening of the arteries). An Internal Review
          Board, or IRB, has approved a double-blind randomized
          placebo-controlled clinical trial in patients who are not candidates


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          for angioplasty or cardiac bypass surgery. This trial has begun at
          Cleveland Clinic Florida, a not-for-profit multispecialty medical
          group practice. The trial is looking at the use of our PEMF technology
          over a period of five months on patients with ischemic cardiomyopathy
          (a heart condition resulting from decreased blood flow to the heart),
          the primary endpoint of which will be the improvement in regional
          myocardial perfusion (the flow of blood through the heart) and
          function and the secondary endpoint of which will be improvement in
          patient angina and exercise tolerance. Full enrollment of patients in
          the clinical trial occurred during June 2007, and we expect the trial
          will be completed by the end of December 2007, although there can be
          no assurance that the trial will be completed within such time frame.
          Because the trial is double-blinded and efficacy cannot be determined
          until the conclusion of the trial when investigators are permitted to
          examine the patients and compare those patients who received the
          actual therapy with those patients who received the placebo therapy,
          preliminary results of the trial will not be available prior to the
          conclusion of the trial.

     o    PAIN MANAGEMENT. According to Medtech Insights, the total U.S. market
          for pain management devices reached $1.2 billion in 2005. Pain is
          generally divided into acute and chronic. Acute pain can be modulated
          and removed by treating its cause. Chronic pain is distinctly
          different and more complex. The source of the pain is often known but
          cannot be eliminated. The urge to do something to relieve the pain
          often makes some patients drug-dependent. Chronic pain may be one of
          the most costly health problems in the United States. According to the
          Centers for Disease Control, arthritic conditions, the leading cause
          of disability in the U.S., afflicts at least 46 million Americans,
          with a cost of $128 billion a year in direct medical costs and
          indirect costs, such as lost productivity and workers' compensation.
          We intend to market our future products against other pain treatments.
          Now that such commonplace medications have been required to carry
          warning labels due to potential dangerous side-effects (and some drugs
          have been withdrawn altogether), we believe that there is a
          significant opportunity for a non-invasive, non-pharmacologic
          alternative that has efficacy and no known side-effects. The February
          2007 publication of treatment guidelines by the American Heart
          Association in the journal, CIRCULATION, advises that
          non-pharmacological alternatives to non-steroidal anti-inflammatory
          drugs, or NSAID's, should be used first in treating chronic pain in
          patients with risk factors for heart disease.

     o    STEM CELL TECHNOLOGY AND TISSUE ENGINEERING. According to a Visiongain
          report, the stem cell and tissue engineering market is expected to
          reach $10.0 billion by 2013. Tissue engineering technology is
          available with several types of replacement skin, cartilage,
          regeneration of bone and other connective structural substitutes. The
          flexibility and plasticity of stem cells has led many researchers to
          believe that stem cells have tremendous promise in the treatment of
          diseases other than those currently addressed by stem cell procedures.
          Theoretically, to put stem cells into a damaged heart may be simple
          but to persuade it to transform into functioning heart muscle is more
          difficult because it can transform itself into several organs or types
          of tissue. Some researchers have reported progress in the development
          of new therapies utilizing stem cells for the treatment of cancer,
          neurological, immunological, genetic, cardiac, pancreatic, liver and
          degenerative diseases. Tissue engineering and stem cell technology
          have had the capability to reform the medical market and have been
          recognized for some time. We plan to explore the opportunities for
          creating medical devices based on our PEMF technology to address the
          needs of these markets.

     o    ORTHOPEDIC APPLICATIONS. We plan to explore opportunities to market
          our products utilizing our PEMF technology for the pain and edema
          associated with acute and chronic orthopedic conditions, including
          fractures and joint replacements. The U.S. fracture market,
          specifically fractures due to osteoporosis was estimated by the
          American Society and Mineral Research in 2005 to include over 2
          million fractures at an overall cost of $16.9 billion, growing by 50%
          in 20 years due to the aging population. The U.S. joint repair and
          revision market included over 940,000 procedures. Costs in 2003 for
          all knee and joint replacement procedures were estimated at $24.8
          billion.


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For a discussion of the status of our research and development activities of
these potential new markets and applications, as well as the challenges in
developing and commercializing products in these markets, see "Potential New
Markets and Applications."

OUR STRATEGY

     Our goal is to become a leader in the development of products and
technologies in the field of non-invasive electrotherapeutic technologies. The
key elements of our strategy are the following:

     CONTINUE TO EXPAND OUR TECHNOLOGY AND PRODUCT LINES.

     We believe that we have a management team with the experience necessary to
develop and create new applications of electrotherapeutic technology. We also
intend to leverage the extensive knowledge and experience of the members of our
Medical and Scientific Advisory Boards, as well as our relationship with
Montefiore Medical Center, where certain of our clinical trials are being
conducted, to assist us in expanding our research and development of new
technologies and products. The development of new technologies, applications and
products is a function of understanding how to design electromagnetic signals
that produce the optimal effects on a biological target. We believe that we,
along with our advisors, have developed the knowledge and expertise to:

     o    create a proper PEMF signal for a desired physiologic effect;

     o    test those signals in multiple systems;

     o    engineer the devices necessary to implement our technology for various
          treatments; and

     o    clinically validate the effects and produce the necessary devices at
          the FDA-registered manufacturing facilities of ADM Tronics Unlimited,
          Inc., or ADM, our largest shareholder.

     LEVERAGE MARKET VALIDATION OF OUR PRODUCTS AND TECHNOLOGY TO COMMERCIALIZE
     ADDITIONAL PRODUCTS TO GROW OUR MARKET SHARE AND CUSTOMER BASE.

     We believe that growth opportunities exist through our continuing research
into signal optimization to market additional products using our PEMF technology
and expand our markets and customer base. Working with clinically validated
prototypes has enabled us to reduce:

     o    the size of the applicator used in the first generation of our
          products from over twelve pounds to under one pound;

     o    the power output from the first generation of our products; and

     o    the costs associated with manufacturing the first generation of our
          products.

     Over the past year, we have developed two new products utilizing our PEMF
technology, the Roma(3) and the Torino II, both of which are currently being
marketed. In addition, the ability to decrease power output has significantly
reduced the serious problems of interference with medical monitoring equipment,
which has in the past, restricted where this technology could be utilized,
including hospital intensive care units. We expect that our additional products
and advancements will allow us to increase our current markets, as well as
attract new markets.


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     CONTINUE TO SEEK COLLABORATIVE AND STRATEGIC AGREEMENTS TO ESTABLISH
     BROADER MARKETING AND DISTRIBUTION CHANNELS FOR OUR PRODUCTS.

     We continue to seek collaborative and strategic agreements to assist us in
the marketing and distribution of our products. We are actively pursuing
exclusive arrangements with strategic partners, having leading positions in our
target markets, in order to establish nationwide, and in some cases worldwide,
marketing and distribution channels for our products. Generally, under these
arrangements, the strategic partners would be responsible for marketing,
distributing and selling our products while we continue to provide the related
technology, products and technical support. Through this approach, we expect to
achieve broader marketing and distribution capabilities in multiple target
markets.

     In order to attract the interest of qualified potential strategic partners,
we have initiated, and will continue to initiate, distribution and sales of our
products in target market areas. We expect to generate sales from such efforts
and demonstrate market acceptance of our products in order to attract strategic
partners to assume marketing, distribution and sales responsibilities for our
products. As of the date of this report, we have engaged six domestic
third-party distributors to assist us in marketing our products in the United
States chronic wound care market and one distributor in Canada to assist us in
marketing our products in the Canadian chronic wound care market. Pursuant to
these written agreements, we have granted the distributors exclusive rights to
distribute our products to LTACH's, acute care facilities, rehabilitation/wound
centers, nursing homes and skilled nursing facilities in select markets within
specified geographic areas. Under these agreements, distributors are entitled to
monthly commissions based on varying percentages of the amount of the invoices
we receive for products rented by such distributors or products sold as a result
of such distributors' efforts, during the preceding calendar month. These
agreements have two-year terms with automatic one-year renewals, subject to
earlier termination in the event of a breach by either party. We intend to
continue to generate revenues through the use of distributors with the
expectation of attracting strategic partners.

     On November 9, 2006, we entered into an exclusive worldwide distribution
agreement with a wholly-owned subsidiary of Allergan, Inc., a global healthcare
company that discovers, develops and commercializes pharmaceutical and medical
device products in specialty markets. Pursuant to the agreement, we granted
Allergan's subsidiary, Inamed Medical Products Corporation and its affiliates
the exclusive worldwide right to market, sell and distribute certain of our
products, including all improvements, line extensions and future generations
thereof in conjunction with any aesthetic or bariatric medical procedures in the
defined marketing territory. Under the agreement, we also granted Inamed the
right to rebrand such product, with Inamed owning all rights to such brands
developed by Inamed for such purpose.

     EXPAND THE USE OF OUR PEMF TECHNOLOGY FOR ANGIOGENESIS AND VASCULARIZATION
     AND OTHER PROCEDURES.

     We intend to pursue FDA clearance of our PEMF technology for angiogenesis
and vascularization, the creation and stimulation of growth of new blood
vessels. We have been, and intend to continue devoting significant resources for
the testing, validation, FDA clearance and commercialization of our PEMF
technology for such applications. We are currently researching and clinically
testing the vascularization and angiogenic effects of our PEMF technology for
proposed use in certain circulatory and cardiac impairment conditions, as
alternatives to the following treatments:

     o    pharmacological interventions for impaired cardiovascular function and
          coronary artery disease;

     o    balloon and laser angioplasty (an invasive procedure performed to
          reduce or eliminate blockages in coronary arteries);


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     o    arthrectomy (the removal of arterial plaque) and cardiac stenting (the
          implantation of a small, metal scaffold after angioplasty to keep the
          artery open and prevent regrowth of arterial plaque); and

     o    cardiac bypass surgery.

     We believe that the effects of our PEMF technology on increasing blood flow
and angiogenesis (the regeneration of new blood vessels) in chronically injured
tissues, along with our non-invasive and non-pharmacological features, could
provide potential as a therapeutic alternative for revascularization (the
creation of new blood vessels), especially in patients for whom standard
angioplasty or cardiac bypass surgery is not suitable treatment.

     MARKET PRODUCTS UTILIZING OUR PEMF TECHNOLOGY AS AN ALTERNATIVE TO
     PHARMACEUTICALS AND INVASIVE SURGICAL PROCEDURES.

     We believe that there is a growing desire among consumers of healthcare
products and services to find alternatives to pharmaceutical and invasive
surgical approaches to healthcare. We believe that continuing announcements
regarding the health problems associated with certain drugs and annual records
stating the number of patients who die from medical error are motivating factors
for people to seek alternative healthcare treatments and procedures, including
treatments like those offered by our products.

OUR PRODUCTS

     We are currently focusing on the commercialization of products utilizing
our PEMF technology for the treatment of a wide array of acute and chronic
disorders. We are currently utilizing our PEMF technology, through the following
products, for the treatment of edema (swelling) and pain in soft tissue.

     SOFPULSE M-10. The SofPulse M-10 utilizes a box-shaped signal generator
that weighs approximately seven pounds. The signal generator delivers
proprietary electroceutical signals through a lightweight and conformable
applicator that ranges in diameter. The SofPulse M-10 is marketed for sale as
well as a rental product to the chronic wound care markets, particularly for use
in long-term acute care hospitals, as well as in long-term care nursing
facilities, rehabilitation hospitals, acute care hospitals and facilities and
home health care systems.

     ROMA(3). The Roma(3) utilizes a disk-shaped signal generator that is
approximately nine inches in diameter and weighs approximately two pounds. The
signal generator delivers the proprietary electroceutical signals simultaneously
through up to three lightweight and conformable applicators that range in
diameter, allowing multiple treatments on the same patient. The signal generator
contains a programmable microprocessor that can automatically activate and
deactivate the Roma(3) for ongoing, unattended treatment. The applicators
utilized by the Roma(3) are intended for single-patient use and are disposable.
The Roma(3) is primarily marketed as a rental product to the chronic wound care
markets, particularly for use in long-term acute care hospitals, as well as in
long-term care nursing facilities, rehabilitation hospitals, acute care
hospitals and facilities and home health care systems.

     TORINO I. The Torino I utilizes a portable, battery powered disk-shaped
signal generator that is approximately two and a half inches in diameter and
weighs approximately four ounces. The signal generator delivers the proprietary
electroceutical signals through variable sized lightweight and conformable
applicators, depending on the application. The signal generator used in the
Torino I is pre-programmed to provide treatment at optimal intervals throughout
the course of therapy. The Torino I is primarily marketed in the plastic and
reconstructive surgery market, where the product is being sold to physicians who
then offer it to their patients.


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     TORINO II. The Torino II is a battery powered, disposable single unit
consisting of both the signal generator and applicator for ease of use. The
applicators that are incorporated into the Torino II are also lightweight and
conformable and come in varying sizes, depending on the application. The signal
generator used in the Torino II is also pre-programmed to provide therapy at
optimal intervals throughout the course of therapy. The Torino II is primarily
marketed in the plastic and reconstructive surgery market, where the product is
sold to physicians who then offer it to their patients.

CURRENT APPLICATIONS

     We plan to continue marketing our products to the wound care and plastic
surgery markets, and we are expanding our marketing efforts in these areas.

     WOUND CARE

     In the acute care setting, serious trauma wounds, failed surgical closures,
amputations (especially those resulting from complications of diabetes), burns
covering a large portion of the body and serious pressure ulcers present special
challenges to the physician. These are often deep and/or large wounds that are
prone to serious infection and further complications due to the extent of tissue
damage or the compromised state of the patient's health. These wounds are often
difficult--or in the worst cases, impossible--to treat quickly and successfully
with more conventional products. Physicians and hospitals need a therapy that
addresses the special needs of these wounds with high levels of clinical and
cost effectiveness. Given the high cost and infection risk of treating these
patients in health care facilities, the ability to create healthy wound beds and
reduce bacterial levels in the wound is particularly important.

     In the extended care and home care settings, different types of wounds with
different treatment implications, present the most significant challenges.
Although a substantial number of acute wounds require post-discharge treatment,
a majority of the challenging wounds in the home care setting are non-healing
chronic wounds. These wounds often involve physiologic and metabolic
complications such as reduced blood supply, compromised lymphatic system (the
circulatory vessels or ducts in which the fluid bathing the tissue cells is
collected and carried to join the bloodstream) or immune deficiencies that
interfere with the body's normal wound healing processes. Diabetic ulcers,
arterial and venous insufficiency wounds (wounds resulting from poor blood flow
in the arteries or veins) and pressure ulcers are often slow-to-heal wounds.
These wounds often develop due to a patient's impaired vascular and tissue
repair capabilities. These conditions can also inhibit the patient's healing
process, and wounds such as these often fail to heal for many months, and
sometimes for several years. Difficult-to-treat wounds do not always respond to
traditional therapies. Physicians and nurses look for therapies that can promote
the healing process and overcome the obstacles of the patients' compromised
conditions. They also prefer therapies that are easy to administer, especially
in the home care setting, where full-time skilled care is generally not
available. In addition, because many of these patients are not confined to bed,
they want therapies which are minimally disruptive to their lives. Our products
are designed to allow patients mobility to conduct normal lives while their
wounds heal.

     The therapeutic value of our products utilizing our PEMF technology has
been demonstrated in the wound care market. In addition to the over 600,000
treatments since the mid-1990s, clinical research supports the efficacy of our
PEMF technology. Independent studies conducted by L.C. Kloth, et. al., in 1999
showed increased wound healing for pressure ulcers treated with one of the
SofPulse signals. In addition, studies conducted by Harvey N. Mayrovitz, PhD.,
et. al., in conjunction with Electropharmacology, Inc., or EPI, and published in
a peer-reviewed medical journal in 1995 determined, through measured blood flow,
that treatment with our technology improved blood flow in the extremities in
diabetic patients who were vascularly impaired with foot ulcers. This
physiological effect is important in the treatment of diabetic ulcers due to the
fact that such non-healing diabetic wounds are primarily the result of impaired
circulation in the area of the wounds. Most significantly, the CMS decision
creating a National Coverage Determination for the use of electromagnetic


                                       8

<PAGE>

therapy in chronic wound treatments found that electromagnetic therapy was
analogous to direct electrical stimulation delivered through methods that differ
from electromagnetic therapy. Although electrical stimulation, when properly
administered, has been shown to be effective in treating recalcitrant wounds, it
is much more labor intensive and difficult to apply effectively without direct
contact with the wound site, while our products are virtually labor free and
easy to operate without direct contact with the wound site as they are able to
treat the target area through wound dressings.

     From 1991 to 1997, EPI marketed its products utilizing electrotherapeutic
technologies primarily for use in nursing homes for the Medicare reimbursable
treatment of chronic wounds, primarily pressure sores and diabetic leg ulcers,
through a rental program. During such time, the business grew at a rate of 12%
per month to a monthly rental-billing rate of almost $300,000. However, due to
changes in reimbursement policy made by CMS in 1997, which prohibited Medicare
coverage of the use of this technology in the treatment of non-healing wounds,
the nursing home revenue diminished significantly by 2001. As a result of the
reimbursement policy changes, we began to:

     o    market our products for use in nursing homes for the non-reimbursable
          treatment of pain and edema associated with acute and/or chronic
          wounds and for the non-reimbursable treatment of pain and edema
          following reconstructive or plastic surgery, both of which markets we
          continue to pursue today; and

     o    consider other applications for use of our PEMF technologies, such as
          for therapeutic angiogenesis and vascularization for use in
          circulatory and cardiac impairment conditions.

     In December 2003, CMS reversed its policy and issued an NCD requiring
reimbursement by Medicare for electromagnetic therapies for non-healing wounds,
which became effective in July 2004. In response to this regulatory change, we
re-introduced our products into the chronic wound market, where we believe that
our products utilizing our PEMF technology have retained their reputation for
therapeutic effect. In addition, we have received authority from the U.S.
Department of Veterans Affairs, or VA, to market and sell and/or rent to VA
facilities nationwide our SofPulse M-10 for the treatment of wounds.

     We continue to market our products for placement within surgical centers
for post-operative immediate use to reduce edema at the target area and a
patient's pain, through a monthly and per-use rental program to physicians and
patients. We anticipate that use of our products may be beneficial in a
substantial number of general post-surgery recovery plans. We are seeking
opportunities to place on a metered, pay-per-use or rental basis, our products
in long-term care nursing facilities, long-term acute care hospitals,
rehabilitation hospitals, acute care facilities, and in the home, through
individual facilities, corporate nursing home and long-term acute care hospital
chains and through regional and national contract therapy service companies that
provide therapies to the nursing home industry, as well as through our own sales
personnel and third-party sales organizations and distributors.

     Since 1997, a number of companies have entered into the wound care market
and have developed technologies and products that are used for the treatment of
chronic wounds, including those that are similar to our technologies and
products, and the existence of these technologies and products in the market may
make it more difficult for us to achieve widespread market acceptance of our
products for the treatment of chronic wounds. Among the companies against whom
we compete are Diapulse Corporation of America, Inc., which manufactures and
markets devices that are deemed by the FDA to be substantially equivalent to
certain of our products; Regenesis Biomedical, which manufactures and markets
devices that are similar to our first generation device; BioElectronics
Corporation, which develops and markets the ActiPatch(TM), a medical dermal
patch that delivers PEMF therapy to soft tissue injuries; and Kinetics Concepts,
Inc., which manufactures and markets negative pressure wound therapy devices in
the wound care market. We also face competition from companies that have
developed other forms of treatment, such as hyperbaric oxygen chambers, thermal
therapies and hydrotherapy. Many of our competitors are well-established, and
have substantially greater financial and other resources, research and


                                       9

<PAGE>

development capabilities and more experience in obtaining regulatory approvals,
manufacturing and marketing than we do. Our ability to commercially exploit our
products must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the
development of new medical processes, devices and products and their level of
acceptance by the medical community. Our competitors may succeed in developing
competing products and technologies that are more effective than our products
and technologies, or that receive government approvals more quickly than our new
products and technologies, which may render our existing and new products or
technology uncompetitive, uneconomical or obsolete. See "Business -
Competition."

     PLASTIC AND RECONSTRUCTIVE SURGERY

     We plan to increase marketing of our products utilizing our PEMF technology
to the plastic and reconstructive surgery market. Plastic surgery patients are
concerned about the length of post surgical recovery time and we believe that
use of our products can reduce the period of recovery in these procedures.
Further, plastic surgery procedures are primarily elective in nature and
expensive and are not dependent to the same extent on, nor as sensitive to, cost
and reimbursement issues as in many other fields of medicine.

     A pilot clinical trial has also been conducted by the chairman of the
Innovative Procedure Committee of the American Society for Aesthetic Plastic
Surgery, or ASAPS. This randomized, prospective study examined the use of our
products post-surgically following laser facial resurfacing. This study, which
was a placebo-controlled clinical study, yielded the following conclusions:

     o    EDEMA AND PAIN TREATMENT DESIRABLE. The labeled indication of our
          products, use in post-operative treatment of edema and pain, is
          suitable for the needs of the plastic surgery market.

     o    ASAPS POSITION STATEMENT. The study provided the basis for an official
          Position Statement being issued by ASAPS recognizing the efficacy of
          our products utilizing our PEMF technology at reducing edema and pain
          post-surgically.

We have received positive clinical observations by plastic surgeons, and
affirmative consumer acceptance by their patients who participated in our beta
test from 2001 to the present in the New York metro area and in Southern
California where patients rented our product for in-home use following plastic
surgery.

     We are also marketing the use of our products in compression garments, to
the plastic surgery market. These "smart" compression garments will be activated
at the time the garments are placed on the patient. These smart compression
garments will cycle on and off automatically throughout the day for up to 30
days. We believe this automatic cycling will virtually eliminate issues related
to compliance by the patient with the physicians post-operative instructions
which are associated with nearly all other interventions, including
pharmaceuticals which require the patient to take medication at prescribed
times, and enhance the overall recovery for the patients.

     POTENTIAL NEW MARKETS AND APPLICATIONS

     We are pursuing development and commercialization of new products as well
as devoting resources to the testing, validation, and compliance with FDA
regulatory requirements of new applications of our technology to address the
needs of the angiogenesis and vascularization, stem cell, pain relief and hair
loss reduction markets. We cannot assure you that we will be able to develop new
products or expand the use of our PEMF technology for any of these additional
markets or applications. Our ability to successfully expand the use of our PEMF
technology for each of these applications will depend on a number of risks,
including:

     o    funding studies related to such applications through joint ventures or
          other strategic alliances or otherwise;


                                       10

<PAGE>

     o    establishing the efficacy of such applications through our research
          and development efforts;

     o    developing and commercializing new products utilizing our technology
          for such applications;

     o    obtaining FDA clearance or approval for such technologies or
          applications; and

     o    establishing market acceptance and reimbursement of our products for
          such uses.

     ANGIOGENESIS AND VASCULARIZATION MARKET

     We are devoting significant resources into the testing, validation, FDA
regulatory requirements and commercialization of the angiogenic and vascular
applications of our PEMF technology. We believe that the non-invasive
application of a specific signal to improve cardiac circulation by creating new
blood vessels could reduce the need for invasive procedures such as angioplasty
and bypass surgery and long-term medication for atherosclerosis.

     o    EVIDENCE. Our PEMF technology has been shown, in published studies in
          peer-reviewed journals, to enhance blood flow and appears to confirm a
          significant portion of this effect as angiogenic, (i.e., the creation
          of new blood flow and vessels).

     o    MAYROVITZ FINDINGS. In published studies by Harvey N. Mayrovitz, et.
          al., in a peer reviewed journal in 1995, our PEMF technology was shown
          to have an immediate impact in significantly increasing micro-vascular
          blood flow.

     o    STRAUCH FINDINGS. Recent research conducted by Dr. Berish Strauch,
          Chairman of the Plastic and Reconstructive Surgery Department of
          Montefiore Medical Center in New York City and a member of our Medical
          Advisory Board, demonstrated that our PEMF technology created a
          significant angiogenesis effect. These findings were presented at an
          international symposium in late 2003 and have been published in
          Plastic and Reconstructive Surgery, a respected peer-reviewed medical
          journal.

     o    PATENTS. We have a patent pending that explicitly secures the
          angiogenic effects of our PEMF technology.

     o    RESEARCH PROGRAM. We have developed a research program to more fully
          document the effects and produce the data required to further validate
          the current evidence that our PEMF in target areas is able to promote
          angiogenesis within the body.

     o    PRE-MARKET APPROVAL. We are seeking to pursue the best regulatory
          strategies for advancing our PEMF technology including the possibility
          of commencing the filing of a pre-market approval application with the
          FDA.

     o    OPPORTUNITY. We believe that the non-invasive application of our PEMF
          technology to permanently improve cardiac circulation by creating new
          blood vessels, known as "remodeling", could reduce the need for
          invasive procedures such as angioplasty and bypass surgery and
          long-term medication for atherosclerosis.

     We have concluded and published controlled animal studies, under the
supervision of Dr. Berish Strauch, at the Montefiore Medical Center, which
demonstrated significant angiogenesis in peripheral tissues in standard models.
Based, in part on this initial information, an IRB-approved, double-blind


                                       11

<PAGE>

randomized placebo-controlled clinical trial in patients who are not candidates
for angioplasty or cardiac bypass surgery has commenced at The Cleveland Clinic
Florida, a not-for-profit multispecialty medical group practice.

     The study, which will be the first controlled human clinical trial using
our PEMF technology for a cardiac indication, will have the following three
objectives:

     o    to establish the safety of our PEMF technology in treatment of
          patients with ischemic cardiomyopathy;

     o    to evaluate the efficacy of our PEMF technology on myocardial
          perfusion (the flow of blood through the heart), ventricular function
          (the function performance of the ventricle of the heart), clinical
          symptoms of angina (severe chest pains from the heart) and exercise
          tolerance after one and three-month treatments in patients with
          ischemic cardiomyopathy; and

     o    to assess the sustainability of our PEMF technology on ischemic
          myocardium (the decrease in blood flow to the heart) two months after
          completion of the therapy.

     The primary endpoint of the trial is improvement in regional myocardial
perfusion and function. The secondary endpoint of the trial is improvement in
patient angina and exercise tolerance. We believe that the effects of our PEMF
technology on increasing blood flow and angiogenesis (the regeneration of new
blood vessels) in chronically injured tissues, along with our non-invasive and
non-pharmacological features, could provide potential as a therapeutic
alternative for revascularization (the creation of new blood vessels),
especially in patients for whom standard percutaneous or surgical
revascularization is not suitable treatment.

     The human clinical trials are a pre-requisite to the filing of applications
to the FDA to market PEMF for the indications set forth above; however, there
can be no assurance that the results of such trials will be positive or even if
the results are positive, that we will receive the requisite FDA clearance or
approval for such indications. Full enrollment of patients in our clinical trial
occurred during June 2007 and we expect that the study will be completed by the
end of December 2007, although there can be no assurance that the trial will be
completed within such time frame. If we do not receive the requisite FDA
clearance or approval to market products utilizing our PEMF technology for those
indications, we will not be able to enter the angiogenesis and vascularization
markets.

     STEM CELLS

     Stem cell research has focused, at least in the public debate, on the
"kinds" of stem cells available for experimentation and eventual utilization.
However, we believe that the bulk of stem cell implantations are not effective
due to the lack of adequate blood supply. The body, especially in injured
tissues resulting from various heart conditions and neurological disorders, does
not provide nor produce sufficient new blood supply to support the introduction
of new cells. We are seeking to develop the specific signals to accelerate the
angiogenic process to enhance the body's ability to support the growth of these
new cells. We believe that this application could improve the stem cell
technologies that currently fail today. If we encounter delays in developing, or
are unable to develop, the specific signals to accelerate the angiogenic process
to enhance the body's ability to support the growth of these new cells, we may
be delayed in, or may be prevented from, entering the stem cell market.


                                       12

<PAGE>

     PAIN RELIEF

     We have developed a small, compact product utilizing our PEMF technology
that effectively reduces pain. We are preparing to market this product into the
consumer market, both at the prescription level and over-the-counter, or OTC. In
both cases, we intend to market the product against other pain treatments. Now
that such commonplace medications have been required to carry warning labels due
to potential dangerous side-effects (and some withdrawn altogether), we believe
that there is a significant opportunity for a non-invasive, non-pharmacologic
alternative that has efficacy and no known side-effects. We have also developed
prototypes of this product; however, we must obtain regulatory clearance before
marketing this product. We intend to file our clearance application with the FDA
to market this product for pain relief by the end of 2007, although there can be
no assurance that the application with the FDA will be filed within this time
frame. Although clearance could be granted to us by the FDA as early as 90 days
from the date of filing of the application, the FDA may request additional
information or require additional testing, which could prevent us from obtaining
such clearance within such 90-day period, if at all. We cannot assure you that
we will be successful in obtaining such clearance and without such clearance, we
will be unable to enter the pain relief market.

     HAIR LOSS REDUCTION

     We are exploring potential applications of our PEMF technology for the
reduction of hair loss resulting from certain medical treatments and in hair
transplant procedures. We have tested our technology in ergonomically configured
applicators for use post-hair transplant. Patients who have undergone hair
transplant procedures typically experience both pain and edema in the soft
tissue where such transplants have occurred. Since our products have been
cleared by the FDA for the adjunctive use in the palliative treatment of
post-operative pain and edema in superficial tissue, they may be used for the
treatment of pain and edema in soft tissue resulting from hair transplants. We
do expect, however, that FDA clearance of products using our PEMF technology for
hair loss reduction or hair rejuvenation will require specific studies and will
require us to file with the FDA a pre-market approval application.

     RESEARCH STUDIES

     During the fourth quarter of 2005, Dr. Diana Casper of Montefiore Medical
Center's Department of Neurosurgery received a grant in the amount of $270,000
from the National Institutes of Health, or NIH, to commence studies to examine
the effects of pulsed magnetic fields on neurons and vessels in cell culture and
intact brain and neural transplants, as well as to explore the potential of this
modality to lessen neurodegeneration (progressive damage or death of neurons
leading to a gradual deterioration of the bodily functions controlled by the
affected part of the nervous system) and increase vascular plasticity (the
lifelong ability of the brain to reorganize neural pathways based on new
experiences). We believe this modality could have applications in the treatment
of chronic and acute vascular and neurodegenerative diseases, including
Parkinson's disease. Although Dr. Casper is not required to do so pursuant to
the NIH grant, she has advised us in writing that she intends to use our PEMF
technology in connection with these studies. The term of the NIH grant expires
on May 31, 2008. Prior to receiving the NIH grant, we provided funding for Dr.
Casper's research in this field, as well as during and following the expiration
of the term of the NIH grant, we will fund Dr. Casper's continued research in
this field using our products.

     We expect to commence research studies with respect to pain relief at
certain university sites and although we do not have any specific plans to date,
we are seeking opportunities to commence additional studies at other research
facilities. We believe that two studies to validate consumer pain application
for Federal Trade Commission purposes will be completed within four to six
months from commencement and estimate that the aggregate cost of such studies
will be approximately $200,000. However, there can be no assurance that the
studies will be completed within this time frame or within this cost.


                                       13

<PAGE>

     In June of 2007, we entered into a Research Agreement with Indiana
University to conduct a randomized, double-blind animal wound study.

RESEARCH AND DEVELOPMENT

     Our research and development efforts continue on several fronts directly
related to our technology, including our expansion into the angiogenesis and
vascularization market, as well as new technologies and products. Although we do
not have any specific plans to date, we intend to pursue entering into joint
ventures, license agreements or other relationships with third-parties to
commercialize any new technologies and products we develop in the future. Our
research and development expenditures were $2,191,944 and $1,813,598 (including
$581,712 and $478,961 of share-based compensation related to the grant of stock
options) for the fiscal years ended March 31, 2007 and 2006, respectively.

     We are currently a party to a sponsored research agreement with Montefiore
Medical Center pursuant to which we fund research in the fields of pulsed
electro-magnetic frequencies under the supervision of Berish Strauch, M.D., of
Montefiore Medical Center's Department of Plastic Surgery, that commenced on
October 17, 2004 and expires on December 31, 2009, subject to renewal in
one-year increments by mutual agreement. We were notified prior to our fiscal
year ended March 31, 2007, that the research being conducted by Dr. Strauch has
concluded prior to our fiscal year end and this agreement will not be renewed.
We expect to receive the data from this study shortly. We also fund research in
the field of neurosurgery under the supervision of Diana Casper, Ph.D., of
Montefiore Medical Center's Department of Neurosurgery. We have accrued $250,000
at March 31, 2007 for our research and development efforts performed by Dr.
Casper and Dr.Strauch.

     Under our sponsored research agreement, Montefiore Medical Center is
required to use its reasonable efforts to complete the applicable research
project that is directed and controlled by the principal investigator, subject
to informal consultation with our technical representative, Arthur A. Pilla,
Ph.D. Under the agreement, Montefiore Medical Center is required to promptly
disclose any discovery or invention made by it, the principal investigator or
any other personnel in the performance of the research project, and title to any
and all of such discoveries or inventions and all other intellectual property
rights developed that relate to any of our products will be our sole and
exclusive property. We also have the first option to obtain a worldwide royalty
bearing license to all other inventions not owned by us that are conceived or
made during the performance of the research project. Although Montefiore Medical
Center and its employees have sole ownership of any copyrighted or copyrightable
works (including reports and publications) that are created by them in the
performance of the research project, we have an irrevocable royalty-free,
nontransferable, non-exclusive right to copy and distribute research reports
furnished to us under the agreement and to prepare, copy and distribute
derivative works based on these research reports. Further, subject to certain
limited exceptions, each of Montefiore Medical Center, the principal
investigator and us are required to keep all confidential information of the
other party in strict confidence for a period of five years after the end of the
term of the agreement.

     In January 2006, we entered into a Master Clinical Trial Agreement with
Cleveland Clinic Florida, a not-for-profit multispecialty medical group
practice, to set forth the basic terms and conditions with respect to studies to
be conducted by Cleveland Clinic Florida thereunder from time to time during the
term of the agreement, which is from January 9, 2006 to January 9, 2009. At
March 31, 2007, we accrued $300,000 for work performed by the Cleveland Clinic
Florida under its agreement with us as well as additional fees, costs and
expenses to third parties for lab work to be handled by such third parties
during the term of the agreement. The IRB approved a double-blind randomized
placebo-controlled clinical trial in patients who are not candidates for
angioplasty or cardiac bypass surgery, which has begun at the Cleveland Clinic
Florida. The trial is looking at the use of our PEMF technology on patients with
ischemic cardiomyopathy the primary endpoint of which will be the improvement in
regional myocardial perfusion and function and the secondary endpoint of which


                                       14

<PAGE>

will be improvement in patient angina and exercise tolerance. Full enrollment of
patients in the clinical trial occurred during June 2007, and we expect the
trial to be completed by December 2007, although there can be no assurance that
the trial will be completed within such time frame.

     In June of 2007, we entered into a Research Agreement with Indiana
University to conduct a randomized, double-blind animal wound study.

INTELLECTUAL PROPERTY

     PATENTS

     We attempt to protect our technology and products through patents and
patent applications. We have built a portfolio of patents and applications
covering our technology and products, including its hardware design and methods.
As of the date of this report, we have three issued U.S. patents, eight
non-provisional pending U.S. patent applications and two provisional U.S.
patents pending covering various embodiments and end use indications for PEMF
and related signals and configurations. The titles, patent numbers and normal
expiration dates (assuming all the U.S. Patent and Trademark Office fees are
paid) of our three issued U.S. patents are set forth in the chart below.

<TABLE>
<S>     <C>

                                                                  PATENT
TITLE                                                             NUMBER    EXPIRATION DATE
--------------------------------------------------------------  ---------  ------------------
Apparatus and Method for Therapeutically Treating Human Body
Tissue with Electromagnetic Radiation                            5723001    March 3, 2019
Pulsed Radio Frequency Electrotherapeutic System                 5584863    December 17, 2013
Athermapeutic Apparatus Employing Electro-magnetic fields        5370680    December 6, 2011
</TABLE>

     One of the pending non-provisional U.S. Patent applications covers basic
signal configurations. We believe this to be a "seminal patent" as it describes
our proprietary methodology for testing signal components, i.e. frequency, pulse
rate, amplitude, etc. to achieve optimum biological responses for specific
conditions. Our other patents pending cover a range of technologies, including
specific embodiments and applications for treatment of various medical
indications, improved application methods and adjunctive utilization with other
therapeutic modalities.

     We also have applied for patent protection in several foreign countries.
Because of the differences in patent laws and laws concerning proprietary
rights, the extent of protection provided by U.S. patents or proprietary rights
owned by us may differ from that of their foreign counterparts.

     We acquired certain rights to our three patents in August 1998, in
connection with ADM acquisition of certain assets then used by EPI in connection
with the PEMF device business. Immediately subsequent to the acquisition, ADM
transferred all of the assets acquired from EPI to us. The assets included all
of the rights, title and interest in the PEMF business as well as the rights
related to such three patents.

     TRADEMARKS

     As of the date of this report, we have four registered
trademarks/servicemarks, "SofPulse", " Ivivi", "The Technology of Life", and our
stylized Ivivi logo. We currently have pending with the U.S. Patent & Trademark
Office, applications for trademark/servicemark registration for our "Roma(3),"
"Torino," "electroceutical," "electroceuticals," "Changing how you heal," and
"Changing the way you heal."


                                       15

<PAGE>

     PROTECTION OF TRADE SECRETS

     We attempt to protect our trade secrets, including the processes, concepts,
ideas and documentation associated with our technologies, through the use of
confidentiality agreements and non-competition agreements with our current
employees and with other parties to whom we have divulged such trade secrets. If
our employees or other parties breach our confidentiality agreements and
non-competition agreements or if these agreements are not sufficient to protect
our technology or are found to be unenforceable, our competitors could acquire
and use information that we consider to be our trade secrets and we may not be
able to compete effectively. Most of our competitors have substantially greater
financial, marketing, technical and manufacturing resources than we have and we
may not be profitable if our competitors are also able to take advantage of our
trade secrets.

SALES AND MARKETING

     We are currently marketing and generating revenues in the wound care and
plastic surgery markets. In order to facilitate the marketing of our products,
we have developed and intend to further develop relationships with sales and
distribution companies currently operating in these markets. In the wound care
market, we are focusing our marketing efforts on the long-term acute care
hospitals because of the high concentration of wound care patients and fixed
reimbursements from Medicare. In the plastic surgery market, we are currently
focusing our efforts on surgical and minimally invasive procedures requiring
compression garments, by establishing relationships with garment manufacturers
and their principle distributors. We also intend to pursue additional markets
and applications, assuming we obtain FDA approval, such as angiogenesis and
vascularization for the treatment of certain circulatory impairment conditions
and pain relief. As we develop additional products and technologies, we intend
to develop the distribution arrangements for this market in concert with overall
regulatory and marketing approaches.

     We seek collaborative and strategic agreements to assist us in the
marketing and distribution of our products. We are actively pursuing exclusive
arrangements with strategic partners, having leading positions in our target
markets, in order to establish nationwide, and in some cases worldwide,
marketing and distribution channels for our products. Generally, under these
arrangements, the strategic partners would be responsible for marketing,
distributing and selling our products while we continue to provide the related
technology, products and technical support. Through this approach, we expect to
achieve broader marketing and distribution capabilities in multiple target
markets.

     In order to attract the interest of qualified potential strategic partners,
we have initiated, and will continue to initiate, distribution and sales of our
products in target market areas. We expect to generate sales from such efforts
and demonstrate market acceptance of our products in order to attract strategic
partners to assume marketing, distribution and sales responsibilities for our
products. As of the date of this report, we have engaged six domestic
third-party distributors to assist us in marketing our products in the United
States and one distributor in Canada to assist us in marketing our products in
Canada. These distributors have the exclusive right to distribute our products
in select markets to LTACH's, acute care facilities, rehabilitation/wound
centers, nursing homes and skilled nursing facilities. We have also contracted
with one distributor to help us penetrate the home health care market. We intend
to continue to generate revenues through the use of these distributors with the
expectation of attracting strategic partners.

     On November 9, 2006, we entered into an exclusive worldwide distribution
agreement with a wholly-owned subsidiary of Allergan, Inc., a global healthcare
company that discovers, develops and commercializes pharmaceutical and medical
device products in specialty markets. Pursuant to the Agreement, we granted
Allergan's subsidiary, Inamed Medical Products Corporation, and its affiliates


                                       16

<PAGE>

the exclusive worldwide right to market, sell and distribute certain of our
products, including all improvements, line extensions and future generations
thereof in conjunction with any aesthetic or bariatric medical procedures in the
Marketing Territory. In November 2006, we received $500,000 under the terms of
this Agreement which has been recorded as deferred revenue in our balance sheet
and is being amortized over eight years. The agreement calls for certain
milestone payments of up to $1,000,000 in the aggregate upon the first
commercial sale (as defined in the agreement) of the product in the United
States and Europe. In addition, Inamed will purchase the product from us at a
pre-determined price and must meet certain minimum order requirements. Finally,
we will receive royalty payments based on Inamed's net sales and number of units
sold of the product, subject to certain annual minimum royalty payments to be
determined by the parties.

     The agreement has an eight year initial term beginning at the product's
first commercial sale. The initial term may be extended for two additional years
without further payment at Inamed's option. Inamed may also pay us a $2,000,000
extension fee and extend the term of the agreement for up to eight additional
years, for a total term of up to 18 years.

     Inamed may only market, sell and distribute the product under the agreement
in the "Marketing Territory," which is generally defined in the agreement as the
United States and such other jurisdictions for which all requisite regulatory
approval has been obtained. If the marketing, sale or distribution of the
product in a jurisdiction would infringe third-party intellectual property
rights and likely result in a lawsuit against us or Inamed, Inamed could require
us to use reasonable commercial efforts to obtain a license for, or redesign,
the product to be sold in that jurisdiction.

     In the event we fail to supply Allergan or its subsidiaries certain minimum
amounts of the product and fail to procure alternate suppliers for such products
within certain timeframes, Inamed will have the right to use certain of our
intellectual property and/or other proprietary information to manufacture the
product until such time as we demonstrate to Inamed's reasonable satisfaction
that we are fully able to resume our supply obligations. During such time as
Inamed controls product manufacturing, our royalty rate would be significantly
reduced.

     In the event Inamed is required to discontinue the marketing, sale or
distribution of the product in the United States and/or any country in the
European Union because of problems with regulatory approvals and/or other
reasons related to the product, we will be required to repay Inamed portions of
the milestone payments up to $1,000,000.

     Inamed may terminate the agreement by giving us 90 to 180 days' prior
written notice. We may terminate the agreement by giving 12 months' prior
written notice if Inamed fails to timely pay the minimum royalty amounts for any
applicable year or fails to meet the minimum sales requirements set forth in the
agreement. A non-breaching party may terminate the agreement following a
material breach of the agreement and the breaching party's failure to cure such
breach during the applicable cure period by giving the breaching party proper
prior written notice. If we are in material breach, and fail to cure, Inamed may
have the right to use certain of our intellectual property and/or other
proprietary information to manufacture the product. Our royalty rate would
subsequently be significantly reduced.

     Neither party may assign or otherwise transfer its right and obligations
under the Agreement, including upon a change of control of such party (as
defined in the agreement), without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that Inamed may assign
its rights and obligations without our prior written consent to Inamed's
affiliates and upon a sale of all or substantially all of the assets or equity
of the business entity, division or unit, as applicable, that markets,
distributes or sells the product.


                                       17

<PAGE>

     The agreement includes other terms and conditions, including provisions
regarding regulatory responsibilities, audit rights, insurance, indemnification
and confidentiality.

     We also believe that aiming messages directly to the public has been
effectively used by the pharmaceutical industry, and we intend to pursue this
approach as one of our marketing strategies. Additionally, we intend to market
our current products and other products we develop through active solicitation
of customers by exhibiting at trade shows, advertising in trade magazines and
contracting with a network of sales/distributor organizations to solicit
prospective customers. As of the date of this report, we have nine full time
employees concentrating 100% of their efforts on sales, sales support and
marketing of our products. We also intend to utilize independent marketing
organizations and manufacturer's representatives to promote our products on a
commission basis.

MANUFACTURER AND SUPPLIERS

     MANUFACTURER

     We and ADM, our largest shareholder, are parties to a manufacturing
agreement, pursuant to which ADM serves as the exclusive manufacturer of all
current and future medical, non-medical electronic and other devices or products
to be produced by us. Pursuant to the terms of the manufacturing agreement, for
each product that ADM manufactures for us, we pay ADM an amount equal to 120% of
the sum of (i) the actual, invoiced cost for raw materials, parts, components or
other physical items that are used in the manufacture of the product and
actually purchased for us by ADM, if any, plus (ii) a labor charge based on
ADM's standard hourly manufacturing labor rate, which we believe is more
favorable then could be attained from unaffiliated third-parties. We generally
purchase and provide ADM with all of the raw materials, parts and components
necessary to manufacture our products and, as a result, the manufacturing fee
paid to ADM is generally 120% of the labor rate charged by ADM. On April 1,
2007, we instituted a procedure whereby ADM invoices us for finished goods at
ADM's cost plus 20 percent.

     ADM warrants the products it manufactures for us against defects in
material and workmanship for a period of 90 days after the completion of
manufacture. After such 90-day period, ADM has agreed to provide repair services
for the products to us at its customary hourly repair rate plus the cost of any
parts, components or items necessary to repair the products unless we provide
such parts, components or items to ADM.

     Under our manufacturing agreement, all inventions, patentable or otherwise,
trade secrets, discoveries, ideas, writings, technology, know-how, improvements
or other advances or findings relating to our products and technologies shall be
and become the exclusive proprietary and confidential information of our company
or any person to whom we may have assigned rights therein. ADM has no rights in
any such proprietary or confidential information and is prohibited from using or
disclosing any of our proprietary or confidential information for its own
benefit or purposes, or for the benefit or purpose of any other person other
than us without our prior written consent. ADM has also agreed to cooperate with
us in securing for us any patents, copyrights, trademarks or the like which we
may seek to obtain in connection therewith. If ADM breaches any of the
confidentiality agreements contained in our manufacturing agreement, or if these
agreements are not sufficient to protect our technology or are found to be
unenforceable, our competitors could acquire and use information that we
consider to be our trade secrets and we may not be able to compete effectively.
We and ADM have agreed that all future technologies and products utilizing
non-invasive electrotherapeutic technologies will be developed and
commercialized by us and not ADM , unless we elect not to pursue such
technologies and products.

     Since ADM is the exclusive manufacturer of all of our current and future
products, if the operations of ADM are interrupted or if our orders or orders of
other ADM customers exceed the manufacturing capabilities of ADM , ADM may not
be able to deliver our products to us on time and we may not be able to deliver
our products to our customers on time. Under the terms of the agreement, if ADM


                                       18

<PAGE>

is unable to perform its obligations under our manufacturing agreement or is
otherwise in breach of any provision of our manufacturing agreement, we have the
right, without penalty, to engage third parties to manufacture some or all of
our products. In addition, if we elect to utilize a third-party manufacturer to
supplement the manufacturing being completed by ADM, we have the right to
require ADM to accept delivery of our products from these third-party
manufacturers, finalize the manufacture of the products to the extent necessary
for us to comply with FDA regulations and ensure that the design, testing,
control, documentation and other quality assurance procedures during all aspects
of the manufacturing process have been met.

     As the exclusive manufacturer of our products, ADM is required to comply
with Quality System Regulation, or QSR, requirements, which require
manufacturers, including third-party manufacturers, to follow stringent design,
testing, control, documentation and other quality assurance procedures during
all aspects of the manufacturing process. In addition, ADMs' manufacturing
facility is required to be registered as a medical device manufacturing site
with the FDA and is subject to inspection by the FDA. ADM has been registered by
the FDA as a Registered Medical Device Establishment since 1988, allowing it to
manufacture medical devices in accordance with procedures outlined in FDA
regulations, which include quality control and related activities. Such
registration is renewable annually and although we do not believe that the
registration will fail to be renewed by the FDA, there can be no assurance of
such renewal. The failure of ADM to obtain any annual renewal would have a
material adverse effect on us if we were not able to secure another manufacturer
of our product. If ADM fails to comply with these requirements, we will need to
find another company to manufacture our products, which could delay the shipment
of our product to our customers.

     We believe that it could take approximately 30-45 days to secure a
third-party manufacturer to supplement ADMs' manufacturing capabilities and
approximately 90-120 days to replace ADM as our sole manufacturer. However,
although we believe that there are a number of third-party manufacturers, other
than ADM , available to us, we cannot assure that we would be able to secure
another manufacturer on terms favorable to us or at all or how long it will take
us to secure such manufacturing.

     The initial term of the manufacturing agreement expires on March 31, 2008,
subject to automatic renewals for additional one-year periods, unless either
party provides three months' prior written notice to the other prior to the end
of the relevant term of its desire to terminate the agreement. [See "Item 12.
Certain Relationships and Related Transactions and Director Independence"]

     SUPPLIERS

     As of April 1, 2007, we purchase only finished products from ADM.
Previously, we purchased and provided ADM with the raw materials, parts,
components and other items that are required to manufacture our products. ADM
relies on a single or limited number of suppliers for such raw materials, parts,
components and other items. Although there are many suppliers for each of these
raw materials, parts, components and other items, ADM is dependent on a limited
number of suppliers for many of the significant raw materials and components.
ADM does not have any long-term or exclusive purchase commitments with any of
our suppliers. ADM's failure to maintain existing relationships with their
suppliers or to establish new relationships in the future could also negatively
affect their ability to obtain r raw materials and components used in our
products in a timely manner. If ADM is unable to obtain ample supply of product
from our existing suppliers or alternative sources of supply, we may be unable
to satisfy our customers' orders which could reduce our revenues and adversely
affect our relationship with our customers.


                                       19

<PAGE>

COMPETITION

     The manufacture, distribution and sale of medical devices and equipment
designed to relieve swelling and pain or to treat chronic wounds is highly
competitive and many of our competitors possess significant product sales, and
greater experience, financial resources, operating history and marketing
capabilities than us. For example, Diapulse Corporation of America, Inc.
manufactures and markets devices that are deemed by the FDA to be substantially
equivalent to some of our products, Regenesis Biomedical manufactures and
markets a device that is similar to our first generation device; BioElectronics
Corporation develops and markets the ActiPatch(TM), a medical dermal patch that
delivers PEMF therapy to soft tissue injuries; and Kinetics Concepts, Inc.
manufactures and markets negative pressure wound therapy devices in the wound
care market. A number of other manufacturers, both domestic and foreign, and
distributors market shortwave diathermy devices that produce deep tissue heat
and that may be used for the treatment of certain of the medical conditions that
our products are used for. Our products may also compete with pain relief drugs
as well as pain relief medical devices, as well as other forms of treatment,
such as hyperbaric oxygen chambers, thermal therapies and hydrotherapy. Other
companies with substantially larger expertise and resources than ours may
develop or market new products and technologies that directly compete with our
current products or other products or technologies developed by us and which may
achieve more rapid acceptance in the medical community. Several other companies
manufacture medical devices based on the principle of electrotherapeutic
technologies for applications in bone healing and spinal fusion, and may adapt
their technologies or products to compete directly with us. Also, universities
and research organizations may actively engage in research and development to
develop technologies or products that will compete with our technologies and
products. Barriers to entry in our industry include (i) a large investment in
research and development; (ii) numerous costly and time-consuming regulatory
hurdles to overcome before any products can be marketed and sold; (iii) high
costs for marketing and for building an effective distribution network; and (iv)
the ability to obtain financing during the entire start up period.

     We believe that in order to become, and continue to be, competitive, we
will need to develop and maintain competitive products and take and hold
sufficient market share. Our methods of competition include (i) continuing our
efforts to develop and sell products, which, when compared to existing products,
perform more efficiently and are available at prices that are acceptable to the
market; (ii) displaying our products and providing associated literature at
major industry trade shows; (iii) initiating discussions with and educating the
medical community to develop interest in our products; and (iv) pursuing
alliance opportunities for the distribution of our products. We further believe
that our competitive advantages with respect to our products include:

     o    the clinical efficacy of our technology and products, as documented in
          publications regarding the efficacy of the technology underlying our
          products and the clinical research and studies performed with respect
          to our products, and as reinforced by the FDA clearance of our
          products for the treatment of edema and pain in soft tissue and
          Medicare's reimbursement for the use of electromagnetic therapy for
          the treatment of chronic wounds;

     o    the benefits of treatments utilizing our products, which include
          treatments that are non-invasive and painless, are free from known
          side-effects and are not susceptible to overdose or abuse, do not
          require special training to implement, may be applied to any part of
          the body and do not require prescriptions;

     o    our continued efforts to protect the technology relating to our
          products through patents and trade secrets, including three existing
          patents, eight non-provisional U.S. patent applications and one
          provisional U.S. patent pending; and

     o    the relevant experience of the members of our advisory boards, the
          Medical Advisory Board, which includes, among others, Dr. Berish
          Strauch, an internationally recognized surgeon, and the Scientific
          Advisory Board, which is led by Dr. Arthur Pilla, a principal
          innovator in PEMF technology.


                                       20

<PAGE>

     MANAGEMENT SERVICES

     In order to keep our operating expenses manageable, we and ADM are parties
to a management services agreement under which ADM provides us and its other
subsidiaries with management services and allocates portions of its real
property facilities for use by us and the other subsidiaries for the conduct of
our respective businesses. As we intend to add employees to our marketing and
sales staff and our administrative staff during our fiscal year ending March 31,
2008, we expect our reliance on the use of the management services of ADM to be
reduced significantly.

     The management services provided by ADM under the management services
agreement include administrative, technical, engineering and regulatory services
with respect to our products. We pay ADM for such services on a monthly basis
pursuant to an allocation determined by ADM and us based on a portion of its
applicable costs plus any invoices it receives from third parties specific to
us.

     We also use office, manufacturing and storage space in a building located
in Northvale, New Jersey, currently leased by ADM, pursuant to the terms of the
management services agreement. ADM determines the portion of space allocated to
us and each other subsidiary on a monthly basis, and we and the other
subsidiaries are required to reimburse ADM for our respective portions of the
lease costs, real property taxes and related costs. See "Item 2. Properties" and
"Item 12. Certain Relationships and Related Transactions and Director
Independence" of this Annual Report on Form 10-KSB.

GOVERNMENT REGULATION

     Our product is a medical device subject to extensive and rigorous
regulation by the FDA, as well as other federal and state regulatory bodies. The
FDA regulations govern the following activities that we perform and will
continue to perform to help ensure that medical products distributed worldwide
are safe and effective for their intended uses among others:

     o    product design and development;

     o    product testing;

     o    product manufacturing;

     o    product safety and effectiveness;

     o    product labeling;

     o    product storage;

     o    record keeping;

     o    pre-market clearance or approval;

     o    advertising and promotion;

     o    production;

     o    product sales and distribution; and

     o    adverse event reporting.


     In response to a 510(k) pre-market notification submitted by EPI, to the
FDA in late 1990, on January 17, 1991, EPI received from the FDA clearance to
begin marketing its magnetic resonance therapy device, which we currently refer
to as the SofPulse. The FDA cleared the use of the SofPulse, which utilizes our
PEMF technology, for the adjunctive use in the palliative treatment of
post-operative pain and edema in superficial tissue. Since the date of the FDA
clearance with respect to the marketing of the SofPulse was granted in 1991, we
have made some modifications to the SofPulse, which resulted in the development
of our current products, including the SofPulse M-10, the Roma(3), the Torino I


                                       21

<PAGE>

and the Torino II. We believe based on guidance published by the FDA, that all
of our current products are covered by the FDA clearance provided in 1991.
Specifically, because we do not believe that any of the changes, or the sum of
the incremental changes made, to the SofPulse in our current products could
significantly affect the safety or effectiveness of the SofPulse, we believe
that the marketing of our current products is sufficiently covered by the FDA
clearance provided in 1991 and does not require a submission of another 510(k)
premarket notification. However, in February 2007, in response to inquiries from
the FDA, we voluntarily submitted a 510(k) for our current products which is
currently under review at the FDA. We have had discussions with the FDA
regarding our application and, in June 2007, we received a letter from the FDA
requesting additional information from us. If the FDA does not grant the 510(k)
clearance for our current products, the FDA may require us to cease marketing
and /or recall current products already sold or rented until FDA clearance or
approval is obtained. In addition, the FDA could subject us to the other
sanctions described below under "Pervasive and Continuing Regulation."

     FDA'S PRE-MARKET CLEARANCE AND APPROVAL REQUIREMENTS

     Unless an exemption applies, each medical device we wish to commercially
distribute in the United States will require either prior 510(k) clearance or
pre-market approval (PMA) from the FDA. The FDA classifies medical devices into
one of three classes. Devices deemed to pose lower risks are placed in either
class I or II, which in many cases requires the manufacturer to submit to the
FDA a pre-market notification requesting permission to commercially distribute
the device. This process is generally known as 510(k) submission and clearance.
Some low risk devices are exempt from this requirement. Devices deemed by the
FDA to pose the greatest risk, such as many life-sustaining, life-supporting or
implantable devices, or devices deemed not substantially equivalent to a
previously cleared 510(k) device, are placed in class III, requiring pre-market
approval.

     510(K) CLEARANCE PATHWAY

     When a 510(k) clearance is required, we must submit a pre-market
notification demonstrating that our proposed device is substantially equivalent
to a previously cleared 510(k) device or a device that was in commercial
distribution before May 28, 1976 for which the FDA has not yet called for the
submission of pre-market approval applications. By regulation, the FDA is
required to review a 510(k) pre-market notification within 90 days of submission
of the application. As a practical matter, clearance often takes significantly
longer. The FDA may require further information, including clinical data, to
make a determination regarding substantial equivalence.

     PRE-MARKET APPROVAL PATHWAY

     A pre-market approval application must be submitted to the FDA if the
device cannot be cleared through the 510(k) process or granted "DO NOVO"
classification. The process of submitting a satisfactory pre-market approval
application is significantly more expensive, complex and time consuming than the
process of establishing "substantial equivalence" pursuant to a pre-market
notification and requires extensive research and clinical studies. A pre-market
approval application must be supported by extensive data, including, but not
limited to, technical, preclinical, clinical trials, manufacturing and labeling
to demonstrate to the FDA's satisfaction the safety and effectiveness of the
device. Upon completion of these tasks, an applicant is required to submit to
the FDA all relevant clinical, animal testing, manufacturing, laboratory
specifications and other information. If accepted for filing, the application is
further reviewed by the FDA and subsequently may be reviewed by an FDA
scientific advisory panel comprised of physicians, statisticians and other
qualified personnel. A public meeting may be held before the advisory panel in
which the pre-market approval application is reviewed and discussed. Upon
completion of such process, the advisory panel issues a favorable or unfavorable
recommendation to the FDA or recommends approval with conditions. The FDA is not
bound by the opinion of the advisory panel. The FDA may conduct an inspection to


                                       22

<PAGE>

determine whether the applicant conforms with QSR requirements. If the FDA's
evaluation is favorable, the FDA will subsequently publish a letter approving
the pre-market approval application for the device for a particular indication
for use. Interested parties can file comments on the order and seek further FDA
review. The pre-market approval process may take several years and no assurance
can be given concerning the ultimate outcome of pre-market approval applications
submitted by an applicant.

     No device that we have developed has required pre-market approval. In
January 1991, however, the FDA advised EPI of its determination to treat the
MRT100, the first product produced, as a class III device. The FDA retains the
right to require the manufacturers of certain Class III medical devices to
submit a pre-market approval application in order to sell such devices or to
promote such devices for specific indications. To date, we have not been asked
by the FDA to seek pre-market approval for our products; however, there can be
no assurance that we will not be required to do so in the future and that, if
required, we will be able to comply with such requirement.

     PERVASIVE AND CONTINUING REGULATION

     After a device is placed on the market, numerous regulatory requirements
apply. These include:

     o    Quality System Regulations, or QSR, which require finished device
          manufacturers, including contract manufacturers, to follow stringent
          design, testing, control, documentation and other quality assurance
          procedures during all aspects of the manufacturing process;

     o    labeling regulations and FDA prohibitions against the promotion of
          products for uncleared, unapproved or "off-label" uses;

     o    medical device reporting regulations, which require that manufacturers
          report to the FDA if their device may have caused or contributed to a
          death or serious injury or malfunctioned in a way that would likely
          cause or contribute to a death or serious injury if the malfunction of
          that or a similar company device were to recur; and

     o    post-market surveillance regulations, which apply when necessary to
          protect the public health or to provide additional safety and
          effectiveness data for the device.

     The FDA has broad post-market and regulatory enforcement powers. We are
subject to unannounced inspections by the FDA to determine our compliance with
the QSR and other regulations, and these inspections include the manufacturing
facilities of ADM, the exclusive manufacturer of our products, or any other
manufacturing subcontractors that we may engage. ADM has been registered with
the FDA as a Medical Device Establishment. Such registration is renewable
annually and although we do not believe that the registration will fail to be
renewed by the FDA, there can be no assurance of such renewal. The failure of
ADM to obtain any annual renewal would have a material adverse effect on us if
we were not able to secure another manufacturer of our product. If ADM fails to
comply with these requirements, we will need to find another company to
manufacture our products which could delay the shipment of our product to our
customers.

     Failure to comply with applicable regulatory requirements can result in
enforcement action by the FDA or the Department of Justice, which may include
any of the following sanctions, among others:

     o    fines, injunctions and civil penalties;

     o    mandatory recall or seizure of our products;

     o    operating restrictions and partial suspension or total shutdown of
          production;

     o    refusing our requests for 510(k) clearance or pre-market approval of
          new products or new intended uses;

     o    withdrawing 510(k) clearance or pre-market approvals that are already
          granted; and

     o    criminal prosecution.


                                       23

<PAGE>

     The FDA also has the authority to require us to repair, replace or refund
the cost of any medical device that has been manufactured for us or distributed
by us. If any of these events were to occur, they could have a material adverse
effect on our business.

     We also are subject to a wide range of federal, state and local laws and
regulations, including those related to the environment, health and safety, land
use and quality assurance. We believe that we and ADM are in substantial
compliance with these laws and regulations as currently in effect, and our
compliance with such laws will not have a material adverse effect on our capital
expenditures, earnings and competitive and financial position.

     INTERNATIONAL REGULATIONS

     International sales of medical devices are subject to foreign governmental
regulations, which vary substantially from country to country. The time required
to obtain clearance or approval by a foreign country may be longer or shorter
than that required for FDA clearance or approval, and the requirements may be
different. There can be no assurance that we will be successful in obtaining or
maintaining necessary approvals to market our products in certain foreign
markets, or obtain such approvals for additional products that may be developed
or acquired by us.

     The primary regulatory environment in Europe is that of the European Union,
which consists of 25 countries encompassing most of the major countries in
Europe. Three member states of the European Free Trade Association have
voluntarily adopted laws and regulations that mirror those of the European Union
with respect to medical devices. Other countries, such as Switzerland, have
entered into Mutual Recognition Agreements and allow the marketing of medical
devices that meet European Union requirements.

     The European Union has adopted numerous directives and European
Standardization Committees have promulgated voluntary standards regulating the
design, manufacture, clinical trials, labeling and adverse event reporting for
medical devices. Devices that comply with the requirements of a relevant
directive will be entitled to bear a CE conformity marking (which stands for
Conformite Europeenne), indicating that the device conforms with the essential
requirements of the applicable directives and, accordingly, can be commercially
distributed throughout the member states of the European Union, the member
states of the European Free Trade Association and countries which have entered
into a Mutual Recognition Agreement. The method of assessing conformity varies
depending on the type and class of the product, but normally involves a
combination of self-assessment by the manufacturer of the product and a
third-party assessment by a Notified Body, an independent and neutral
institution appointed by a country to conduct the conformity assessment. This
third-party assessment may consist of an audit of the manufacturer's quality
system and specific testing of the manufacturer's device. An assessment by a
Notified Body in one member state of the European Union, the European Free Trade
Association or one country which has entered into a Mutual Recognition Agreement
is required in order for a manufacturer to commercially distribute the product
throughout these countries. ISO 9001 and ISO 13845 certification are voluntary
harmonized standards. Compliance establishes the presumption of conformity with
the essential requirements for a CE Marking. In April 2007, we initiated our
application for CE Marking approval for our portable, battery operated products
and in June 2007, we received approval for CE Marking of such products.

REIMBURSEMENT

     Our products are rented principally to nursing homes and extended care
facilities that receive payment coverage for products and services they utilize
from various public and private third-party payors, including the Medicare
program and private insurance plans. As a result, the demand and payment for our
products are dependent, in part, on the reimbursement policies of these payors.
The manner in which reimbursement is sought and obtained for any of our products
varies based upon the type of payor involved and the setting to which the
product is furnished and in which it is utilized by patients.


                                       24

<PAGE>

     We cannot determine the effect of changes in the healthcare system or
method of reimbursement in the United States for our products or any other
products that may be produced by us in the United States. For example, from 1991
to 1997, products utilizing our technology were marketed primarily for use in
nursing homes for the Medicare reimbursable treatment of chronic wounds through
a rental program. Due to changes in reimbursement made by CMS, in 1997, which
prohibited Medicare coverage of the use of the technology used in our products
in the treatment of non-healing wounds, the nursing home revenue diminished
significantly by 2001 and we pursued alternative markets and applications for
use of our technology. In December 2003, CMS reversed its policy, clearing the
way for issuance of an NCD authorizing Medicare coverage of electromagnetic
therapy for wound treatment under the conditions described below. In response to
this significant regulatory change, we re-entered the wound care market.

     CMS has not yet cleared separate reimbursement for the use of the
technology used in our products in the home health setting. Accordingly, in
December 2005, we retained a consulting company specializing in CMS
reimbursement and coverage matters to assist us in arranging and preparing for a
meeting with CMS to request such clearance. In May 2006, with the assistance of
this consulting company, we held a meeting with CMS and made a presentation in
support of separate reimbursement for the use of the technology used in our
products in the home health setting. We continue to retain a consulting company
to assist us with our efforts relating to CMS reimbursement. Even if we were to
obtain clearance from CMS for the separate reimbursement of the technology used
in our products in the home health setting, the regulatory environment could
again be changed to bar CMS coverage for treatment of chronic wounds utilizing
the technology used in our products, whether for home health use or otherwise,
which could limit the amount of coverage patients or providers are entitled to
receive for electromagnetic wound therapy.

     We believe that government and private efforts to contain or reduce health
care costs are likely to continue. These trends mapayors to deny or limit
reimbursement for our products, which could negatively impact the pricing and
profitability of, or demand for, our products.

     MEDICARE

     Medicare is a federally funded program that provides health coverage
primarily to the elderly and disabled. Medicare is composed of four parts: Part
A, Part B, Part C and Part D. Medicare Part A (hospital insurance) covers, among
other things, inpatient hospital care, home health care and skilled nursing
facility services. Medicare Part B (supplementary medical insurance) covers
various services, including those services provided on an outpatient basis.
Medicare Part B also covers medically necessary durable medical equipment and
medical supplies. Medicare Part C, also known as "Medicare Advantage," offers
beneficiaries a choice of various types of health care plans, including several
managed care options. Medicare Part D is the new Voluntary Prescription Drug
Benefit Program, which becomes effective in 2006.

     The Medicare program has established guidelines for the coverage and
reimbursement of certain equipment, supplies and support services. In general,
in order to be reimbursed by Medicare, a healthcare item or service furnished to
a Medicare beneficiary must be reasonable and necessary for the diagnosis or
treatment of an illness or injury or to improve the functioning of a malformed
body part and not otherwise excluded by statute.

     CMS may adopt an NCD concerning items and services that will or will not be
covered. NCD's establish substantive legal standards for Medicare coverage of
specific items or services on a national basis to be followed by all Medicare
contracted intermediaries and carriers.


                                       25

<PAGE>

     In 2004, CMS issued an NCD for Electrical Stimulation and Electromagnetic
Therapy for the Treatment of Wounds. Effective July 1, 2004, CMS covers
electromagnetic therapy for chronic stage III or stage IV pressure ulcers
(ulcers that have not healed within 30 days of occurrence), arterial ulcers,
diabetic ulcers, and venous stasis ulcers. Electromagnetic therapy services will
be covered only when performed by a physician, physical therapist, or incident
to a physician service. Unsupervised therapy for wound treatment will not be
covered, nor will the service be covered as an initial treatment modality.
Coverage begins only after appropriate standard would therapy has been tried for
at least 30 days and there are no measurable signs of improved healing. Medicare
does not cover the device used for electromagnetic treatment of wounds.

     The NCD provides that electromagnetic therapy for wound treatment will be
covered only after appropriate standard wound treatment has been tried for at
least 30 days with no measurable signs of healing. Additionally, wounds
undergoing treatment by electromagnetic therapy must be evaluated at least
monthly by the treating physician. Medicare will not continue to cover the
treatment if the wound shows no measurable signs of improvement within any 30
day period of treatment or if certain other conditions exist following
treatment. Local Medicare contractors have some discretion to cover other uses
of electromagnetic therapy not specified in the NCD. Non-governmental payors
often adopt coverage conditions based on the NCD's issued for the applicable
therapy or service.

     The methodology for determining the amount of Medicare reimbursement of our
products varies based upon, among other things, the setting in which a Medicare
beneficiary receives health care items and services. A discussion of Medicare
coverage for electromagnetic therapy for the treatment of wounds in various
settings is discussed below.

     HOSPITAL SETTING

     Since the establishment of the prospective payment system in 1983, acute
care hospitals are generally reimbursed for certain patients by Medicare for
inpatient operating costs based upon prospectively determined rates. Under the
prospective payment system, or PPS, acute care hospitals receive a predetermined
payment rate based upon the Diagnosis-Related Group, or DRG, which is assigned
to each Medicare beneficiary's stay, regardless of the actual cost of the
services provided. Certain additional or "outlier" payments may be made to a
hospital for cases involving unusually high costs or lengths of stay.
Accordingly, acute care hospitals generally do not receive direct Medicare
reimbursement under PPS for the distinct costs incurred in purchasing or renting
our products. Rather, reimbursement for these costs is included within the
DRG-based payments made to hospitals for the treatment of Medicare-eligible
inpatients who utilize the products. Long-term care and rehabilitation hospitals
also are now paid under a PPS rate that does not directly account for all actual
services rendered. Since PPS payments are based on predetermined rates, and may
be less than a hospital's actual costs in furnishing care, hospitals have
incentives to lower their inpatient operating costs by utilizing equipment and
supplies, such as our products, that are effective in treating patients more
quickly than traditional methods. The amount that the hospital receives under
PPS could limit the amount that we could charge a hospital for the use of our
products.

     Certain specialty hospitals also use our products. Such specialty hospitals
are exempt from the PPS and, subject to certain cost ceilings, are reimbursed by
Medicare on a reasonable cost basis for inpatient operating and capital costs
incurred in treating Medicare beneficiaries. Such hospitals may have additional
Medicare reimbursement for reasonable costs incurred in the use of our products.

     SKILLED NURSING FACILITY SETTING

     On July 1, 1998, reimbursement for SNFs under Medicare Part A changed from
a cost-based system to a prospective payment system which is based on resource
utilization groups, or RUGs. Under the RUGs system, a Medicare patient in a SNF
is assigned to a RUGs category upon admission to the facility. The RUGs category


                                       26

<PAGE>

to which the patient is assigned depends upon the medical services and
functional support the patient is expected to require. The SNF receives a
prospectively determined daily payment based upon the RUGs category assigned to
each Medicare patient. These payments are intended generally to cover all
inpatient services for Medicare patients, including routine nursing care,
capital-related costs associated with the inpatient stay and ancillary services.
Effective July 2002, the daily payments were based on the national average cost.
Effective January 1, 2006, refinements to the RUG's decreased reimbursement for
therapy services. Because SNF's are paid on a fixed daily cost reimbursement,
SNFs have become less inclined to use products which had previously been
reimbursed as variable ancillary costs.

     HOME HEALTH SETTING

     The Balanced Budget Act of 1997 requires consolidated Medicare billing on a
prospective payment basis of all home health services provided to a beneficiary
under a home health plan of care authorized by a physician. Only the home health
agency overseeing the beneficiary's plan of care may bill Medicare for all such
covered items and services falling under that plan of care.

     In 2004, CMS added electromagnetic therapy as a type of service payable in
the home health setting, but subject to Medicare's consolidated home health
billing provisions. Thus, Medicare will not pay separately for electromagnetic
therapy services. In December 2005, we retained a consulting company
specializing in CMS reimbursement and coverage matters to assist us in arranging
and preparing for a meeting with CMS to request that CMS cover electromagnetic
therapy for wound treatment separately in the home health setting. In May 2006,
with the assistance of this consulting company, we held a meeting with CMS and
made a presentation in support of reimbursement for the home health use of the
technology used in our products. As of the date of this report, we have not
received any feedback from CMS as to whether CMS intends to reimburse use of the
technology used in our products separately in the home health setting.

     OTHER SETTINGS

     Medicare will also reimburse electromagnetic therapy for wound treatment
under Medicare Parts A and B as appropriate by physicians and by therapists and
at federally qualified health centers, rural health clinics, and critical access
hospitals.

PRODUCT LIABILITY AND INSURANCE

     We may be exposed to potential product liability claims by those who use
our products. Therefore, we maintain a general liability insurance policy, which
includes aggregate product liability coverage of $1,000,000 for products.

     We believe that our present insurance coverage is adequate for the types of
products currently marketed. There can be no assurance, however, that such
insurance will be sufficient to cover potential claims or that the present level
of coverage, or increased coverage, will be available in the future at a
reasonable cost.

EMPLOYEES

     At June 19, 2007, we had 19 full-time salaried employees, including 10 in
executive managerial and administrative positions and nine in sales and
marketing positions. ADM currently provides administrative, technical,
engineering and regulatory services with respect to our products pursuant to a
management services agreement.


                                       27

<PAGE>

     We intend to add employees to our technical staff, sales and marketing
staff and administrative staff during the year ending March 31, 2008. We expect
to add additional employees for sales, laboratory and research/development
positions. We intend to utilize independent sales organizations and
manufacturer's representatives to promote our products on a commission basis and
thereby avoid the expense of creating an in-house sales capability.

     None of our employees are represented by unions or collective bargaining
agreements. We believe that our relationships with our employees are good.

COMPANY HISTORY

     We were incorporated under the laws of the State of New Jersey in March
1989 under the name AA Northvale Medical Associates, Inc. as a subsidiary of ADM
(OTC BB: ADMT.OB), our largest shareholder (which holds approximately 33.9% of
the outstanding shares of our common stock). From March 1989 until August 1998,
we had very limited operations, which included the operation of medical clinics
for conducting clinical studies on certain products of ADM. In August 1998, ADM
purchased certain assets from Electropharmacology, Inc. (formerly known as MRI,
Inc.), or EPI, that were then used by EPI in connection with its device
business, including the right to use the EPI patents, and immediately
transferred all of those assets to us. The assets included all of EPI's rights,
title and interest in its device business as well as certain rights related to
three patents related to the PEMF technology that were issued in 1994, 1996 and
1998. In January 2000, we acquired all of the rights to the EPI patents. In
April 2003, we acquired the operations of five former subsidiaries of ADM, and
in August 2004, we changed our name to Ivivi Technologies, Inc. While we have
conducted development and sales and marketing activities, we have generated
limited revenues and have incurred significant losses to date.

AVAILABLE INFORMATION

     We maintain a website at www.ivivitechnologies.com. We make available free
of charge on our website all electronic filings with the Securities and Exchange
Commission (including proxy statements and reports on Forms 10-KSB, 10-QSB and
8-K and any amendments to these reports) as soon as reasonably practicable after
such material is electronically filed with or furnished to the Securities and
Exchange Commission. The Securities and Exchange Commission maintains an
internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the Securities and Exchange Commission.

     We have also posted policies, codes and procedures that outline our
corporate governance principles, including the charters of the board's audit and
nominating and corporate governance committees, and our Code of Ethics covering
directors and all employees and the Code of Ethics for senior financial officers
on our website. These materials also are available free of charge in print to
stockholders who request them in writing. The information contained on our
website does not constitute a part of this report.

RISK FACTORS

     AN INVESTMENT IN OUR COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, TOGETHER WITH
THE OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-KSB, BEFORE
BUYING OUR COMMON STOCK. THESE RISKS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND THE VALUE OF OUR
COMMON STOCK.

                          RISKS AFFECTING OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO EVALUATE OUR POTENTIAL FOR
FUTURE SUCCESS AND DETERMINE IF WE WILL BE ABLE TO EXECUTE OUR BUSINESS PLAN.
THIS MAKES IT DIFFICULT TO EVALUATE OUR FUTURE PROSPECTS AND THE RISK OF SUCCESS
OR FAILURE OF OUR BUSINESS.


                                       28

<PAGE>

     We were formed in 1989, but had very limited operations until 1998 when we
acquired the assets utilized by EPI in connection with its medical device
business and your evaluation of our business and prospects will be based partly
on our limited operating history. While we have conducted development and sales
and marketing activities, we have generated limited revenues to date.
Consequently, our historical results of operations may not give you an accurate
indication of our future results of operations or prospects. You must consider
our business and prospects in light of the risks and difficulties we will
encounter as an early-stage company in a new and rapidly evolving market. These
risks include:

     o    our ability to effectively and efficiently market and distribute our
          products through our sales force and third-party distributors;

     o    the ability of ADM or other manufacturers utilized by us to
          effectively and efficiently manufacture our products;

     o    our ability to obtain market acceptance of our current products and
          future products that may be developed by us;

     o    our ability to sell our products at competitive prices which exceed
          our per unit costs; and

     o    our ability to obtain regulatory approval or clearance of our
          products.

We may not be able to address these risks and difficulties, which could
materially and adversely affect our revenues, operating results and our ability
to continue to operate our business.

WE HAVE A HISTORY OF SIGNIFICANT AND CONTINUED OPERATING LOSSES AND A
SUBSTANTIAL ACCUMULATED EARNINGS DEFICIT AND WE MAY CONTINUE TO INCUR
SIGNIFICANT LOSSES.

     We have generated only limited revenues from product sales and have
incurred net losses of approximately $7.8 and $10.7 million for the fiscal years
ended March 31, 2007 and 2006, respectively. At March 31, 2007, we had an
accumulated deficit of approximately $23.7 million. We expect to incur
additional operating losses, as well as negative cash flow from operations, for
the foreseeable future, as we continue to expand our marketing efforts with
respect to our products and to continue our research and development of
additional applications for our products as well as new products utilizing our
PEMF technology and other technologies that we may develop in the future. Our
ability to increase our revenues from sales of our current products and other
products developed by us will depend on:

     o    increased market acceptance and sales of our current products;

     o    commercialization and market acceptance of new technologies and
          products under development; and

     o    medical community awareness.

WE HAVE HAD DIFFICULTIES WITH OUR FINANCIAL ACCOUNTING CONTROLS IN THE PAST IF
WE ARE UNABLE TO ESTABLISH APPROPRIATE INTERNAL FINANCIAL REPORTING CONTROLS AND
PROCEDURES, IT COULD CAUSE USE TO FAIL TO MEET OUR REPORTING OBLIGATIONS, RESULT
IN THE RESTATEMENT OF OUR FINANCIAL STATEMENTS, HARM OUR OPERATING RESULTS,
SUBJECT US TO REGULATORY SCRUTINY AND SANCTION, CAUSE INVESTORS TO LOSE
CONFIDENCE IN OUR REPORTED FINANCIAL INFORMATION AND HAVE A NEGATIVE EFFECT ON
THE MARKET PRICE FOR SHARES OF OUR COMMON STOCK.

     Effective internal controls are necessary for us to provide reliable
financial reports and effectively prevent fraud. We maintain a system of
internal control over financial reporting, which is defined as a process
designed by, or under the supervision of, our principal executive officer and
principal financial officer, or persons performing similar functions, and
effected by our 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.


                                       29

<PAGE>

     As noted below, we have had difficulties with our financial controls in the
past. As a public company, we have significant requirements for enhanced
financial reporting and internal controls. See discussion under "Item 8A.
Controls and Procedures" of this Annual Report on Form 10-KSB. We will be
required to document and test our internal control procedures in order to
satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which
requires annual management assessments of the effectiveness of our internal
controls over financial reporting and a report by our independent registered
public accounting firm addressing these assessments. The process of designing
and implementing effective internal controls is a continuous effort that
requires us to anticipate and react to changes in our business and the economic
and regulatory environments and to expend significant resources to maintain a
system of internal controls that is adequate to satisfy our reporting
obligations as a public company.

     On or about March 28, 2006, Stonefield Josephson, Inc., our former
independent auditors, advised us in writing and discussed with us orally its
views regarding certain areas requiring improvement in our internal control over
financial reporting. The areas requiring improvement were generally: (i) lack of
staff with technical accounting expertise to independently apply our accounting
policies in accordance with accounting principles generally accepted in the
United States, (ii) improper cut off procedures and (iii) lack of adequate
back-up and documentation procedures with respect to our inventory prior to
March 31, 2005 and with respect to stock options previously granted by us. Our
management has determined that, due to the reasons described above, we had not
consistently followed established internal control over financial reporting
procedures related to the analysis, documentation and review of selection of the
appropriate accounting treatment for certain transactions.

     Although we have assigned the highest priority to the improvement in our
internal control over financial reporting and have taken, and will continue to
take, action in furtherance of such improvement, we cannot assure you that the
above-mentioned areas will be fully remedied, if ever. Moreover, we cannot
assure you that we will not, in the future, identify further areas requiring
improvement in our internal control over financial reporting. We cannot assure
you that the measures we have taken or will take to remediate any areas in need
of improvement or that we will implement and maintain adequate controls over our
financial processes and reporting in the future as we continue our rapid growth.
If we are unable to establish appropriate internal financial reporting controls
and procedures, it could cause us to fail to meet our reporting obligations,
result in the restatement of our financial statements, harm our operating
results, subject us to regulatory scrutiny and sanction, cause investors to lose

confidence in our reported financial information and have a negative effect on
the market price for shares of our common stock. See "Item 8A. Controls and
Procedures" of this Annual Report on Form 10-KSB.

WE HAVE RESTATED OUR FINANCIAL STATEMENTS IN THE PAST TO REFLECT VARIOUS
CORRECTIONS. NO ASSURANCES CAN BE GIVEN THAT SIMILAR RESTATEMENTS WILL NOT BE
REQUIRED IN THE FUTURE.

     We restated our financial statements in the past to reflect various
corrections of certain errors. The impact of the restatement of such financial
statements is included in our financial statements as of and for the year ended
March 31, 2006. In addition, we and our former auditors identified certain
errors requiring correction to our statement of operations for the year ended
March 31, 2005. While we believe we have put processes in place to begin to
remedy areas in our internal controls, no assurances can be given that we will
not be faced with situations which may require us to restate our financial
statements again. Any such restatements could adversely effect the credibility
of our reported financial results and the price of our common stock.


                                       30

<PAGE>

WE ARE CURRENTLY DEPENDENT ON OUR PRODUCTS WHICH UTILIZE OUR PEMF TECHNOLOGY,
AND INCREASING OUR REVENUES WILL DEPEND ON OUR ABILITY TO INCREASE MARKET
PENETRATION, AS WELL AS OUR ABILITY TO DEVELOP AND COMMERCIALIZE NEW PRODUCTS
AND TECHNOLOGIES.

     Products based on non-invasive, electrotherapeutic technologies represent
known methods of treatment that we believe have been under-utilized clinically.
Physicians and other healthcare professionals may not use products and
technologies developed by us unless they determine that the clinical benefits to
the patient are greater than those available from competing products or
therapies or represent equal efficacy with lower cost. Even if the advantage of
our products and technologies is established as clinically and fiscally
significant, physicians and other healthcare professionals may not elect to use
such products and technologies. The rate of adoption and acceptance of our
products and technologies may also be affected adversely by unexpected side
effects or complications associated with our products, consumers' reluctance to
invest in new products and technologies, the level of third-party reimbursement
and widespread acceptance of other products and technologies. Consequently,
physicians and other healthcare professionals, healthcare payors and consumers
may not accept products or technologies developed by us. Broad market acceptance
of our current products and other products and technologies developed by us in
the future may require the education and training of numerous physicians and
other healthcare professionals, as well as conducting or sponsoring clinical and
fiscal studies to demonstrate the cost efficiency and other benefits of such
products and technologies. The amount of time required to complete such training
and studies could be costly and result in a delay or dampening of such market
acceptance. Moreover, healthcare payors' approval of use for our products and
technologies in development may be an important factor in establishing market
acceptance.

     We may be required to undertake time-consuming and costly development
activities and seek regulatory clearance or approval for new products or
technologies. Although the FDA has cleared our products for the treatment of
edema and pain in soft tissue, we may not be able to obtain regulatory clearance
or approval of new products or technologies or new treatments through existing
products or maintain clearance of our existing products. In addition, we have
not demonstrated an ability to market and sell our products, much less multiple
products simultaneously. If we are unable to increase market acceptance of our
current products or develop and commercialize new products in the future, we
will not be able to increase our revenues. The completion of the development of
any new products or technologies or new uses of existing products will remain
subject to all the risks associated with the commercialization of new products
based on innovative technologies, including:

     o    our ability to fund and establish research that supports the efficacy
          of new technologies and products;

     o    our ability to obtain regulatory approval or clearance of such
          technologies and products, if needed;

     o    our ability to obtain market acceptance of such new technologies and
          products;

     o    our ability to effectively and efficiently market and distribute such
          new products;

     o    the ability of ADM or other manufacturers utilized by us to
          effectively and efficiently manufacture such new products; and

     o    our ability to sell such new products at competitive prices that
          exceed our per unit costs for such products.

IF OUR CUSTOMERS ARE UNABLE TO RECEIVE REIMBURSEMENT FROM THIRD-PARTIES,
INCLUDING REIMBURSEMENT FROM MEDICARE, OUR GROWTH AND REVENUES WILL BE
MATERIALLY AND ADVERSELY AFFECTED IN MARKETS WHERE OUR CUSTOMERS RELY ON
INSURANCE COVERAGE FOR PAYMENT.


                                       31

<PAGE>

     Some healthcare providers such as hospitals and physicians that purchase,
lease or rent medical devices in the United States generally rely on third-party
payors, principally Medicare and private health insurance plans, including
health maintenance organizations, to reimburse all or part of the cost of the
treatment for which the medical device is being used. Commercialization of our
products and technologies in the United States will depend in part upon the
availability of reimbursement for the cost of the treatment from third-party
healthcare payors such as Medicare and private health insurance plans, including
health maintenance organizations, in non-capitated markets, where we rely on
insurance coverage for payment. Such third-party payors are increasingly
challenging the cost of medical products and services, which have and could
continue to have a significant effect on the ratification of such technologies
and services by many healthcare providers. Several proposals have been made by
federal and state government officials that may lead to healthcare reforms,
including a government directed national healthcare system and healthcare
cost-containment measures. The effect of changes in the healthcare system or
method of reimbursement for our current products and any other products or
technologies that we may market in the United States cannot be determined.

     While commercial insurance companies make their own decisions regarding
which medical procedures, technologies and services to cover, commercial payors
often apply standards similar to those used adopted by the Centers for Medicare
& Medicaid Services, or CMS, in determining Medicare coverage. The Medicare
statute prohibits payment for any medical procedures, technologies or services
that are not reasonable and necessary for the diagnosis or treatment of illness
or injury. In 1997, CMS, which is responsible for administering the Medicare
program, had interpreted this provision to deny Medicare coverage of procedures
that, among other things, are not deemed safe and effective treatments for the
conditions for which they are being used, or which are still investigational.
However, in July 2004, CMS reinstated Medicare reimbursement for the use of the
technology used in our products in the treatment of non-healing wounds under
certain conditions.

     CMS has established a variety of conditions for Medicare coverage of the
technology used in our products. These conditions depend, in part, on the
setting in which the service is provided. For example, in 2004, CMS added
electromagnetic therapy as a type of service payable in the home health setting,
but subject to Medicare's consolidated home health billing provisions. Thus,
Medicare will not pay separately for electromagnetic therapy services if the
service is billed under a home health plan of care provided by a home health
agency. Rather, the home health agency must pay for the electromagnetic therapy
as part of the consolidated payment made to the home health agency for the
entire range of home health services under the patient's care plan.

     In December of 2005, we retained a consulting company specializing in CMS
reimbursement and coverage matters to assist us in arranging and preparing for a
meeting with CMS to request that CMS cover electromagnetic therapy for wound
treatment separately in the home health setting. We continue to retain a
consulting company to assist us with CMS.

     In May 2006, with the assistance of this consulting company, we held a
meeting with CMS and made a presentation in support of reimbursement for the
home health use of the technology used in our products. Even if CMS were to
approve separate reimbursement of electromagnetic therapy in the home health
setting, the regulatory environment could change and CMS might deny all coverage
for electromagnetic therapy as treatment of chronic wounds, whether for home
health use or otherwise, which could limit the amount of coverage patients or
providers are entitled to receive. Either of these events would materially and
adversely affect our revenues and operating results. Medicare does not cover the
cost of the device used for the electromagnetic treatment of wounds.

     We cannot predict when, if ever, CMS will allow for reimbursement for the
use of the technology in our products in the home, or what additional
legislation or regulations, if any, may be enacted or adopted in the future
relating to our business or the healthcare industry, including third-party
coverage and reimbursement, or what effect any such legislation or regulations


                                       32

<PAGE>

may have on us. Furthermore, significant uncertainty exists as to the coverage
status of newly approved healthcare products, and there can be no assurance that
adequate third-party coverage will be available with respect to any of our
future products or new applications for our present products. In currently
non-capitated markets, failure by physicians, hospitals, nursing homes and other
users of our products to obtain sufficient reimbursement for treatments using
our technologies would materially and adversely affect our revenues and
operating results. Alternatively, as the U.S. medical system moves to more
fixed-cost models, such as payment based on diagnosis related groups,
prospective payment systems or expanded forms of capitation, the market
landscape may be altered, and the amount we can charge for our products may be
limited and cause our revenues and operating results to be materially and
adversely affected.

WE WILL LIKELY NEED ADDITIONAL CAPITAL TO MARKET OUR PRODUCTS AND TO DEVELOP AND
COMMERCIALIZE NEW TECHNOLOGIES AND PRODUCTS AND IT IS UNCERTAIN WHETHER SUCH
CAPITAL WILL BE AVAILABLE.

     Our business is capital intensive and we will likely require additional
financing in order to:

     o    fund research and development;

     o    expand sales and marketing activities;

     o    develop new or enhanced technologies or products;

     o    maintain and establish regulatory compliance;

     o    respond to competitive pressures; and

     o    acquire complementary technologies or take advantage of unanticipated
          opportunities.

     Our need for additional capital will depend on:

     o    the costs and progress of our research and development efforts;

     o    the preparation of pre-market application submissions to the FDA for
          our new products and technologies and costs associated therewith;

     o    the number and types of product development programs undertaken;

     o    the number of products we have manufactured for sale or rental;

     o    the costs and timing of expansion of sales and marketing activities;

     o    the amount of revenues from sales of our existing and potentially new
          products;

     o    the cost of obtaining and maintaining, enforcing and defending patents
          and other intellectual property rights;

     o    competing technological and market developments; and

     o    developments related to regulatory and third-party coverage matters.

Although we expect that our available funds, together with funds from
operations, will be sufficient to meet our anticipated needs for the next 12
months, we will likely need to obtain additional capital to continue to operate
and grow our business. Our cash requirements may vary materially from those


                                       33

<PAGE>

currently anticipated due to changes in our operations, including our marketing
and distribution activities, product development, regulatory requirements,
expansion of our personnel and the timing of our receipt of revenues. Our
ability to obtain additional financing in the future will depend in part upon
the prevailing capital market conditions, as well as our business performance.
There can be no assurance that we will be successful in our efforts to arrange
additional financing on terms satisfactory to us or at all. If additional
financing is raised by the issuance of common stock you may suffer additional
dilution and if additional financing is raised through debt financing, it may
involve significant restrictive covenants which could affect our ability to
operate our business. If adequate funds are not available, or are not available
on acceptable terms, we may not be able to continue our operations, grow our
business or take advantage of opportunities or otherwise respond to competitive
pressures and remain in business.

WE OUTSOURCE THE MANUFACTURING OF OUR PRODUCTS TO ADM, OUR LARGEST SHAREHOLDER
AND EXCLUSIVE MANUFACTURER, AND IF THE OPERATIONS OF ADM ARE INTERRUPTED OR IF
OUR ORDERS EXCEED THE MANUFACTURING CAPABILITIES OF ADM, WE MAY NOT BE ABLE TO
DELIVER OUR PRODUCTS TO CUSTOMERS ON TIME.

     Pursuant to a manufacturing agreement between us and ADM, our largest
shareholder, ADM is the exclusive manufacturer of our products, and we may rely
on ADM to manufacture other products that we may develop in the future. ADM
operates a single facility and has limited capacity that may be inadequate if
our customers place orders for unexpectedly large quantities of our products, or
if ADM' other customers place large orders of products, which could limit ADM'
ability to produce our products. In addition, if the operations of ADM were
halted or restricted, even temporarily, or they are unable to fulfill large
orders, we could experience business interruption, increased costs, damage to
our reputation and loss of our customers. Moreover, under our agreement, ADM may
terminate the agreement under certain circumstances. Although we have the right
to utilize other manufacturers if ADM is unable to perform under our agreement,
manufacturers of our products need to be licensed with the FDA, and identifying
and qualifying a new manufacturer to replace ADM as the manufacturer of our
products could take several months during which time, we would likely lose
customers and our revenues could be materially delayed and/or reduced.

BECAUSE OF OUR RELATIONSHIP WITH ADM, WE MAY BECOME SUBJECT TO CONFLICTS OF
INTERESTS THAT MAY ADVERSELY AFFECT OUR ABILITY TO OPERATE OUR BUSINESS.

     Our Vice Chairman of the Board and Co-Chief Executive Officer, Andre'
DiMino, serves as the President and Chief Executive Officer of ADM; and our
President and Co-Chief Executive Officer, David Saloff, serves as a director of
ADM. This could create, or appear to create, potential conflicts of interest
when members of our senior management are faced with decisions that could have
different implications for us and for ADM. For example, conflicts of interest
could arise between us and ADM in various areas such as fundraising, competing
for new business opportunities, and other areas. In addition, ADM serves as the
exclusive manufacturer of our products and we utilize personnel at ADM to
provide administrative and other services to us. No assurance can be given as to
how potentially conflicted board members will evaluate their fiduciary duties to
us and ADM, respectively, or how such individuals will act under such
circumstances. Furthermore, the appearance of conflicts, even if such conflicts
do not materialize, might adversely affect the public's perception of us.

OUR ABILITY TO EXECUTE OUR BUSINESS PLAN DEPENDS ON THE SCOPE OF OUR
INTELLECTUAL PROPERTY RIGHTS AND NOT INFRINGING THE INTELLECTUAL PROPERTY RIGHTS
OF OTHERS. THE VALIDITY, ENFORCEABILITY AND COMMERCIAL VALUE OF THESE RIGHTS ARE
HIGHLY UNCERTAIN.

     Our ability to compete effectively with other companies is materially
dependent upon the proprietary nature of our technologies. We rely primarily on
patents and trade secrets to protect our technologies.

     We have:


                                       34

<PAGE>

     o    one patent on our device, which expires in 2019, as well as two other
          patents for certain embodiments of PEMF and other aspects of such
          device;

     o    eight U.S. non-provisional patent applications pending; and

     o    two provisional U.S. patents pending.

Third parties may seek to challenge, invalidate, circumvent or render
unenforceable any patents or proprietary rights owned by us based on, among
other things:

     o    subsequently discovered prior art;

     o    lack of entitlement to the priority of an earlier, related
          application; or

     o    failure to comply with the written description, best mode, enablement
          or other applicable requirements.

     In general, the patent position of medical device companies is highly
uncertain, still evolving and involves complex legal, scientific and factual
questions. We are at risk that:

     o    other patents may be granted with respect to the patent applications
          filed by us; and

     o    any patents issued to us may not provide commercial benefit to us or
          will be infringed, invalidated or circumvented by others.

     The United States Patent and Trademark Office currently has a significant
backlog of patent applications, and the approval or rejection of patents may
take several years. Prior to actual issuance, the contents of United States
patent applications are generally published 18 months after filing. Once issued,
such a patent would constitute prior art from its filing date, which might
predate the date of a patent application on which we rely. Conceivably, the
issuance of such a prior art patent, or the discovery of "prior art" of which we
are currently unaware, could invalidate a patent of ours or prevent
commercialization of a product claimed thereby.

     Although we generally conduct a cursory review of issued patents prior to
engaging in research or development activities, we may be required to obtain a
license from others to commercialize any of our new products under development.
If patents that cover our existing or new products are issued to other
companies, there can be no assurance that any necessary license could be
obtained on favorable terms or at all.

     There can be no assurance that we will not be required to resort to
litigation to protect our patented technologies and other proprietary rights or
that we will not be the subject of additional patent litigation to defend our
existing and proposed products and processes against claims of patent
infringement or any other intellectual property claims. Such litigation could
result in substantial costs, diversion of management's attention, and diversion
of our resources.

     We also have applied for patent protection in several foreign countries.
Because of the differences in patent laws and laws concerning proprietary rights
between the United States and foreign countries, the extent of protection
provided by patents and proprietary rights granted to us by the United States
may differ from the protection provided by patents and proprietary rights
granted to us by foreign countries.

     We attempt to protect our trade secrets, including the processes, concepts,
ideas and documentation associated with our technologies, through the use of
confidentiality agreements and non-competition agreements with our current
employees and with other parties to whom we have divulged such trade secrets. If


                                       35

<PAGE>

our employees or other parties breach our confidentiality agreements and
non-competition agreements or if these agreements are not sufficient to protect
our technology or are found to be unenforceable, our competitors could acquire
and use information that we consider to be our trade secrets and we may not be
able to compete effectively. Most of our competitors have substantially greater
financial, marketing, technical and manufacturing resources than we have and we
may not be profitable if our competitors are also able to take advantage of our
trade secrets.

     We may decide for business reasons to retain certain knowledge that we
consider proprietary as confidential and elect to protect such information as a
trade secret, as business confidential information or as know-how. In that
event, we must rely upon trade secrets, know-how, confidentiality and
non-disclosure agreements and continuing technological innovation to maintain
our competitive position. There can be no assurance that others will not
independently develop substantially equivalent proprietary information or
otherwise gain access to or disclose such information.

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS OR KEY PERSONNEL OR CONSULTANTS MAY
MATERIALLY AND ADVERSELY AFFECT OUR OPERATIONS AND OUR ABILITY TO EXECUTE OUR
GROWTH STRATEGY.

     Our ability to execute our business plan depends upon the continued
services of Andre' DiMino, our Vice Chairman of the Board and Co-Chief Executive
Officer and David Saloff, our President and Co-Chief Executive Officer, as well
as our key technology, marketing, sales, support and consulting personnel,
including Dr. Arthur Pilla, one of our consultants, our Science Director and the
Chairman of our Scientific Advisory Board. Although we have entered into
employment or consulting agreements containing non-compete agreements with
Messrs. DiMino and Saloff and certain of our key personnel, including Dr. Pilla,
we may not be able to retain these individuals or enforce such non-compete
agreements under applicable law. Further, our employment agreement with Mr.
DiMino requires him to devote at least a majority of his work-time toward Ivivi;
however, the remaining amount of his work-time may be devoted elsewhere,
including at ADM. As a result, Mr. DiMino's attention to our business and
operations may be diverted by his obligations elsewhere, including at ADM, and
we may not be able to have access to Mr. DiMino as needed by us. If we lost the
services of these executive officers or our key personnel, our business may be
materially and adversely affected and our stock price may decline. In addition,
our ability to execute our business plan is dependent on our ability to attract
and retain additional highly skilled personnel. We have key person life
insurance in the amount of $2 million for Mr. DiMino, but not for any of our
other executive officers or key employees.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR OUR COMPONENTS AND RAW MATERIALS
AND ANY INTERRUPTION IN THE AVAILABILITY OF THESE COMPONENTS AND RAW MATERIALS
USED IN OUR PRODUCT COULD REDUCE OUR REVENUES AND MATERIALLY AND ADVERSELY
AFFECT OUR OPERATING RESULTS.

     We rely on a limited number of suppliers for the components and raw
materials used in our products. Although there are many suppliers for each of
our component parts and raw materials, we are dependent on a single or limited
number of suppliers for many of the significant components and raw materials.
This reliance involves a number of significant risks, including:

     o    unavailability of materials and interruptions in delivery of
          components and raw materials from our suppliers;

     o    manufacturing delays caused by such unavailability or interruptions in
          delivery; and

     o    fluctuations in the quality and the price of components and raw
          materials.

     We do not have any long-term or exclusive purchase commitments with any of
our suppliers. Our failure to maintain existing relationships with our suppliers
or to establish new relationships in the future could also negatively affect our
ability to obtain our components and raw materials used in our products in a


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<PAGE>

timely manner. If we are unable to obtain ample supply of product from our
existing suppliers or alternative sources of supply, we may be unable to satisfy
our customers' orders which could reduce our revenues and adversely affect our
relationships with our customers and materially and adversely affect our
operating results.


                          RISKS RELATED TO OUR INDUSTRY

THE MEDICAL PRODUCTS MARKET IS HIGHLY COMPETITIVE AND SUSCEPTIBLE TO RAPID
CHANGE AND SUCH CHANGES COULD RENDER OUR EXISTING PRODUCTS AND ANY NEW PRODUCTS
DEVELOPED BY US UNECONOMICAL OR OBSOLETE.

     The medical products market is characterized by extensive research and
development activities and significant technological change. Our ability to
execute our business strategy depends in part upon our ability to develop and
commercialize efficient and effective products based on our technologies. We
compete against established companies as well as numerous independently owned
small businesses, including Diapulse Corporation of America, Inc., which
manufactures and markets devices that are substantially equivalent to some of
our products; Regenesis Biomedical, which manufactures and markets devices that
are similar to our first generation device; BioElectronics Corporation, which
develops and markets the ActiPatch(TM), a medical dermal patch that delivers
PEMF therapy to soft tissue injuries; and KCI Concepts, Inc., which manufactures
and markets negative pressure wound therapy devices in the wound care market. We
also face competition from companies that have developed other forms of
treatment, such as hyperbaric oxygen chambers, thermal therapies and
hydrotherapy. In addition, companies are developing or may, in the future,
engage in the development of products and/or technologies competitive with our
products. We expect that technological developments will occur and that
competition is likely to intensify as new technologies are employed. Many of our
competitors are capable of developing products based on similar technology, have
developed and are capable of continuing to develop products based on other
technologies, which are or may be competitive with our products and
technologies. Many of these companies are well-established, and have
substantially greater financial and other resources, research and development
capabilities and more experience in obtaining regulatory approvals,
manufacturing and marketing than we do. Our ability to execute our business
strategy and commercially exploit our technology must be considered in light of
the problems, expenses, difficulties, complications and delays frequently
encountered in connection with the development of new medical processes, devices
and products and their level of acceptance by the medical community. Our
competitors may succeed in developing competing products and technologies that
are more effective than our products and technologies, or that receive
government approvals more quickly than our new products and technologies, which
may render our existing and new products or technology uncompetitive,
uneconomical or obsolete.

WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR WHICH OUR PRODUCT LIABILITY
INSURANCE MAY BE INADEQUATE.

     Our business exposes us to potential product liability risks, which are
inherent in the testing, manufacturing and marketing of medical devices. While
we are not aware of any side-effects resulting from the use of our products,
there may be unknown long-term effects that may result in product liability
claims in the future. Although we maintain $1.0 million of product liability
insurance, we cannot provide any assurance that:


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<PAGE>

     o    our insurance will provide adequate coverage against potential
          liabilities if a product causes harm or fails to perform as promised;

     o    adequate product liability insurance will continue to be available in
          the future; or

     o    our insurance can be maintained on acceptable terms.

The obligation to pay any product liability claim in excess of whatever
insurance we are able to obtain would increase our expenses and could greatly
reduce our assets.

IF THE FDA OR OTHER STATE OR FOREIGN AGENCIES IMPOSE REGULATIONS THAT AFFECT OUR
PRODUCTS, OUR DEVELOPMENT, MANUFACTURING AND MARKETING COSTS WILL BE INCREASED.

     The development, testing, production and marketing of our current products
is, and other products developed by us may be, subject to regulation by the FDA
as devices under the 1976 Medical Device Amendments to the Federal Food, Drug
and Cosmetic Act. Although the FDA has cleared our SofPulse product for
the adjunctive use in the palliative treatment of post-operative pain and edema
in superficial tissue, use of our current products and any new products
developed by us will be subject to FDA regulation as well. Before a new medical
device, or a new use of, or claim for, an existing product can be marketed in
the United States, it must first receive either 510(k) clearance or pre-market
approval from the FDA, unless an exemption applies. Either process can be
expensive and lengthy. The FDA's 510(k) clearance process usually takes from
three to twelve months, but it can take longer and is unpredictable. The process
of obtaining pre-market approval is much more costly and uncertain than the
510(k) clearance process and it generally takes from one to three years, or even
longer, from the time the application is filed with the FDA.

     In the United States, medical devices must be:

     o    manufactured in establishments subject to FDA inspection to assess
          compliance with the FDA Quality Systems Regulation, or QSR; and

     o    produced in accordance with the QSR for medical devices.

As a result, we, as well as ADM, the exclusive manufacturer of our products, are
required to comply with QSR requirements and if we fail to comply with these
requirements, we will need to find another company to manufacture our products
which could delay the shipment of our product to our customers. In addition,
ADM's manufacturing facility:

     o    is required to be registered as a medical device manufacturing site
          with the FDA; and

     o    is subject to inspection by the FDA.

The FDA requires producers of medical devices to obtain FDA clearance and, in
some cases, approval prior to commercialization in the United States. Testing,
preparation of necessary applications and the processing of those applications
by the FDA is expensive and time consuming. We do not know if the FDA will act
favorably or quickly in making such reviews, and significant difficulties or
costs may be encountered by us in our efforts to obtain FDA clearance and
approval. The FDA may also place conditions on clearance and approvals that
could restrict commercial applications of such products. Product approvals may
be withdrawn if compliance with regulatory standards is not maintained or if
problems occur following initial marketing. Delays imposed by the FDA clearance
and approval process may materially reduce the period during which we have the
exclusive right to commercialize patented products.


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<PAGE>

     We have made modifications to our devices and may make additional
modifications in the future that we believe do not or will not require
additional clearances or approvals. Although we believe that our current
products are covered by the FDA clearance provided in 1991 with respect to the
original SofPulse product, in February 2007, in response to inquiries from the
FDA, we voluntarily submitted a 510(k) application for our current products,
which are modified versions of our SofPulse product. We have had discussions
with the FDA regarding our application and, in June 2007, we received a letter
from the FDA requesting additional information from us. If the FDA does not
grant the 510(k)clearance for the modifications, we may be required to stop
marketing and to recall the modified devices and could be subject to the other
sanctions described below.. We also are subject to Medical Device Reporting
regulations, which require us to report to the FDA if our products cause or
contribute to a death or serious injury, or malfunction in a way that would
likely cause or contribute to a death or serious injury. We are not aware of any
death or serious injury caused by or contributed to by our products, however, we
cannot assure you that any such problems will not occur in the future with our
existing or future products.

     Additionally, our existing and future products may be subject to regulation
by similar agencies in states and foreign countries. While we believe that we
have complied with all applicable laws and regulations, continued compliance
with such laws or regulations, including any new laws or regulations in
connection with our products or any new products developed by us, might impose
additional costs on us or marketing impediments on our products which could
adversely affect our revenues and increase our expenses. The FDA and state
authorities have broad enforcement powers. Our failure to comply with applicable
regulatory requirements could result in enforcement action by the FDA or state
agencies, which may include any of the following sanctions:

     o    warning letters, fines, injunctions and civil penalties;

     o    repair, replacement, refunds, recall or seizure of our products;

     o    operating restrictions or partial suspension or total shutdown of
          production;

     o    refusing our requests for 510(k) clearance or premarket approval of
          new products, new intended uses, or modifications to existing
          products;

     o    withdrawing 510(k) clearance or premarket approvals that have already
          been granted; and

     o    criminal prosecution.

If any of these events were to occur, it could harm our business and materially
and adversely affect our results of operations.

THE FDA CAN IMPOSE CIVIL AND CRIMINAL ENFORCEMENT ACTIONS AND OTHER PENALTIES ON
US IF WE OR OUR MANUFACTURER FAILS TO COMPLY WITH FDA REGULATIONS WHICH ARE
OFTEN DIFFICULT TO COMPLY WITH.

     Medical device manufacturing facilities must maintain records, which are
available for FDA inspectors documenting that the appropriate manufacturing
procedures were followed. The FDA has authority to conduct inspections of our
facility, as well as the facility of our manufacturer. Labeling and promotional
activities are also subject to scrutiny by the FDA and, in certain instances, by
the Federal Trade Commission. If the FDA were to determine that the indication
for use of our products has a more narrow meaning than that which we have
historically deemed it to be, our ability to continue to market and sell our
products could be materially adversely affected. Any failure by us or the
manufacturer of our products to take satisfactory corrective action in response
to an adverse inspection or to comply with applicable FDA regulations could
result in enforcement action against us or our manufacturer, including a public
warning letter, a shutdown of manufacturing operations, a recall of our
products, civil or criminal penalties or other sanctions. From time to time, the
FDA may modify such requirements, imposing additional or different requirements


                                       39

<PAGE>

which may require us to alter our business methods which could result in
increased expenses and materially and adversely affect our results of
operations. In addition, if the Federal Trade Commission were to commence an
investigation concerning any of our claims about our products and conclude that
our claims were false, misleading or deceptive in violation of the Federal Trade
Commission Act, we could become subject to significant financial consequences
and compliance measures, including, the repayment of some or all of our gross
profits from such products and the compliance with various reporting
requirements imposed by the Federal Trade Commission.


                        RISKS RELATED TO OUR COMMON STOCK

EXECUTIVE OFFICERS, DIRECTORS AND ENTITIES AFFILIATED WITH THEM HAVE SUBSTANTIAL
CONTROL OVER US, WHICH COULD DELAY OR PREVENT A CHANGE IN OUR CORPORATE CONTROL
FAVORED BY OUR OTHER SHAREHOLDERS.

     As of June 19, 2007, our directors, executive officers and principal
shareholders (including ADM), together with their affiliates, beneficially own,
in the aggregate, approximately 62.4% of our outstanding common stock, assuming
the exercise of all outstanding options and warrants held by such persons that
are exercisable within 60 days of this report. In particular, ADM, of which
Andre' DiMino, our Vice Chairman of the Board and Co-Chief Executive Officer, is
President and Chief Executive Officer, beneficially owns approximately 33.9% of
our outstanding shares of common stock, and Mr. DiMino, together with members of
the DiMino family, beneficially own approximately 17.5% of the outstanding
shares of ADM.

     Under the terms of a voting agreement among Mr. DiMino, David Saloff, our
President and Co-Chief Executive Officer, Edward Hammel, our Executive Vice
President, Sean Hagberg, Ph.D., our Chief Science Officer, Arthur Pilla, PhD.,
one of our consultants, our Science Director and the Chairman of our Scientific
Advisory Board, Berish Strauch, M.D., one of our consultants and a member of our
Medical Advisory Board, and Fifth Avenue Capital Partners, one of our
shareholders, Mr. DiMino shall have the right to vote up to 1,527,825 additional
shares of our common stock (including shares underlying options held by such
shareholders that are exercisable within 60 days of the date of this report),
representing approximately 16% of shares of our common stock outstanding as of
June 19, 2007. These figures do not reflect the increased percentages that the
officers and directors may have in the future in the event that they exercise
any additional options granted to them under the 2004 Amended and Restated Stock
Option Plan or if they otherwise acquire additional shares of common stock. The
interests of our current officer and director shareholders and our largest
shareholder may differ from the interests of other shareholders.

     As a result, the current officer and director shareholders and ADM do and
will continue to have the ability to exercise substantial control over all
corporate actions requiring shareholder approval, irrespective of how our other
shareholders may vote, including the following actions:

     o    the election of directors;

     o    adoption of stock option plans;

     o    the amendment of charter documents; or

     o    the approval of certain mergers and other significant corporate
          transactions, including a sale of substantially all of our assets.

FUTURE SALES OF OUR COMMON STOCK, INCLUDING SALES OF OUR COMMON STOCK ACQUIRED
UPON THE EXERCISE OF OUTSTANDING OPTIONS OR WARRANTS, MAY CAUSE THE MARKET PRICE
OF OUR COMMON STOCK TO DECLINE.


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<PAGE>

     We had 9,588,908 shares of common stock outstanding as of June 19, 2007, of
which 4,843,908 shares are freely transferable without restriction and 4,745,000
shares are restricted as a result of securities laws and lock-up agreements that
have been executed by our officers and directors restricting their ability to
transfer our stock until October 18, 2007, without the consent of the
representatives of the underwriters of our initial public offering, or IPO. In
addition, as of June 19, 2007, options to purchase 2,752,975 shares of our
common stock were issued and outstanding, of which 1,255,684 were vested. All
remaining options will vest over various periods ranging up to a five-year
period measured from the date of grant. The weighted-average exercise price of
the vested stock options is $2.17, which is substantially lower than the current
market price of our common stock. As of June 19, 2007, warrants to purchase
2,609,691 shares of common stock were issued and outstanding. We also may issue
additional shares of stock in connection with our business, including in
connection with acquisitions, and may grant additional stock options to our
employees, officers, directors and consultants under our stock option plans or
warrants to third parties. If a significant portion of these shares were sold in
the public market, the market value of our common stock could be adversely
affected.

WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF SUCH TAKEOVER WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.

     Our amended and restated certificate of incorporation and by-laws include
provisions which could make it more difficult for a third-party to acquire us,
even if doing so would be beneficial to our shareholders. These provisions will
include:

     o    authorizing the issuance of "blank check" preferred stock that could
          be issued by our board of directors to increase the number of
          outstanding shares or change the balance of voting control and resist
          a takeover attempt;

     o    limiting the ability of shareholders to call special meetings of
          shareholders;

     o    requiring all shareholder actions to be taken at a meeting of our
          shareholders or by the unanimous written consent of our shareholders;
          and

     o    establishing advance notice requirements for nominations for election
          to the board of directors and for proposing matters that can be acted
          upon by shareholders at shareholder meetings.

In addition, provisions of the New Jersey Business Corporation Act, including
the New Jersey Shareholder Protection Act, and the terms of the employment
agreements with our executive officers may discourage, delay or prevent a change
in our control.

DUE TO PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS, A SHAREHOLDER
MAY BE PREVENTED FROM CALLING A SPECIAL MEETING FOR SHAREHOLDER CONSIDERATION OF
A PROPOSAL OVER THE OPPOSITION OF OUR BOARD OF DIRECTORS AND SHAREHOLDER
CONSIDERATION OF A PROPOSAL MAY BE DELAYED UNTIL OUR NEXT ANNUAL MEETING.

     Our amended and restated certificate of incorporation and our by-laws
provide that any action required or permitted to be taken by our shareholders
must be effected at an annual or special meeting of shareholders or by the
unanimous written consent of our shareholders. Our amended and restated
certificate of incorporation provides that, subject to certain exceptions, only
our board of directors, the chairman or vice chairman of our board of directors,
a chief executive officer or a co-chief executive officer, as the case may be,
or our president or, at the direction of any of them, any vice president or
secretary may call special meetings of our shareholders. Our by-laws also
contain advance notice requirements for proposing matters that can be acted on
by the shareholders at a shareholder meeting. Accordingly, a shareholder may be
prevented from calling a special meeting for shareholder consideration of a
proposal over the opposition of our board of directors and shareholder
consideration of a proposal may be delayed until the next annual meeting. As
such, any time-sensitive proposals that a shareholder may have may not be
considered in a timely manner.


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<PAGE>

THE TRADING PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE, AND YOU MAY NOT BE
ABLE TO RESELL YOUR SHARES AT OR ABOVE THE PRICE AT WHICH YOU PURCHASED YOUR
SHARES, OR AT ALL.

     The trading price of our common stock is highly volatile and subject to
wide fluctuations in price in response to various factors, some of which are
beyond our control. These factors include:

     o    quarterly variations in our results of operations or those of our
          competitors;

     o    announcements by us or our competitors of acquisitions, new products,
          significant contracts, commercial relationships or capital
          commitments;

     o    disruption to our operations or those of ADM, our exclusive
          manufacturer, or our suppliers;

     o    commencement of, or our involvement in, litigation;

     o    any major change in our board or management;

     o    changes in governmental regulations or in the status of our regulatory
          approvals; and

     o    general market conditions and other factors, including factors
          unrelated to our own operating performance.

     In addition, the stock market in general, and the market for medical device
technology companies in particular, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of those companies. These broad market and industry factors may
seriously harm the market price of our common stock, regardless of our actual
operating performance. In addition, in the past, following periods of volatility
in the overall market and the market price of a company's securities, securities
class action litigation has often been instituted against these companies. This
litigation, if instituted against us, could result in substantial costs and a
diversion of our management's attention and resources.

IF OUR COMMON STOCK IS DELISTED FROM THE AMERICAN STOCK EXCHANGE, YOU MAY NOT BE
ABLE TO RESELL YOUR SHARES AT OR ABOVE THE PRICE AT WHICH YOU PURCHASED YOUR
SHARES, OR AT ALL.

     In order for our common stock to continue to be listed on the American
Stock Exchange, we must meet the current American Stock Exchange listing
requirements. If we were unable to meet these requirements, our common stock
could be delisted from the American Stock Exchange. If our common stock were to
be delisted from the American Stock Exchange, our common stock could continue to
trade on the NASD's over-the-counter bulletin board following any delisting from
the American Stock Exchange, or on the Pink Sheets, as the case may be. Any such
delisting of our common stock could have an adverse effect on the market price
of, and the efficiency of the trading market for, our common stock, not only in
terms of the number of shares that can be bought and sold at a given price, but
also through delays in the timing of transactions and less coverage of us by
securities analysts, if any. Also, if in the future we were to determine that we
need to seek additional equity capital, it could have an adverse effect on our
ability to raise capital in the public or private equity markets.


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<PAGE>

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF OUR
SECURITIES.

     If we fail to maintain listing for our securities on the American Stock
Exchange, and no other exclusion from the definition of a "penny stock" under
the Exchange Act, is available, then our common stock would be subject to "penny
stock" regulations. The Securities and Exchange Commission has adopted
regulations which generally define a "penny stock" to be any equity security
that is not trading on the American Stock Exchange or an exchange that has a
market price (as defined) of less than $5.00 per share or an exercise price of
less than $5.00 per share, subject to certain exceptions. As a result, if our
common stock became subject to these regulations, it would be subject to rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Securities and Exchange Commission relating to the
penny stock market. The broker-dealer must also disclose the commission payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our common stock and may affect
the ability of investors to sell our common stock in the secondary market and
the price at which such purchasers can sell any such securities.

WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY DIVIDENDS IN THE
FUTURE, AND ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF YOUR STOCK.

     We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future and any return on investment may be limited to the value of your stock.
We plan to retain any future earnings to finance growth.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-KSB may contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act.

     Forward-looking statements include statements with respect to our beliefs,
plans, objectives, goals, expectations, anticipations, assumptions, estimates,
intentions, and future performance, and involve known and unknown risks,
uncertainties and other factors, which may be beyond our control, and which may
cause our actual results, performance or achievements to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as "may," "will,"
"can," "anticipate," "assume," "should," "indicate," "would," "believe,"
"contemplate," "expect," "seek," "estimate," "continue," "plan," "point to,"
"project," "predict," "could," "intend," "target," "potential," and other
similar words and expressions of the future.

     All forward-looking statements are expressly qualified in their entirety by
this cautionary notice. You are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this Annual
Report on Form 10-KSB. We have no obligation, and expressly disclaim any


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<PAGE>

obligation, to update, revise or correct any of the forward-looking statements,
whether as a result of new information, future events or otherwise. We have
expressed our expectations, beliefs and projections in good faith and we believe
they have a reasonable basis. However, we cannot assure you that our
expectations, beliefs or projections will result or be achieved or accomplished.

ITEM 2. DESCRIPTION OF PROPERTY

     We are headquartered at 224-S Pegasus Avenue, Northvale, New Jersey. We
also have research facilities located at 3120 De La Cruz Boulevard, Santa Clara,
California. Our facilities located in Northvale, New Jersey consist of
approximately 6,000 square feet of space, approximately 1,500 square feet of
which is office space, 1,000 square feet of which is manufacturing space used by
ADM and 3,500 square feet of which is storage space. These facilities are housed
in part of 16,000 square feet of combined warehouse and office space currently
leased by ADM from 224 Pegasus Avenue Associates of Englewood, NJ, pursuant to a
lease that expires in June 2008. We and two other subsidiaries of ADM utilize
portions of the leased space. Pursuant to a management services agreement to
which we, ADM and ADM' other subsidiaries are parties, ADM determines, on a
monthly basis, the portion of space utilized by us during such month, which may
vary from month to month based upon the amount of inventory being stored by us
and areas used by us for research and development, and we reimburse ADM for our
portion of the lease costs, real property taxes and related costs based upon the
portion of space utilized by us. We have incurred $43,795 and $43,883 for the
use of such space during the fiscal years ended March 31, 2007 and 2006,
respectively. On July 23, 2004, we entered into a lease for our research
facilities located in Santa Clara, California. The lease provides for a month to
month rent of $400.

     We are planning to move our headquarters to Montvale, New Jersey on or
about October 1, 2007. In June 2007, we entered into a lease pursuant to which,
subject to the satisfaction of certain conditions, including the receipt of
certain permits from local authorities, we will rent approximately 7,494 square
feet of office space located in Montvale, New Jersey. If such conditions are
satisfied, the term of the lease will begin on or about October 1, 2007 and
expire on our about November 1, 2014, subject to our option to renew the lease
for an additional five year period on terms and conditions set forth therein.
Pursuant to the lease, we will be required to pay rent in the amount of
$14,051.25 per month during the first two years of the term, with the exception
of month 13 at no cost, and $15,612.50 per month thereafter. This lease will
require us to add additional limits on our currently outstanding liability
insurance. Although we currently are unable to estimate the cost of moving into
this new office space, we do not anticipate such costs being material to our
results of operations. Following our move, we intend to retain certain of our
current office and laboratory space.

     We believe that our existing facilities are suitable as office, storage and
laboratory space, and are adequate to meet our current needs. We also believe
that our insurance coverage adequately covers our current interest in our leased
space. We do not own any real property for use in our operations or otherwise.

ITEM 3. LEGAL PROCEEDINGS

     On August 17, 2005, we filed a complaint against Conva-Aids, Inc. t/a New
York Home Health Care Equipment, or NYHHC, and Harry Ruddy in the Superior Court
of New Jersey, Law Division, Docket No. BER-L-5792-05, alleging breach of
contract with respect to a distributor agreement that we and NYHHC entered into
on or about August 1, 2004, pursuant to which: (i) we appointed NYHHC as
exclusive distributor of our products in a defined market place for so long as
NYHHC secured a minimum number of placements of our products and (ii) NYHHC
agreed to pay us $2,500 per month for each product shipped to NYHHC. By letter,
dated August 9, 2005, we terminated the agreement due to NYHHC's failure to make
the payments required under the agreement and failure to achieve the minimum


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<PAGE>

number of placements required under the agreement. We are seeking various forms
of relief, including: (i) money damages, including amounts due under unpaid
invoices in an aggregate amount of $236,560, (ii) an accounting and (iii) the
return of our products. The defendants filed a motion to dismiss alleging lack
of jurisdiction and failure to state a claim with regard to Harry Ruddy. We
opposed the defendant's motion to dismiss. On November 18, 2005, the Court
denied the defendant's motion to dismiss, without prejudice, based upon lack of
jurisdiction. The complaint was dismissed against Harry Ruddy, individually The
Court permitted a period of discovery to determine the jurisdiction issue, which
discovery is substantially complete. The defendants filed another motion to
dismiss based upon a claim of lack of jurisdiction, which was heard and denied
by the Court on June 9, 2006. On or about July 10, 2006, the defendants filed an
answer and NYHHC filed counterclaims against us for breach of contract, breach
of the implied covenant of good faith and fair dealing, restitution, unjust
enrichment 34 and fraudulent inducement. An answer to the counterclaim was filed
on August 9, 2006. Discovery is now continuing on the merits of the claims in
the complaint and counterclaim.

     On October 10, 2006, we received a demand for arbitration by Stonefield
Josephson, Inc. with respect to a claim for fees for accounting services in the
amount of approximately $106,000, plus interest and attorney's fees. Stonefield
Josephson had previously invoiced Ivivi for fees for accounting services in an
amount which Ivivi has refuted. We responded to Stonefield Josephson's demand
for arbitration, which we believe was procedurally defective and premature due
to Stonefield Josephson's failure to participate in required mediation, and we
continue to defend against the claim vigorously, although provision has been
made for the amount of the claim in the financial statements. Moreover, we are
pursuing claims against Stonefield Josephson. On October 26, 2006, we sent a
letter requesting the required mediation before arbitration. On December 4,
2006, we received notification from the arbitration forum that the arbitration
was placed on hold until the mediation phase is completed.

     Other than the foregoing, we are not a party to, and none of our property
is the subject of, any pending legal proceedings other than routine litigation
that is incidental to our business.

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

     No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of our fiscal
year ended March 31, 2007.


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
        BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

     Our common stock has been quoted on The American Stock Exchange since the
IPO on October 19, 2006 under the ticker symbol "II." On June 19, 2007, the last
quoted per share bid price of our common stock on The American Stock Exchange
was $4.40. The following table sets forth, for the periods indicated, the range
of high and low bid prices for our common stock as reported by The American
Stock Exchange.

     Fiscal Year Ended March 31, 2007
     --------------------------------

     QUARTER ENDING                                        HIGH      LOW
     December 31, 2006 (beginning October 19, 2006)       $6.55     $5.20
     March 31, 2007                                       $6.15     $3.61


                                       45

<PAGE>

HOLDERS

     As of June 19, 2007, there were approximately 47 holders of record of our
common stock.

DIVIDENDS

     To date, we have not paid any dividends on our common stock and we do not
intend to pay dividends for the foreseeable future, but intend instead to retain
earnings, if any, for use in our business operations. The payment of dividends
in the future, if any, will be at the sole discretion of our board of directors
and will depend upon our debt and equity structure, earnings and financial
condition, need for capital in connection with possible future acquisitions and
other factors, including economic conditions, regulatory restrictions and tax
considerations. We cannot guarantee that we will pay dividends or, if we pay
dividends, the amount or frequency of these dividends.

EQUITY COMPENSATION PLAN INFORMATION

SEE "ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS."

SALES OF UNREGISTERED SECURITIES

     We did not sell any securities during the fiscal year ended March 31, 2007
that were not registered under the Securities Act.

USE OF PROCEEDS

     The Registration Statement on Form SB-2 (File No. 333-122768) (the
"Registration Statement") relating to our IPO was declared effective by the
Securities and Exchange Commission on October 18, 2006. On October 24, 2006, we
completed the IPO, pursuant to which we sold 2.5 million shares of our common
stock at $6.00 per share and raised gross proceeds of $15.0 million. Net
proceeds to us were approximately $12.2 million from the IPO after the payment
of underwriting discounts and commissions and expenses related to the IPO. We
granted the underwriters of the IPO an option for a period of 45 days following
the consummation of the IPO to purchase from us up to an aggregate of 375,000
additional shares of our common stock to cover over-allotments, if any. On
November 22, 2006, the underwriters partially exercised their over-allotment
option for 250,000 shares of our common stock for additional gross proceeds of
$1.5 million. Net proceeds to us from the partial exercise of the over-allotment
option were $1.4 million after the payment of underwriting commissions and
expenses. Maxim Group LLC acted as representative of the underwriters of the IPO
and Brean Murray, Carret & Co., LLC acted as co-manager of the IPO. The offering
of the securities in our IPO did not terminate prior to the sale of all of the
registered securities, other than that portion of the over-allotment option that
was not exercised.

     The aggregate amount of the gross proceeds raised in the IPO, including the
underwriters' partial exercise of the over-allotment option, was $16.5 million.
We paid the underwriters of the IPO $1,485,000 in underwriting discounts and
commissions and $360,000 for non-accountable expenses. We incurred additional
expenses related to the IPO, including the exercise of the over-allotment
option, of approximately $1,015,000, and the net proceeds to us from the IPO
were approximately $13,640,000.


                                       46

<PAGE>

     Use of the net proceeds from the IPO through March 31, 2007 was as follows:

<TABLE>
<S>                                                                                             <C>
Repayment of indebtedness due to ADM (1)                                                        $ 2,607,266

Repayment of loan plus interest due to AJAX Capital LLC (2)                                         257,123

Repayment of interest on convertible loan due to AJAX Capital LLC                                    76,712

Repayment of interest on convertible loan due to Kenneth S. Abramowitz & Co, Inc. (3)               18,740

Repayment of interest on all remaining convertible loans issued in our private placement            148,913

Research and development                                                                            391,175

Sales and marketing                                                                                 260,995

Patent filings and other regulatory                                                                 122,607

Insurance                                                                                           158,764

Professional fees                                                                                   456,457

General corporate purposes, including working capital                                             1,814,233

Termination of revenue sharing agreement with AJAX Capital, LLC                                     296,136
                                                                                             ---------------

Total                                                                                           $ 6,609,121
                                                                                             ===============
</TABLE>

------------------
(1) As of the date of this report, ADM is the beneficial owner of approximately
33.9% of our outstanding common stock.

(2) Ajax Capital LLC is an investment fund wholly-owned by Steven Gluckstern,
our Chairman of the Board.

(3) Kenneth S. Abramowitz & Co, Inc. is an investment fund wholly-owned by
Kenneth Abramowitz, one of our directors.

     The remaining portion of the net proceeds from the IPO in the amount of
approximately $8.3 million has been invested in short-term, interest-bearing
money market accounts.

SHARE REPURCHASES.

     We did not repurchase any issued and outstanding shares of our common stock
during the fiscal year ended March 31, 2007.


                                       47

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

     THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS AND INVOLVES
NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, THOSE DESCRIBED
UNDER "ITEM 1. BUSINESS-RISK FACTORS" OF THIS ANNUAL REPORT ON FORM 10-KSB.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING
STATEMENTS. THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS AND NOTE THERETO INCLUDED ELSEWHERE IN THIS ANNUAL REPORT
ON FORM 10-KSB.

OVERVIEW

     We are an early-stage medical technology company focusing on designing,
developing and commercializing proprietary electrotherapeutic technologies.
Electrotherapeutic technologies use electric or electromagnetic signals to help
relieve pain, swelling and inflammation and promote healing processes and tissue
regeneration. We have focused our research and development activities on pulsed
electromagnetic field, or PEMF technology. This technology utilizes a magnetic
field that is turned on and off rapidly to create a therapeutic electrical
current in injured tissue, which then stimulates biochemical and physiological
processes to help repair injured soft tissue and reduce related pain. We are
currently marketing products utilizing our PEMF technology to the chronic wound
and plastic and reconstructive surgery markets. We are developing proprietary
technology for other therapeutic medical markets.

     While we have conducted research and development and performed sales and
marketing activities, we have generated limited revenues to date and have
incurred significant losses since our inception. At March 31, 2007, we had an
accumulated deficit of approximately $23.7 million. We expect to incur
additional operating losses, as well as negative cash flow from operations for
the foreseeable future as we continue to expand our marketing efforts with
respect to our products and to continue our research and development of
additional applications for our products, as well as new products utilizing our
PEMF technology. We are focusing our research and development activities on
optimizing the signal parameters of our PEMF technology, enabling us to produce
improved clinical outcomes and produce a smaller more efficient product
utilizing less power.

     Our revenues to date have been primarily generated through monthly or daily
rental programs and through the direct sale of our products. During the fiscal
year ended March 31, 2007, we began to sell certain of our units, through
distributors, in certain additional markets. We expect future revenues to be
generated through monthly or daily rental programs with, and the sale of our
products and related disposable products to long-term care nursing facilities,
long-term acute care hospitals, rehabilitation hospitals, acute care facilities,
home health users and individual patients. In addition, we expect revenues also
to be generated through the sale of certain of our products to plastic surgery
patients and physicians.

     On October 24, 2006, we completed the IPO, pursuant to which we sold 25
million shares of our common stock at $6.00 per share and raised gross proceeds
of $15.0 million. We granted the underwriters of the IPO an option for a period
of 45 days following the consummation of the IPO to purchase from us up to an
aggregate of 375,000 additional shares of our common stock to cover
over-allotments, if any. Net proceeds to us were approximately $12.2 million
from the IPO after the payment of underwriting discounts and commissions and
expenses related to the IPO. On November 22, 2006, we received additional net
proceeds of approximately $1.4 million, after the payment of underwriting
commissions and expenses, from the partial exercise of the over-allotment option
to purchase 250,000 of the available 375,000 shares of our common stock.


                                       48

<PAGE>

     On November 9, 2006, we entered into an exclusive worldwide distribution
agreement with a wholly-owned subsidiary of Allergan, Inc., a global healthcare
company that discovers, develops and commercializes pharmaceutical and medical
device products in specialty markets. Pursuant to the Agreement, we granted
Allergan's subsidiary, Inamed Medical Products Corporation, and its affiliates
the exclusive worldwide right to market, sell and distribute certain of our
products, including all improvements, line extensions and future generations
thereof in conjunction with any aesthetic or bariatric medical procedures in the
Marketing Territory. In November 2006, we received $500,000 under the terms of
this Agreement which has been recorded as deferred revenue in our balance sheet
and is being amortized over eight years. We anticipate receiving additional
revenues under this agreement.

     Our ability to increase our revenues from rental and sales of our current
products and other products developed by us will depend on a number of factors,
including our ability to increase market penetration of our current products,
our ability to enter into marketing and distribution agreements in our target
markets with companies such as Allergan as well as our ability to develop and
commercialize new products and technologies. Physicians and other healthcare
professionals may not use our products or other potential products and
technologies developed by us unless they determine that the clinical benefits to
the patient are greater than those available from competing products or
therapies or represent equal efficacy with lower cost. Full enrollment of
patients in our cardiac clinical trial at The Cleveland Clinic Florida where we
are utilizing PEMF to treat patients with ischemic cardiomyopathy occurred
during June 2007. We believe that PEMF's effects of improving blood flow and
regeneration of new blood vessels could prove useful for these patients for
which there are no alternatives. Given the length of the trial, as well as the
post-trial review period, the earliest data could be analyzed and available is
four months after the final patient is enrolled. As a result, we would
anticipate results likely being available in December 2007, however, we cannot
assure when results of the trial will be available.

     Even if the advantage of our products and technologies is established as
clinically and fiscally significant, physicians and other healthcare
professionals may not elect to use our products and technologies developed by us
for any number of reasons. The rate of adoption and acceptance of our products
and technologies may be affected adversely by perceived issues relating to
quality and safety, consumers' reluctance to invest in new products and
technologies, the level of third-party reimbursement and widespread acceptance
of other products and technologies. Broad market acceptance of our current
products and other products and technologies developed by us in the future may
require the education and training of numerous physicians and other healthcare
professionals, as well as conducting or sponsoring clinical and cost-benefit
studies to demonstrate the effectiveness and efficiency of such products and
technologies. The amount of time required to complete such training and studies
could be costly and result in a delay or dampening of such market acceptance.
Moreover, healthcare payors' approval of use for our products and technologies
in development may be an important factor in establishing market acceptance.

     While commercial insurance companies make their own decisions regarding
which medical procedures, technologies and services to cover, commercial payors
often apply standards similar to those adopted by the Centers for Medicare and
Medicaid Services, or CMS in determining Medicare coverage. The Medicare statute
prohibits payment for any medical procedures, technologies or services that are
not reasonable and necessary for the diagnosis or treatment of illness or
injury. In 1997, CMS, which is responsible for administering the Medicare
program, had interpreted this provision to deny Medicare coverage of procedures
that, among other things, are not deemed safe and effective treatments for the
conditions for which they are being used, or which are still investigational.
However, in July 2004, CMS reinstated Medicare reimbursement for the use of the
technology used in our products in the treatment of non-healing wounds under
certain conditions.

     CMS has established a variety of conditions for Medicare coverage of the
technology used in our products. These conditions depend, in part, on the
setting in which the service is provided. For example, in 2004, CMS added
electromagnetic therapy as a type of service payable in the home health setting,


                                       49

<PAGE>

but subject to Medicare's consolidated home health billing provisions. Thus,
Medicare will not pay separately for electromagnetic therapy services if the
service is billed under a home health plan of care provided by a home health
agency. Rather, the home health agency must pay for the electromagnetic therapy
as part of the consolidated payment made to the home health agency for the
entire range of home health services under the patient's care plan.

     In December 2005, we retained a consulting company specializing in CMS
reimbursement and coverage matters to assist us in arranging and preparing for a
meeting with CMS to request that CMS cover electromagnetic therapy for wound
treatment separately in the home health setting. In May 2006, with the
assistance of this consulting company, we held a meeting with CMS and made a
presentation in support of reimbursement for the home health use of the
technology used in our products. We continue to retain this consulting company
to assist us with our efforts with CMS. Even if CMS were to approve separate
reimbursement of electromagnetic therapy in the home health setting, the
regulatory environment could change and CMS might deny all coverage for
electromagnetic therapy as treatment of chronic wounds, whether for home health
use or otherwise, which could limit the amount of coverage patients or providers
are entitled to receive. Either of these events would materially and adversely
affect our revenues and operating results.

     We cannot predict when, if ever, CMS will allow for reimbursement for the
use of the technology in our products in the home, or what additional
legislation or regulations, if any, may be enacted or adopted in the future
relating to our business or the healthcare industry, including third-party
coverage and reimbursement, or what effect any such legislation or regulations
may have on us. Furthermore, significant uncertainty exists as to the coverage
status of newly approved healthcare products, and there can be no assurance that
adequate third-party coverage will be available with respect to any of our
future products or new applications for our present products. In currently
non-capitated markets, failure by physicians, hospitals, nursing homes and other
users of our products to obtain sufficient reimbursement for treatments using
our technologies would materially and adversely affect our revenues and
operating results. Alternatively, as the U.S. medical system moves to more
fixed-cost models, such as payment based on diagnosis related groups,
prospective payment systems or expanded forms of capitation, the market
landscape may be altered, and the amount we can charge for our products may be
limited and cause our revenues and operating results to be materially and
adversely affected.

     We may be required to undertake time-consuming and costly development
activities and seek regulatory clearance or approval for new products or
technologies. Although the FDA has cleared the use of our products for the
treatment of edema and pain in soft tissue, we may not be able to obtain
regulatory clearance or approval of new products or technologies or new
treatments through existing products. In addition, we have not demonstrated an
ability to market and sell our products. The completion of the development of
any new products or technologies or new uses of existing products will remain
subject to all the risks associated with the commercialization of new products
based on innovative technologies, including:

     o    our ability to fund and establish research that supports the efficacy
          of new technologies and products;

     o    our ability to obtain regulatory approval or clearance of such
          technologies and products, if needed;

     o    our ability to obtain market acceptance of such new technologies and
          products;

     o    our ability to effectively and efficiently market and distribute such
          new products;

     o    the ability of ADM or other manufacturers utilized by us to
          effectively and efficiently manufacture such new products; and

     o    our ability to sell such new products at competitive prices that
          exceed our per unit costs for such products.


                                       50

<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Estimates are used
for, but not limited to, the accounting for the allowance for doubtful accounts,
inventories, income taxes and loss contingencies. Management bases its estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from these
estimates under different assumptions or conditions.

     We believe the following critical accounting policies, among others, may be
impacted significantly by judgment, assumptions and estimates used in the
preparation of our financial statements:

     o    We recognize revenue primarily from the rental and to a lesser extent
          from the sale of our products.

          Rental revenue is recognized as earned on either a monthly or
          pay-per-use basis in accordance with individual customer agreements.
          In most cases, we allow the rental end user to evaluate our equipment
          on a 30-day trial basis, during which time we provide any
          demonstration or education necessary for the use of our equipment.
          Rental revenue recognition commences after the end of the trial
          period. All of our rentals are terminable by either party at any time.
          When we use a third party to bill insurance companies, we still
          recognize revenue as our products are used. When certain of our
          distributors bill end users, we recognize rental revenue when we are
          paid by the distributor.

          Sales are recognized when our products are shipped to end users
          including medical facilities and distributors. Our products are
          principally shipped on a "freight collect" basis. Shipping and
          handling charges and costs are immaterial. We have no post shipment
          obligations and sales returns have been immaterial.

          We provide an allowance for doubtful accounts determined primarily
          through specific identification and evaluation of significant past due
          accounts, supplemented by an estimate applied to the remaining balance
          of past due accounts.

     o    Our products held for sale are included in the balance sheet under
          "Inventory." At March 31, 2007, we also had equipment held for rental,
          which are our products that are rented to third parties, used
          internally and loaned out for marketing and testing. The units are
          depreciated over three to seven years commencing on the date placed in
          service.

     o    We apply Statement of Financial Accounting Standards No. 128,
          "Earnings Per Share" (FAS 128). Net loss per share is computed by
          dividing net loss by the weighted average number of common shares
          outstanding plus common stock equivalents representing shares issuable
          upon the assumed exercise of stock options and warrants. Common stock
          equivalents were not included for the reporting periods, as their
          effect would be anti-dilutive.

     o    In April 2006, we adopted the fair value recognition provisions of
          SFAS No. 123(R), Accounting for Stock-based Compensation, to account
          for compensation costs under our stock option plans. We previously
          utilized the intrinsic value method under Accounting Principles Board
          Opinion No. 25, Accounting for Stock Issued to Employees (as amended).


                                       51

<PAGE>

     o    We use the fair value method for equity instruments granted to
          non-employees and use the Black Scholes option value model for
          measuring the fair value of warrants and options. The stock based fair
          value compensation is determined as of the date of the grant or the
          date at which the performance of the services is completed
          (measurement date) and is recognized over the periods in which the
          related services are rendered.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES--AN
INTERPRETATION OF FASB STATEMENT NO. 109 (FIN 48). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109, ACCOUNTING FOR
INCOME TAXES (FASB No. 109). The interpretation prescribes a recognition
threshold and also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure, and transition. The
provisions of FIN 48 are effective for us on April 1, 2007. We do not believe
the application of FIN 48 will have a material effect on our financial position,
results from operations, or cash flows.

     In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS
(SFAS No. 157), which establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. Where applicable, this
accounting standard, which simplifies and codifies related guidance within GAAP,
is effective for us beginning April 1, 2008. We have not yet determined the
effect, if any, the adoption of SFAS No. 157 may have on our financial
statements.

     In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (SFAS No. 159). This statement
permits entities to choose to measure financial assets and liabilities, with
certain exceptions, at fair value at specified election dates. A business entity
shall report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. This
statement is effective for us beginning April 1, 2008. We have not determined
the effect, if any, the adoption of SFAS No. 159 may have on our financial
statements.


RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2007 (FISCAL 2007) COMPARED TO YEAR ENDED MARCH 31, 2006
(FISCAL 2006)

     NET LOSS. Net loss decreased $2,968,060 to $7,778,611, or $1.13 per share,
for fiscal 2007 compared to $10,746,671, or $2.26 per share, for fiscal 2006.
The decrease in net loss primarily resulted from (i) increases in revenues of
$395,828, or 50%, (ii) decreases in cost of rental revenue of $121,987, or 56%,
(iii) decreases in sales and marketing expenses of $54,681, or 5%, (iv)
decreases in the change in the fair value of warrant and registration rights
liabilities of $4,632,710, or 99%, offset by increases in cost of sales of
$34,250, or 65%, increases in depreciation and amortization of $10,587, or 117%,
increases in research and development of $275,595, or 21%, increases in general
and administrative expenses of $161,878, or 8%, increases in share based
compensation of $1,485,600, or 226%, and increases in net interest and finance
costs of $269,236, or 19% for fiscal 2007 as compared to fiscal 2006.

     REVENUE. Total revenue increased $395,828, or 50%, to $1,182,340 for fiscal
2007 as compared to $786,512 for fiscal 2006. The increase in revenue was
primarily the result of increased unit sales, increased marketing efforts and,
to a lesser extent, the recognition of licensing revenue from our Allergan
agreement.


                                       52

<PAGE>

     COST OF SALES. Cost of goods sold increased $34,250, or 65%, to $87,040 for
fiscal 2007 from $52,790 for fiscal 2006 due to the increase in unit sales.

     COST OF RENTALS. Cost of rental revenue decreased $121,987, or 56%, to
$93,998 for fiscal 2007 from $215,985 for fiscal 2006 due to an inventory
write-off of obsolete inventory during the third quarter of fiscal 2006 in the
amount of $70,861 and a decrease in depreciation expense on rental equipment of
$46,328. Cost of rental revenue consists primarily of the cost of electronics
and other components including depreciation relating to the manufacture of our
products by third parties, including ADM. Cost of rental revenue for fiscal 2007
and fiscal 2006 included depreciation of $5,463 and $51,791 and inter-company
allocations of $75,584 and $72,417, respectively. Inter-company allocations for
fiscal 2007 and fiscal 2006 consisted of amounts payable to ADM under our
management services agreement.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$10,587, or 117%, to $19,636 for fiscal 2007 from $9,049 for fiscal 2006,
excluding depreciation on the cost of rental units. The increase was
attributable to amortizing deferred costs relating to our distribution agreement
with Allergan in the amount of $3,570 and increased depreciation of $2,583
relating to newly acquired fixed assets.

     RESEARCH AND DEVELOPMENT COSTS. Research and development costs increased
$275,595, or 21%, to $1,610,232 for fiscal 2007 from $1,334,637 for fiscal 2006.
The increase was due to increased costs associated with existing clinical trials
and research studies which are ongoing by us.

     SELLING AND MARKETING EXPENSES. Selling and marketing expenses decreased
$54,681, or 5%, to $1,098,266 for fiscal 2007 as compared to $1,152,947 for
fiscal 2006. The overall decrease resulted from decreases in advertising costs
of $244,112 and consulting fees of $77,414, offset by increases in commissions
of $110,765 and increases in salaries of $156,079.

     GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $161,878, or 8%, to $2,217,743 for fiscal 2007 as compared to
$2,055,865 for fiscal 2006. The increase resulted primarily from (i) increases
in salary expenses of $304,218, (ii) increases in payroll tax expenses of
$34,858, and (iii) insurance expenses of $80,775, partially offset by decreases
in office expenses of $85,376, decreases in professional fees of $147,410 and
decreases in consulting fees of $30,448. General and administrative expenses for
fiscal 2007 and fiscal 2006 reflect inter-company allocations of $242,595 and
$226,807, respectively. Inter-company allocations for fiscal 2007 and fiscal
2006 consisted of amounts payable to ADM under our management services
agreement.

     SHARE BASED COMPENSATION EXPENSE. Shared based compensation expense
increased $1,485,600, or 226%, to $2,142,448 for fiscal 2007 as compared to
$656,848 for fiscal 2006 due to the adoption of FASB 123(R) for common stock
options issued by us during fiscal 2007.

     WARRANTS AND REGISTRATION RIGHTS. The change in the fair value of warrant
and registration rights liabilities decreased $4,632,710, or 99%, to $25,827 for
fiscal 2007 as compared to $4,658,537 for fiscal 2006. The decrease resulted
from the reclassification of the warrant and registration rights liabilities to
equity, in the amount of $3,450,050, when the registration statement related to
our IPO became effective in October 2006.

     NET INTEREST AND FINANCING COSTS. Net interest and financing costs
increased $269,236, or 19%, to $1,665,761 for fiscal 2007 from $1,396,525 for
fiscal 2006 due to the additional shares issued under the convertible notes for
failure by us to register our underlying securities (the IPO) in the amount of
$579,525, partially offset by (i) decreases in interest expense on the
convertible notes issued by us in the amount of $94,478, (ii) decreases in
amortized financing costs of $57,946 and (iii) increased interest earned of
$158,100 from amounts invested in money market funds.


                                       53

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     We have had significant operating losses for the fiscal years ended March
31, 2007 and 2006. As of March 31, 2007, we had an accumulated deficit of
approximately $23.7 million. Our continuing operating losses have been funded
principally through the proceeds of our private placement financings and our
IPO. We have only generated limited revenues of $1,182,340 and $786,512 for the
fiscal years ended March 31, 2007 and 2006, respectively, primarily from the
rental and sale of our products, and we expect to incur additional operating
losses, as well as negative cash flow from operations, for the foreseeable
future, as we continue to expand our marketing efforts with respect to our
products and continue our research and development of additional applications
for our technology and other technologies that we may develop in the future We
do not expect to be able to generate sufficient cash flow from our operations
during the next twelve-month period; however, we believe that the proceeds from
our IPO, combined with our expected revenues, will be sufficient to fund our
operations for the next 12 months.

     As of March 31, 2007, we had cash and cash equivalents of $8.3 million as
compared to cash and cash equivalents of $742,348 at March 31, 2006. The
increase in cash and cash equivalents during the fiscal year ended March 31,
2007 was due to funds received in connection with our IPO during October 2006
and partial exercise of the underwriters' over-allotment option in November 2006
as well as $500,000 received under our distribution agreement with Allergan.

     Net cash used in operating activities was approximately $3.5 million during
the fiscal year ended March 31, 2007 compared to approximately $3.5 million
during the fiscal year ended March 31, 2006. Net cash used in operating
activities for the fiscal year ended March 31, 2007 resulted primarily from our
net loss of approximately $7.8 million during the period, partially offset by
non-cash charges of approximately $3.7 million and an increase in accounts
payable and accrued expenses of approximately $160,000 during the period as well
as $500,000 received under our distribution agreement with Allergan.

     Net cash used by investing activities was approximately $309,000 during the
fiscal year ended March 31, 2007 compared to $6,595 during the fiscal year ended
March 31, 2006, the increase of which was due to purchases of equipment of
approximately $34,000 and increases in intangible assets of $274,000.

     Net cash provided by financing activities was approximately $11.4 million
during the fiscal year ended March 31, 2007 compared to net cash provided by
financing activities of approximately $1.8 million during the fiscal year ended
March 31, 2006. The increase in cash provided by financing activities for the
fiscal year ended March 31, 2007 was primarily related to the proceeds of our
IPO and the partial exercise of the underwriters' over-allotment option of
approximately $14.0 million, partially offset by repayments of advances from
affiliates of $2.6 million.

     Our business is capital intensive and we will likely require additional
financing in order to:

     o    fund research and development;

     o    expand sales and marketing activities;

     o    develop new or enhanced technologies or products;

     o    maintain and establish regulatory compliance;


                                       54

<PAGE>

     o    respond to competitive pressures; and

     o    acquire complementary technologies or take advantage of unanticipated
          opportunities.

     Our need for additional capital will depend on:

     o    the costs and progress of our research and development efforts;

     o    the preparation of pre-market application submissions to the FDA for
          our new products and technologies;

     o    the number and types of product development programs undertaken;

     o    the number of products to be manufactured for sale or rental;

     o    the costs and timing of expansion of sales and marketing activities;

     o    the amount of revenues from sales of our existing and potentially new
          products;

     o    the cost of obtaining, maintaining, enforcing and defending patents
          and other intellectual property rights;

     o    competing technological and market developments; and

     o    developments related to regulatory and third-party coverage matters.

     In order to keep our operating expenses manageable, we entered into a
management services agreement, dated as of August 15, 2001, with ADM under which
ADM provides us and its other subsidiaries, with management services and
allocates portions of its real property facilities for use by us and the other
subsidiaries for the conduct of our respective businesses.

     The management services provided by ADM under the management services
agreement include administrative, technical, engineering and regulatory services
with respect to our products. We pay ADM for such services on a monthly basis
pursuant to an allocation determined by ADM and us based on a portion of its
applicable costs plus any invoices it receives from third parties specific to
us. As we intend to add additional full and/or part-time employees to our
administrative staff during the fiscal year ending March 31, 2008, we expect our
reliance on the use of the management services of ADM to be reduced
significantly.

     We also use office, manufacturing and storage space in a building located
in Northvale, New Jersey, currently leased by ADM, pursuant to the terms of the
management services agreement. ADM determines the portion of space allocated to
us and each other subsidiary on a monthly basis, and we and the other
subsidiaries are required to reimburse ADM for our respective portions of the
lease costs, real property taxes and related costs.

     In addition, we are a party to a manufacturing agreement with ADM, dated as
of August 15, 2001, and as amended and restated in May 2006, under which we
utilize ADM as our exclusive manufacturer of all of our current and future
medical and non-medical electronic and other devices or products. For each
product that ADM manufactures for us, we pay ADM an amount equal to 120% of the
sum of (i) the actual, invoiced cost for raw materials, parts, components or
other physical items that are used in the manufacture of the product and
actually purchased for us by ADM, if any, plus (ii) a labor charge based on ADM
Tronic's standard hourly manufacturing labor rate, which we believe is more


                                       55

<PAGE>

favorable than could be attained from unaffiliated third-parties. We generally
purchase and provide ADM with all of the raw materials, parts and components
necessary to manufacture our products and, as a result, the manufacturing fee
paid to ADM is generally 120% of the labor rate charged by ADM. On April 1,
2007, we instituted a procedure whereby ADM invoices us for finished goods at
ADM's cost plus 20%.

     We have incurred $75,584 and $72,417 for ADM' manufacture of our products
pursuant to the manufacturing agreement during the fiscal years ended March 31,
2007 and March 31, 2006, respectively.

     The amount included in general and administrative expense representing
ADM's allocations for the fiscal year ended March 31, 2007 and 2006, was
$242,595 and $226,807, respectively, consisting of amounts payable under our
management services agreement with ADM.

     During the twelve month period ended March 31, 2007, we purchased $59,789
of finished goods from ADM at contracted rates.

     During October 2006, we completed our IPO, selling 2.5 million shares of
our common stock at $6.00 per share raising gross proceeds of $15.0 million Net
proceeds to us were approximately $12.2 million from the IPO after the payment
of underwriting discounts and commissions and expenses related to the IPO.
During November 2006, we received additional net proceeds of approximately $1.4
million, after the payment of underwriting commissions and expenses, from the
partial exercise of the underwriters' over-allotment option to purchase 250,000
of the 375,000 available shares of our common stock at $6.00 per share.

     Upon the consummation of the IPO, we paid approximately $2.6 million to ADM
representing the balance in inter-company accounts at October 24, 2006 due to
ADM from us, for product manufacturing and services provided by ADM to us under
our management services agreement for the period from March 1989 to October
2006. Further, at the closing of our IPO, we repaid in full our notes payable to
Ajax on October 24, 2006 with a payment of $257,123, which represented the
outstanding principal and interest under the unsecured subordinated loan.

     Upon the consummation of the IPO, unsecured convertible notes in the
aggregate principal amount of $6.1 million issued in our December 2004 and
February 2005 joint private placement with ADM automatically converted into an
aggregate of 1,630,232 shares of our common stock. The notes bore interest at an
annual rate of 6%, which interest was payable at the direction of the holder in
cash, shares of ADM common stock or shares of our common stock. We issued 21,378
shares and 18,016 shares of common stock on December 27, 2006 and January 17,
2007, respectively, in lieu of cash for interest payments on the notes, which
concluded our obligation to such holders.

     On the effective date of the Registration Statement, unsecured convertible
notes in the aggregate principal amount of $2,000,000 issued in connection with
our November 2005 and March 2006 private placements to four institutional
investors automatically converted into an aggregate of 392,157 shares of our
common stock. The notes bore interest at an annual rate of 8%, payable in cash.
Two of the institutional investors who purchased notes, Ajax Capital LLC and
Kenneth S. Abramowitz & Co., Inc., are investment funds wholly-owned by Steven
Gluckstern and Kenneth Abramowitz, respectively, each of whom began to serve as
a director of our company in connection with our IPO, waived their right to
receive interest payments on a quarterly basis through the consummation of the
IPO (approximately $25,000 per quarter). We used approximately $77,000 and
$19,000 of the net proceeds from our IPO to pay Ajax Capital LLC and Kenneth S.
Abramowitz, Co. Inc., respectively, and approximately $149,000 of the net
proceeds from the IPO to pay to the remaining such holders' any and all interest
with respect to such notes then due and payable.


                                       56

<PAGE>

     As a result of the foregoing, we do not have any loans outstanding as of
the date of this report.

     In November 2006, we received $500,000 under the terms of our agreement
with Allergan and its subsidiary, Inamed, and we anticipate receiving additional
revenues under this agreement.

     Although we expect that the net proceeds of the IPO, together with our
available funds and funds generated from our operations, will be sufficient to
meet our anticipated needs for 12 months, we may need to obtain additional
capital to continue to operate and grow our business. Our cash requirements may
vary materially from those currently anticipated due to changes in our
operations, including our marketing and distribution activities, product
development, expansion of our personnel and the timing of our receipt of
revenues. Our ability to obtain additional financing in the future will depend
in part upon the prevailing capital market conditions, as well as our business
performance. There can be no assurance that we will be successful in our efforts
to arrange additional financing on terms satisfactory to us or at all.

OFF-BALANCE SHEET ARRANGEMENTS

     We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.


                                       57

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                                                                          Page

Report of Independent Registered Public Accounting Firm                    59

Balance Sheet as of March 31, 2007                                         60

Statements of Operations for the years ended March 31, 2007 and 2006       61

Statements of Stockholders' Equity for the years ended
  March 31, 2007 and 2006                                                  62

Statements of Cash Flows for the years ended March 31, 2007 and 2006       63

Notes to the Financial Statements                                          65


                                       58


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors and
Stockholders of Ivivi Technologies, Inc.



We have audited the accompanying balance sheet of Ivivi Technologies, Inc. as of
March 31, 2007, and the related statements of operations, stockholders' equity,
and cash flows for each of the two years then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 audit provides 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 Ivivi Technologies, Inc. as of
March 31, 2007, and the results of its operations and its cash flows for each of
the two years then ended in conformity with accounting principles generally
accepted in the United States of America.



/s/ Raich Ende Malter & Co. LLP
East Meadow, New York
June 28, 2007


                                       59

<PAGE>

                            IVIVI TECHNOLOGIES, INC.
                                 BALANCE SHEET
                                 AS OF MARCH 31,

                                     ASSETS

                                                                       2007
                                                                   ------------
Current assets:
        Cash and cash equivalents                                  $  8,310,697
        Accounts receivable, net of allowance for
          doubtful accounts of $37,405                                  224,349
        Inventory                                                       236,735
        Prepaid expenses                                                154,730
                                                                   ------------

                                                                      8,926,511

Property and equipment, net                                              46,040
Equipment in use and under rental agreements, net                        60,096
Intangible assets, net of accumulated amortization of $3,570            270,826
                                                                   ------------

                                                                   $  9,303,473
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
        Accounts payable and accrued expenses                      $  1,005,975
        Advances payable - affiliates                                    36,657
                                                                   ------------

                                                                      1,042,632

Deferred revenue                                                        473,958

Stockholders' equity:
        Preferred stock, no par value; 5,000,000 shares
          authorized, no shares issued and outstanding                        -
        Common stock, no par value; 70,000,000 shares
          authorized, 9,556,783 shares issued
          and outstanding                                            20,922,154
        Additional paid-in capital                                   10,577,111
        Accumulated deficit                                         (23,712,382)
                                                                   ------------

                                                                      7,786,883
                                                                   ------------

                                                                   $  9,303,473
                                                                   ============

   The accompanying notes are an integral part of these financial statements.


                                       60

<PAGE>

                            IVIVI TECHNOLOGIES, INC.
                            STATEMENTS OF OPERATIONS
                          FOR THE YEARS ENDED MARCH 31,

                                                       2007            2006
                                                   ------------    ------------
Revenue:
       Sales                                       $    416,292    $    147,949
       Rentals                                          740,006         638,563
       Licensing                                         26,042               -
                                                   ------------    ------------

                                                      1,182,340         786,512
                                                   ------------    ------------
Costs and expenses:
       Cost of sales                                     87,040          52,790
       Cost of rentals                                   93,998         215,985
       Depreciation and amortization                     19,636           9,049
       Research and development                       1,610,232       1,334,637
       Sales and marketing                            1,098,266       1,152,947
       General and administrative                     2,217,743       2,055,865
       Share based compensation                       2,142,448         656,848
                                                   ------------    ------------

                                                      7,269,363       5,478,121
                                                   ------------    ------------

                                                     (6,087,023)     (4,691,609)
Change in fair value of
       warrant and registration
       rights liabilities                               (25,827)     (4,658,537)
Interest and finance
       costs, net                                    (1,665,761)     (1,396,525)
                                                   ------------    ------------

Loss before provision
       for income taxes                             (7,778,611)    (10,746,671)
Provision for income taxes                                    -               -
                                                   ------------    ------------

Net loss                                           $ (7,778,611)   $(10,746,671)
                                                   ============    ============

Net loss per share, basic
       and diluted                                 $      (1.13)   $      (2.26)
                                                   ============    ============

Weighted average shares
       outstanding                                    6,875,028       4,745,000
                                                   ============    ============

   The accompanying notes are an integral part of these financial statements.


                                       61

<PAGE>
<TABLE>
                                                      IVIVI TECHNOLOGIES, INC.
                                                 STATEMENTS OF STOCKHOLDERS' EQUITY
                                             FOR THE YEARS ENDED MARCH 31, 2007 AND 2006


                                                Common Stock              Additional                                       Total
                                         ----------------------------      Paid-In       Deferred      Accumulated     Stockholders'
                                             Shares         Amount         Capital     Compensation       Deficit         Equity
                                         -------------------------------------------------------------------------------------------
<S>                                        <C>          <C>             <C>            <C>             <C>             <C>
Balance - April 1, 2005                    4,745,000    $     74,600    $    768,689   $   (522,802)   $ (5,187,100)   $ (4,866,613)
Reclassification of deferred compensation                                   (522,802)       522,802                               -
Beneficial conversion feature                                                133,776                                        133,776
Share based compensation                                                     653,047                                        653,047
Warrants issued without debt                                                 242,780                                        242,780
Intrinsic value of options issued
  to employees                                                                11,424                                         11,424
Net loss                                                                                                (10,746,671)    (10,746,671)
                                         -------------------------------------------------------------------------------------------

Balance - March 31, 2006                   4,745,000          74,600       1,286,914              -     (15,933,771)    (14,572,257)
Issuance of common stock in connection
  with initial public offering, net        2,750,000      13,640,241               -                              -      13,640,241
Convertible debt converted                 1,584,009       8,087,500               -                              -       8,087,500
Unamortized value of convertible debt
  discount at time of conversion                   -        (523,484)              -                              -        (523,484)
Issuance cost related to convertible
  debt conversion                                  -        (568,864)              -                              -        (568,864)
Value of share based registration rights
  liability at time of conversion            438,380               -       3,450,050                              -       3,450,050
Value of warrants and beneficial
  conversion feature at time of conversion         -               -       3,697,699                              -       3,697,699
Accrued interest paid in stock                39,394         212,161               -                              -         212,161
Share based compensation                           -               -       2,142,448                                      2,142,448
Net loss                                           -               -               -                     (7,778,611)     (7,778,611)
                                         -------------------------------------------------------------------------------------------

Balance - March 31, 2007                   9,556,783    $ 20,922,154    $ 10,577,111   $          -    $(23,712,382)   $  7,786,883
                                         ===========================================================================================

                             The accompanying notes are an integral part of these financial statements.


                                                                 62
</TABLE>

<PAGE>
<TABLE>
                                IVIVI TECHNOLOGIES, INC.
                                STATEMENTS OF CASH FLOWS
                             FOR THE YEARS ENDED MARCH 31,

                                                              2007            2006
                                                          ------------    ------------
<S>                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                  $ (7,778,611)   $(10,746,671)
Adjustments to reconcile net loss to net cash
  used by operating activities:
    Depreciation and amortization                               25,099          60,840
    Change in fair value of warrant and
      registration rights liabilities                           25,827       4,658,537
    Share based financing penalties                          1,350,278         770,752
    Amortization of loan costs and discount                    173,008         237,856
    Share based compensation                                 2,142,448         664,471
    Provision for doubtful accounts                             30,608          19,665
    Amortization of deferred revenue                           (26,042)              -
Changes in operating assets and liabilities:
  (Increase) decrease in:
    Inventory                                                   54,761         (19,760)
    Accounts receivable                                        (32,826)       (240,665)
    Prepaid expenses                                          (144,144)        291,356
  Increase in:
    Accounts payable and accrued expenses                      158,834         763,980
    Deferred revenue                                           500,000               -
                                                          ------------    ------------
                                                            (3,520,760)     (3,539,639)
                                                          ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                        (34,344)         (6,595)
    Intangible assets                                         (274,407)              -
                                                          ------------    ------------
                                                              (308,751)         (6,595)
                                                          ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock in connection with
  initial public offering                                   13,963,898               -
Proceeds from issuance of notes, net of
  costs of $104,208                                                  -       1,895,792
Affiliate advances                                          (2,566,038)         70,207
Proceeds of notes                                              250,000               -
Repayment of notes                                            (250,000)              -
Deferred loan costs                                                  -               -
Deferred offering costs                                              -        (183,062)
                                                          ------------    ------------
                                                            11,397,860       1,782,937
                                                          ------------    ------------

Net increase/(decrease) in cash and cash equivalents         7,568,349      (1,763,297)
Cash and cash equivalents, beginning of period                 742,348       2,505,645
                                                          ------------    ------------

Cash and cash equivalents, end of period                  $  8,310,697    $    742,348
                                                          ============    ============
</TABLE>


                                       63

<PAGE>
<TABLE>

                                IVIVI TECHNOLOGIES, INC.
                                STATEMENTS OF CASH FLOWS
                             FOR THE YEARS ENDED MARCH 31,

                                                              2007            2006
                                                          ------------    ------------
<S>                                                       <C>             <C>
Supplemental disclosures of cash flow information:
Cash paid for:
  Interest                                                $    417,662   $    170,164
  Income taxes                                                       -              -

Non Cash Financing and Investing Activities:
  Debt converted to equity                                $  7,564,016              -
  Warrant and registration rights liabilities
      converted to equity                                 $  7,147,749              -
  Shares issued for accrued interest                      $    212,161              -


  The accompanying notes are an integral part of these financial statements.


                                           64
</TABLE>

<PAGE>

                            IVIVI TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2007

1.   ORGANIZATIONAL MATTERS

     ORGANIZATION

     Ivivi Technologies, Inc. ("we", "us", "the company" or "Ivivi"), formerly
AA Northvale Medical Associates, Inc., was incorporated under the laws of the
state of New Jersey on March 9, 1989. We are authorized under our Certificate of
Incorporation to issue 70,000,000 common shares, no par value and 5,000,000
preferred shares, no par value.

     NATURE OF BUSINESS

     We sell and rent non-invasive electro-therapeutic medical devices. These
products are sold or rented to customers located principally in the United
States.

     Our medical devices are subject to extensive and rigorous regulation by the
FDA, as well as other federal and state regulatory bodies. We believe based upon
guidance published by the FDA that all of our current products are covered by
the FDA clearance provided in 1991 for our SofPulse product. In February, 2007,
in response to inquiries from the FDA, we voluntarily submitted a 510(k) for our
current products which is currently under review by the FDA. We have had
discussions with the FDA regarding our application and, in June 2007, we
received a letter from the FDA requesting additional information from us. If the
FDA does not grant a 510(k) clearance for our current products, the FDA may
require us to cease marketing and/or recall current products already sold or
rented until FDA clearance or approval is obtained.

2.   SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES-- These financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and, accordingly, require management to make estimates and assumptions that
affect the reported amounts of 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.

     FAIR VALUE OF FINANCIAL INSTRUMENTS-- For certain of our financial
instruments, including accounts receivable, accounts payable and accrued
expenses and advances payable-affiliates, the carrying amounts approximate fair
value due to their relatively short maturities.

     CASH AND CASH EQUIVALENTS-- We consider all highly liquid investments with
maturities of three months or less at the time of purchase to be cash
equivalents. Cash equivalents consist primarily of money market funds and other
debt investments that are carried at cost, which approximate fair value.

     REVENUE RECOGNITION-- We recognize revenue primarily from the sales and
rental of our products. In addition, we recognize revenue from companies that
are licensed to distribute our products in specific markets. Further, and to a
lesser extent, we recognize revenue from the amortization of licensing revenue
under our Revenue Sharing Agreement (See Note 7).

     Sales are recognized when our products are shipped to end users including
medical facilities and distributors. Shipping and handling charges and costs are
immaterial. Except for warranties on our products, we have no post shipment
obligations and sales returns have been immaterial.

     Rental revenue is recognized as earned on either a monthly or pay-per-use
basis in accordance with individual customer agreements. In most cases, we allow
the rental end user to evaluate our equipment on a trial basis, during which
time we provide any demonstration or education necessary for the use of our
equipment. Rental revenue recognition commences after the end of the trial
period. All of our rentals are terminable by either party at any time. When we
use a third party to bill insurance companies, we still recognize revenue as our
products are used. When certain of our distributors bill end users, we recognize
rental revenue when we are paid by the distributor.


                                       65

<PAGE>

     We provide an allowance for doubtful accounts determined primarily through
specific identification and evaluation of significant past due accounts,
supplemented by an estimate applied to the remaining balance of past due
accounts.

     INVENTORY-- Inventory consists of our electroceutical units and is stated
at the lower of cost or market.

     PROPERTY & EQUIPMENT-- We record our equipment at historical cost. We
expense maintenance and repairs as incurred. Depreciation is provided for by the
straight-line method over three to seven years, the estimated useful lives of
the property and equipment.

     RENTAL EQUIPMENT-- Rental equipment consists of our electroceutical units
and accessories leased to third parties, used internally and loaned out for
marketing and testing. It is depreciated on a straight-line basis over three to
seven years, the estimated useful lives of the units, commencing on the date
placed in service.

     INTANGIBLE ASSETS--Intangible assets consist of patents and trademarks of
$198,862 and deferred licensing costs of $71,964, net of accumulated
amortization of $3,570. Amortization expense totalled $3,570 and $0.00 for the
fiscal years ended March 31, 2007 and 2006, respectively. Patents and trademarks
are amortized over their legal life and deferred licensing costs are amortized
over the life of the related Revenue Sharing agreement (See Note 7).

     LONG-LIVED ASSETS-- We follow Statement of Financial Accounting Standards
(SFAS), No. 144, "ACCOUNTING FOR IMPAIRMENT OF DISPOSAL OF LONG-LIVED ASSETS,"
which established a "primary asset" approach to determine the cash flow
estimation period for a group of assets and liabilities that represents the unit
of accounting for a long lived asset to be held and used. Long-lived assets to
be held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The carrying amount of a long-lived asset 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. Long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less cost to sell. During
the years ended March 31, 2007 and 2006, no impairment loss was recognized.

     ADVERTISING COSTS-- Advertising costs are expensed as incurred and amounted
to $81,832 and $325,944 for the fiscal years ended March 31, 2007 and 2006,
respectively.

     RESEARCH AND DEVELOPMENT COSTS-- Our research and development costs consist
mainly of payments for third party research and development arrangements and
employee salaries. Research and development totalled $1,610,232 and $1,334,637,
before related charges of $581,712 and $478,961 for share-based compensation,
for the fiscal years ended March 31, 2007 and 2006, respectively.

     SHARE-BASED COMPENSATION--We historically accounted for share-based
compensation to employees in accordance with Accounting Principles Board Opinion
No. 25 ("APB 25") "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES," and its related
interpretations, as permitted by SFAS No. 123, "ACCOUNTING FOR STOCK BASED
COMPENSATION." APB 25 required the use of the intrinsic value method.

     On April 1, 2006, we adopted the provisions of SFAS 123(R) "SHARE-BASED
PAYMENT," using the modified prospective method. Under this method, we
recognized compensation cost based on the grant date fair value, using the Black
Scholes option value model, for all share-based payments granted on or after
April 1, 2006 plus any awards granted to employees prior to April 1, 2006 that
remain unvested at that time.


                                       66

<PAGE>

     We use the fair value method for equity instruments granted to nonemployees
and use the Black Scholes option value model for measuring the fair value of
warrants and options. The share-based fair value compensation is determined as
of the date of the grant or the date at which the performance of the services is
completed (measurement date) and is recognized over the periods in which the
related services are rendered.

     Pro forma information regarding the effects on operations of employee and
director common share purchase options as required by SFAS No. 123 and SFAS No.
148 has been determined as if we had accounted for those options under the fair
value method. Pro forma information is computed using the Black Scholes method
at the date of grant of the options based on the following assumption ranges:
(1) risk free interest rate of 3.62% to 4.75%; (2) dividend yield of 0%; (3)
volatility factor of the expected market price of our common stock of 60% to
67%; and (4) an expected life of the options of 1.5 to 5 years. The foregoing
option valuation model requires input of highly subjective assumptions. Because
common share purchase options granted to employees and directors have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value of estimates, the existing model does not in the opinion of our
management necessarily provide a reliable single measure of the fair value of
common share purchase options we have granted to our employees and directors.

Pro forma information relating to employee and director common share purchase
options is as follows:

                                                                 For the fiscal
                                                                   year ended
                                                                 March 31, 2006
                                                                ----------------

Net loss as reported                                              $ (10,746,671)

Add: share based compensation expense
     calculated under APB 25                                      $      11,424

Deduct: share based compensation expense
     calculated under fair value method                           $     (46,511)
                                                                ----------------

Pro forma net loss                                                $ (10,781,758)
                                                                ================

Basic and diluted net loss per share,
     as reported                                                  $       (2.26)
                                                                ================

Pro forma basic and diluted
     net loss per share                                           $       (2.27)
                                                                ================


                                       67

<PAGE>

     INCOME TAXES-- We reported the results of our operations for the year ended
March 31, 2006 and the results of our operations for the period April 1, 2006
through October 18, 2006, the IPO date (see Note 3) as part of a consolidated
tax return with ADM Unlimited, Inc., formerly a majority shareholder. We have
entered into a tax sharing arrangement where each of the members compensates
each other to the extent that their respective taxes are affected as a result of
this arrangement. We are filing separate corporate income tax returns for the
period October 19, 2006 through March 31, 2007. Deferred income taxes result
primarily from temporary differences between financial and tax reporting.
Deferred tax assets and liabilities are determined based on the difference
between the financial statement bases and tax bases of assets and liabilities
using enacted tax rates. A valuation allowance is recorded to reduce a deferred
tax asset to that portion that is expected to more likely than not be realized.

     NET LOSS PER SHARE-- We use SFAS No. 128, "Earnings Per Share" for
calculating the basic and diluted loss per share. We compute basic loss per
share by dividing net loss and net loss attributable to common shareholders by
the weighted average number of common shares outstanding. Diluted loss per share
is computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential shares had been issued and if the additional shares
were dilutive. Common equivalent shares are excluded from the computation of net
loss per share if their effect is antidilutive.

     Per share basic and diluted net loss amounted to $1.13 for the fiscal year
ended March 31, 2007 and $2.26 for the fiscal year ended March 31, 2006. For the
years ended March 31, 2007 and 2006, 5,270,291 potential shares and 5,417,515
potential shares, respectively, were excluded from the shares used to calculate
diluted earnings per share as their inclusion would reduce net loss per share.

     RECLASSIFICATIONS--Certain reclassifications have been made to the
consolidated financial statements for the prior period in order to have them
conform to the current period's classifications. These reclassifications have no
effect on previously reported net income.

     NEW ACCOUNTING PRONOUNCEMENTS

     In July 2006, the FASB issued Interpretation No. 48, ACCOUNTING FOR
UNCERTAINTY IN INCOME TAXES--AN INTERPRETATION OF FASB STATEMENT NO. 109 (FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements in accordance with FASB Statement No.
109, ACCOUNTING FOR INCOME TAXES (FASB No. 109). The interpretation prescribes a
recognition threshold and also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The provisions of FIN 48 are effective for us on
April 1, 2007. The application of FIN 48 will not have a material effect on our
financial position, results from operations, or cash flows.

     In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS
(SFAS No. 157), which establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. Where applicable, this
accounting standard, which simplifies and codifies related guidance within GAAP,
is effective for us beginning April 1, 2008. We have not yet determined the
effect, if any, the adoption of SFAS No. 157 may have on our financial
statements.

     In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (SFAS No. 159). This statement
permits entities to choose to measure financial assets and liabilities, with
certain exceptions, at fair value at specified election dates. A business entity
shall report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. This
statement is effective for us beginning April 1, 2008. We have not determined
the effect, if any, the adoption of SFAS No. 159 may have on our financial
statements.


                                       68

<PAGE>

3.   INITIAL PUBLIC OFFERING

     During October 2006, we completed our initial public offering, the IPO,
selling 2.5 million shares of our common stock at $6.00 per share, raising gross
proceeds of $15.0 million. The underwriters of the offering were granted an
option for a period of 45 days to purchase up to an aggregate of 375,000
additional shares of common stock from us to cover over-allotments, if any. Net
proceeds to us from the IPO were approximately $12.2 million after the payment
of underwriting discounts and commissions and expenses related to the offering.
On November 22, 2006, we received additional net proceeds of approximately $1.4
million, after the payment of underwriting commissions and expenses, from the
underwriters who partially exercised their option to purchase 250,000 of the
available 375,000 shares of our common stock to cover over-allotments at $600
per share.

     Upon the consummation of the IPO, unsecured convertible notes in the
aggregate principal amount of $6,087,500, issued in our December 2004 and
February 2005 joint private placements with ADM Unlimited, Inc., or ADM, the
owner of 33.9% of our outstanding common stock, automatically converted into an
aggregate of 1,630,232 shares of our common stock. The notes bore interest at an
annual rate of 6%, which interest was payable at the discretion of the holder in
cash, shares of ADM common stock or shares of our common stock.

     Also, upon consummation of the IPO, unsecured convertible notes in the
aggregate principal amount of $2,000,000 issued in connection with our November
2005 and March 2006 private placements to four institutional investors
automatically converted into an aggregate of 392,157 shares of our common stock.
The notes bore interest at an annual rate of 8%, payable in cash. Two of the
institutional investors who purchased notes, Ajax Capital LLC and Kenneth S.
Abramowitz & Co., Inc., are investment funds wholly-owned by Steven Gluckstern
and Kenneth Abramowitz, respectively, each of whom began to serve as a director
of our company upon the effective date of the Registration Statement and waived
their right to receive interest payments on a quarterly basis through the
consummation of the IPO (approximately $25,000 per quarter). We used
approximately $77,000 and $19,000 of the net proceeds to pay Ajax Capital LLC
and Kenneth S. Abramowitz Co., Inc., respectively, and an additional $149,000 of
the proceeds from the IPO to pay the other holders, any and all interest with
respect to such notes then due and payable.

     As a result of the foregoing, we do not have any loans outstanding as of
the date of this filing.

4.   PROPERTY AND EQUIPMENT, NET

     Our property and equipment as of March 31, 2007 is as follows:

              Computer equipment                       $   45,453
              Leasehold improvements                        3,401
              Machinery & Equipment                       206,853
                                                       ----------

                                                          255,707
              Accumulated depreciation                   (209,667)
                                                       ----------

                                                       $   46,040
                                                       ==========

     Depreciation and amortization expense related to property and equipment
amounted to $16,066 and $9,049 during the years ended March 31, 2007 and 2006,
respectively.


                                       69

<PAGE>

5.   RENTAL EQUIPMENT

     Equipment in use and under rental agreements consists of the following at
March 31, 2007:

                Electroceutical units                $  940,139
                Accumulated depreciation               (880,043)
                                                     ----------

                                                     $   60,096
                                                     ==========

     Depreciation expense related to equipment in use and under rental
agreements, which is included in the cost of rentals on our Statements of
Operations, amounted to $5,463 and $51,791 during the years ended March 31, 2007
and 2006, respectively.

6.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     At March 31, 2007, accounts payable and accrued expenses consisted of the
following:

                Research and development             $  559,420

                Professional fees                       286,904

                Sales commissions                        24,562

                Other                                   135,089
                                                     ----------

                                                     $1,005,975
                                                     ==========

7.   DEFERRED REVENUE

     In August, 2006, we sold to Ajax, 15 units of the Roma3 and 5 units of the
SofPulse M-10 at a purchase price of $14,500 per unit, the then published
wholesale unit price for the Roma3 and the SofPulse M-10, for an aggregate
purchase price of $290,000. In connection therewith, we entered into a Revenue
Sharing Agreement (the "Revenue Sharing Agreement") with Ajax, pursuant to which
we agreed to use our commercially reasonable efforts to rent to third parties
all of the units of the Roma3 and the SofPulse M-10 purchased by Ajax.

     On December 22, 2006, our Audit Committee approved the termination of the
Revenue Sharing Agreement with Ajax. In connection with the termination, Ajax
transferred to us all of its rights, title and interest in and to the units of
the Roma3 and the SofPulse M-10 purchased by Ajax on the date of the Revenue
Sharing Agreement, and we paid Ajax $296,136. As a result of the termination, we
are entitled to all revenues generated by the rental and sales of such units and
the related applicators from and after the termination date.


                                       70

<PAGE>

     On November 9, 2006, we entered into an exclusive worldwide distribution
agreement (the "Agreement") with a wholly-owned subsidiary of Allergan, Inc.
("Allergan"), a global healthcare company that discovers, develops and
commercializes pharmaceutical and medical device products in specialty markets.
Pursuant to the Agreement, we granted Allergan's subsidiary, Inamed Medical
Products Corporation and its affiliates ("Inamed") the exclusive worldwide right
to market, sell and distribute certain of our products, including all
improvements, line extensions and future generations thereof (collectively, the
"Product") in conjunction with any aesthetic or bariatric medical procedures
(the "Field") in the defined Marketing Territory.

     Under the Agreement, we also granted Inamed the right to rebrand the
Product, with Inamed owning all rights to such brands developed by Inamed for
such purpose. Under the Agreement, we received an initial payment of $500,000
and will receive certain milestone payments of up to $1,000,000 in the aggregate
upon the Product's First Commercial Sale (as defined in the Agreement) in the
United States and Europe. In addition, Inamed will purchase the Product from us
at a predetermined price and must meet certain minimum order requirements.
Finally, we will receive royalty payments based on Inamed's net sales and number
of units sold of the Product, subject to certain annual minimum royalty payments
to be determined by the parties.

     The Agreement has an eight year initial term beginning at the Product's
First Commercial Sale. The initial term may be extended for two additional years
without further payment at Inamed's option. Inamed may also pay us a $2,000,000
extension fee and extend the term of the Agreement for up to eight additional
years, for a total term of up to 18 years.

     Inamed may market, sell and distribute the Product under the Agreement only
in the "Marketing Territory," which is generally defined in the Agreement as the
United States and such other jurisdictions for which all requisite regulatory
approval has been obtained. If the marketing, sale or distribution of the
Product in a jurisdiction would infringe third-party intellectual property
rights and likely result in a lawsuit against us or Inamed, Inamed could require
us to use reasonable commercial efforts to obtain a license for, or redesign,
the Product to be sold in that jurisdiction.

     In the event we fail to supply Allergan or its subsidiaries certain minimum
amounts of the Product and fail to procure alternate suppliers for such Products
within certain timeframes, Inamed will have the right to use certain of our
intellectual property and/or other proprietary information to manufacture the
Product until such time as we demonstrate to Inamed's reasonable satisfaction
that we are fully able to resume our supply obligations. During such time as
Inamed controls Product manufacturing, our royalty rate would be significantly
reduced.

     In the event Inamed is required to discontinue the marketing, sale or
distribution of the Product in the United States and/or any country in the
European Union because of problems with regulatory approvals and/or other
reasons related to the Product, we will be required to repay Inamed portions of
the milestone payments up to $1,000,000.

     Inamed may terminate the Agreement by giving 90 to 180 days' prior written
notice to us. We may terminate the Agreement by giving 12 months' prior written
notice if Inamed fails to timely pay us minimum royalty amounts for any
applicable year or fails to meet the minimum sales requirements set forth in the
Agreement. A nonbreaching party may terminate the Agreement following a material
breach of the Agreement and the breaching party's failure to cure such breach
during the applicable cure period by giving the breaching party proper prior
written notice. If we are in material breach, and fail to cure, Inamed may have
the right to use certain of our intellectual property and/or other proprietary
information to manufacture the Product. Our royalty rate would subsequently be
significantly reduced.


                                       71

<PAGE>

     Neither party may assign or otherwise transfer its right and obligations
under the Agreement, including upon a change of control of such party (as
defined in the Agreement), without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that Inamed may assign
its rights and obligations without the prior written consent of the company to
Inamed's affiliates and upon a sale of all or substantially all of the assets or
equity of the business entity, division or unit, as applicable, that markets,
distributes or sells the Product.

     The Agreement includes other terms and conditions, including provisions
regarding regulatory responsibilities, audit rights, insurance, indemnification
and confidentiality.

     In November 2006, we received $500,000 under the terms of this Agreement
which was recorded as deferred revenue and is being amortized over eight years,
the initial term of the agreement. During the fiscal year ended March 31, 2007,
we have recognized $26,042 in revenue from this agreement.

8.   INCOME TAXES

     Net operating losses for tax purposes of approximately $13,573,000 at March
31, 2007 are available for carryover. The net operating losses will expire from
2010 through 2027. We have provided a 100% valuation allowance for the deferred
tax benefit resulting from the net operating loss carryover due to our limited
operating history. In addressing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences are deductible. A
reconciliation of the statutory Federal income tax rate and the effective income
tax rate for the years ended March 31, 2007 and 2006 follows:

                                                          2007          2006
                                                      ------------  ------------

Statutory federal income tax rate                         (34)%         (34)%

State income taxes, net of federal taxes                   (6)%          (6)%

Nondeductible items:
     Share-based compensation                              11%            2%
     Share-based financing penalties                        7%            3%
     Change in fair value of derivative liabilities         0%           18%

Valuation allowance                                        22%           17%
                                                      ------------  ------------

Effective income tax rate                                   0%            0%
                                                      ============  ============

     Significant components of deferred tax assets and liabilities are as
follows:


                                       72

<PAGE>

                                                  March 31,       March 31,
                                                    2007            2006
                                                ------------    ------------

   Deferred tax assets (liabilities):
   Bad debts                                    $     15,000    $      8,000
   Net operating loss carryforwards                5,427,000       3,740,000
                                                ------------    ------------
   Deferred tax assets, net                        5,442,000       3,748,000
   Valuation allowance                            (5,442,000)     (3,748,000)
                                                ------------    ------------

   Net deferred tax assets                      $          -    $          -
                                                ============    ============

9.   OPTIONS AND WARRANTS OUTSTANDING

     We have instituted a stock option plan for the issuance of 2,437,500
shares. As of March 31, 2007 and 2006, 1,885,600 and 1,544,725 of options,
respectively, were awarded, with 551,900 reserved for future issuance as of
March 31, 2007. The weighted average fair value of options issued to employees
and directors during the years ended March 31, 2007 and 2006 is $2.63 and $1.82
per share, respectively.

     Included in the table below are 775,000 of nonplan options to Steven
Gluckstern, our Chairman of the Board, that were granted during the fiscal year
ended March 31, 2007.

     In connection with the private placements with ADM in December 2004 and
February 2005, we issued 1,191,827 Common Stock Purchase Warrants ("CSPW") and
an additional 438,380 CSPWs as a penalty due to our delayed IPO. In addition, we
issued 392,157 CSPWs in connection with our private placements completed in
November 2005 and March 2006. Further, we issued 260,000 CSPWs to our
consultants as well as 327,327 CSPWs issued to the Maxim Group, who acted as our
placement agent in connection with our private placement as well as acting as an
advisor to the company.

     COMMON SHARE OPTIONS AND WARRANTS ISSUED

     The following table summarizes information on all common share purchase
options and warrants issued by us for the periods ended March 31, 2007 and 2006,
including common share equivalents relating to the convertible debenture share
purchase warrants.


                                       73

<PAGE>

<TABLE>
                                             March 31, 2007             March 31, 2006
                                        ------------------------   -----------------------
                                                      Weighted                   Weighted
                                                       Average                    Average
                                                      Exercise                   Exercise
                                          Number        Price        Number        Price
                                        ----------    ----------   ----------   ----------
<S>                                      <C>          <C>             <C>       <C>
Outstanding, beginning of the year       3,740,108    $     3.50    3,003,105   $     2.68
Granted                                  1,571,433          4.95      737,003         7.02
Exercised                                        -             -            -            -
Terminated                                 (41,250)         5.73            -            -
                                        ----------    ----------   ----------   ----------

Outstanding, end of the year             5,270,291    $     3.81    3,740,108   $     3.50
                                        ==========    ==========   ==========   ==========

Exercisable, end of year                 3,600,092    $     3.68      876,627   $     2.83
                                        ==========    ==========   ==========   ==========
</TABLE>

     The number and weighted average exercise prices of all common shares and
common share equivalents issuable and stock purchase options and warrants
outstanding as of March 31, 2007 is as follows:

                                               WEIGHTED        WEIGHTED
       RANGE OF             REMAINING           AVERAGE         AVERAGE
       EXERCISE              NUMBER           CONTRACTUAL      EXERCISE
        PRICES             OUTSTANDING       LIFE (YEARS)        PRICE
   --------------------------------------------------------------------
    $0.00 to $1.00           1,112,963            8.3            $0.23
    $1.01 to $3.00              67,763            7.3             1.58
    $3.01 to $4.00           1,722,421            6.8             3.51
    $4.01 to $6.00           1,895,647            8.7             5.54
    $6.01 to $9.00             471,497            8.1             6.73
                        -----------------------------------------------

                             5,270,291            7.9            $3.81
                        ===============================================


                                       74

<PAGE>

     SHARE BASED COMPENSATION

     Share based compensation expense consists of the following components:

                                                 2007           2006
                                             ------------   ------------

        Cost of rentals                      $         45   $         41
        Research and development                  581,712        478,961
        Sales and marketing                       176,691        112,337
        General and administrative              1,384,000         65,509
                                             ------------   ------------

                                             $  2,142,448   $    656,848
                                             ============   ============

10.  COMMITMENTS AND CONTINGENCIES

     In January 2006, we entered into a Master Clinical Trial Agreement with the
Cleveland Clinic Florida to perform a clinical trial of our device for a new
use. The estimated cost of the clinical trial is $300,000. The Cleveland Clinic
Florida is a not-for-profit multi-specialty medical group practice.

     Our medical devices are sold under agreements providing for the repair or
replacement of any devices in need of repair, at our cost, for up to one year
from the date of delivery, unless such need was caused by misuse or abuse of the
device. Based on prior experience, at March 31, 2006 and 2005 no amounts have
been accrued for potential warranty costs and such costs are expected to be
nominal for the fiscal year ended March 31, 2007.

     CONSULTING AGREEMENTS

     We have entered into various consulting agreements in exchange for cash and
share based compensation. Certain of the agreements contain automatic renewal
provisions. Consulting expense totalled $1,509,493 and $1,427,844 for the years
ended March 31, 2007 and 2006, respectively.

11.  RETIREMENT PLAN

     We have a 401(k) profit-sharing plan that covers substantially all
employees. We will contribute up to 3% on each employee's salary at the end of
each fiscal year, beginning with fiscal 2008. Since the plan was adopted in
March 2007, we had no expense for the fiscal year ended March 31, 2007.

12.  LEGAL PROCEEDINGS

     On August 17, 2005, we filed a complaint against Conva-Aids, Inc. t/a New
York Home Health Care Equipment, or NYHHC, and Harry Ruddy in the Superior Court
of New Jersey, Law Division, Docket No. BER-L-5792-05, alleging breach of
contract with respect to a distributor agreement that we and NYHHC entered into
on or about August 1, 2004, pursuant to which: (i) we appointed NYHHC as
exclusive distributor of our products in a defined market place for so long as
NYHHC secured a minimum number of placements of our products and (ii) NYHHC
agreed to pay us $2,500 per month for each product shipped to NYHHC. By letter,
dated August 9, 2005, we terminated the agreement due to NYHHC's failure to make
the payments required under the agreement and failure to achieve the minimum
number of placements required under the agreement. We are seeking various forms
of relief, including: (i) money damages, including amounts due under unpaid
invoices in an aggregate amount of $236,560, (ii) an accounting and (iii) the


                                       75

<PAGE>

return of our products. The defendants filed a motion to dismiss, alleging lack
of jurisdiction and failure to state a claim with regard to Harry Ruddy. We
opposed the defendant's motion to dismiss. On November 18, 2005, the Court
denied the defendant's motion to dismiss, without prejudice, based upon lack of
jurisdiction. The complaint was dismissed against Harry Ruddy, individually The
Court permitted a period of discovery to determine the jurisdiction issue, which
discovery is substantially complete. The defendants filed another motion to
dismiss based upon a claim of lack of jurisdiction, which was heard and denied
by the Court on June 9, 2006. On or about July 10, 2006, the defendants filed an
answer, and NYHHC filed counterclaims against us for breach of contract, breach
of the implied covenant of good faith and fair dealing, restitution, unjust
enrichment and fraudulent inducement. An answer to the counterclaim was filed on
August 9, 2006. Discovery is now continuing on the merits of the claims in the
complaint and counterclaim.

     On October 10, 2006, we received a demand for arbitration by Stonefield
Josephson, Inc. with respect to a claim for fees for accounting services in the
amount of approximately $106,000, plus interest and attorney's fees. Stonefield
Josephson had previously invoiced Ivivi for fees for accounting services in an
amount that Ivivi has refuted. We responded to Stonefield Josephson's demand for
arbitration, which we believe was procedurally defective and premature due to
Stonefield Josephson's failure to participate in required mediation, and we
continue to defend against the claim vigorously, although provision has been
made for the amount of the claim in the financial statements. Moreover, we are
pursuing claims against Stonefield Josephson. On October 26, 2006, we sent a
letter requesting the required mediation before arbitration. On December 4,
2006, we received notification from the arbitration forum that the arbitration
was placed on hold until the mediation phase is completed.

     Other than the foregoing, we are not a party to, and none of our property
is the subject of, any pending legal proceedings other than routine litigation
that is incidental to our business.

13.  CONCENTRATIONS

     During the fiscal year ended March 31, 2007, three customers accounted for
80% of our sales revenue and two customers accounted for 44% of our rental
revenue. During the fiscal year ended March 31, 2006, one customer accounted for
11% of our revenue. At March 31, 2007, one customer accounted for 57% of our
accounts receivable. The loss of these major customers could have a material
adverse impact on our operations and cash flow.

14.  RELATED PARTY TRANSACTIONS

     As discussed in Note 3, we used approximately $77,000 and $19,000 of the
net proceeds from our IPO to pay Ajax Capital LLC and Kenneth S. Abramowitz Co.,
Inc., respectively, any and all interest with respect to the November 2005 and
March 2006 private placement notes.

     In connection with the IPO, we repaid approximately $2.6 million to ADM,
representing the balance in our inter-company accounts at October 24, 2006 due
to ADM from us for product manufacturing and allocations of support services
provided by ADM to us for the period from March 1989 to October 2006.

     In addition, we repaid our note payable to Ajax with a payment of $257,123,
which represented the outstanding principal and interest under the unsecured
subordinated loan. The note bore interest at an annual rate of 8%.


                                       76

<PAGE>

     As discussed in Note 7, on December 22, 2006, our Audit Committee approved
the termination of the Revenue Sharing Agreement with Ajax dated, August 28,
2006. In connection with the termination, Ajax transferred to us all of its
rights, title and interest in and to the units of the Roma3 and the SofPulse
M-10 purchased by Ajax on the date of the Revenue Sharing Agreement, and we paid
Ajax $296,136.

     Pursuant to a management services agreement, dated as of August 15, 2001,
ADM provides us with administrative, technical, engineering and regulatory
services and allocates portions of its real property facilities for use by us.
In addition, ADM serves as the exclusive manufacturer of medical and other
devices or products to be distributed by us.

     The amount included in cost of rental revenue on our Statements of
Operations relating to these services provided by ADM was $75,584 and $72,417
for the fiscal years ended March 31, 2007 and 2006.

     The amount included in general and administrative expense representing
ADM's allocations for the fiscal year ended March 31, 2007 and 2006, was
$242,595 and $226,807, respectively, consisting of amounts payable under our
management services agreement with ADM.

     During the twelve month period ended March 31, 2007, we purchased $59,789
of finished goods from ADM at contracted rates.

     Our activity in affiliates is summarized as follows:

      Fiscal years ended March 31,               2007            2006
      -----------------------------------    ------------    ------------

      Balance, beginning of year             $  2,602,695    $  2,532,488

      Advances                                     12,218            (785)
      Purchases                                    59,789               -
      Charges                                     318,179         299,224
      Payments                                 (2,956,224)       (228,232)

                                             ------------    ------------
      Balance, end of year                   $     36,657    $  2,602,695
                                             ============    ============

15.  SUBSEQUENT EVENTS

     We are planning to move our headquarters to Montvale, New Jersey on or
about October 1, 2007. In June 2007, we entered into a lease pursuant to which,
subject to the satisfaction of certain conditions, including the receipt of
certain permits from local authorities, we will rent approximately 7,494 square
feet of office space located in Montvale, New Jersey. If such conditions are
satisfied, the term of the lease will begin on or about October 1, 2007 and
expire on or about November 1, 2014, subject to our option to renew the lease
for an additional five year period on terms and conditions set forth therein.
Pursuant to the lease, we will be required to pay rent in the amount of
$14,051.25 per month during the first two years of the term, with the exception
of month 13 at no cost, and $15,612.50 per month thereafter. Although we
currently are unable to estimate the cost of moving into this new office space,
we do not anticipate such costs being material to our results of operations.
Following our move, we intend to retain certain of our current office and
laboratory space. This lease will require us to add additional limits to our
currently outstanding liability insurance.


                                       77

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     On March 8, 2006, we appointed Raich Ende Malter & Co. LLP as our
independent registered public accounting firm to replace Stonefield Josephson,
Inc. following our dismissal of Stonefield Josephson on March 7, 2006. This
action was ratified by our board of directors on March 24, 2006. We appointed
Stonefield Josephson as our independent registered public accounting firm on
July 1, 2005. Stonefield Josephson did not issue any reports on our financial
statements as of any date or for any period.

     During the period from July 1, 2005 through March 8, 2006, we had no
disagreements with Stonefield Josephson on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Stonefield Josephson
would have caused it to make reference to the subject matter of the
disagreements in its report, except for the following matter. During the fiscal
years ended March 31, 2005 and March 31, 2004, we had initially improperly
accounted for certain stock-based compensation costs having to do with improper
classification of certain persons between consultants and employees and also
initially not properly accounting for the effect of changes in status of
optionees whose status changed from consultant to employee. After discussions
with Stonefield Josephson, we agreed to change the accounting treatment related
to these matters and have revised our financial statements as of March 31, 2005
and for the year then ended.

     In a March 28, 2006 correspondence, and in oral discussions on or around
that date, Stonefield Josephson noted that as of March 31, 2005 and March 31,
2004 and during the years then ended, certain errors and omissions contained in
our financial statements were discovered which constituted deficiencies in our
internal control over financial reporting. Stonefield Josephson also advised us
of its view regarding areas deficiencies in our internal control over financial
reporting. The deficiencies were: (i) lack of staff with technical accounting
expertise to independently apply our accounting policies in accordance with
accounting principles generally accepted in the United States, (ii) improper cut
off procedures for the periods presented and (iii) lack of adequate back-up and
documentation procedures with respect to our inventory prior to March 31, 2005
and with respect to stock options previously granted by us. Our management has
determined that, due to the reasons described above, we had not consistently
followed established internal control over financial reporting procedures
related to the analysis, documentation and review of selection of the
appropriate accounting treatment for certain transactions.

     The financial statements as of March 31, 2005 and for the year then ended
reflect all necessary adjustments, including those described above. The net
effect of these changes on our statements of operations for the fiscal year
ended March 31, 2005 was an increase of net loss for such year of $184,781.

     We have assigned the highest priority to the improvement in our internal
control over financial reporting and have taken, and will continue to take,
action in furtherance of such improvement. Our management is committed to
implementing strong control policies and procedures and ensuring that our
financial reporting is accurate and complete. We have undertaken the following
initiatives with respect to our internal control and procedures that we believe
are reasonably likely to improve our internal control over financial reporting:
(i) we hired a certified public accountant with prior public company experience
to serve as our Corporate Controller; (ii) we hired Alan V. Gallantar, a
certified public accountant with prior public company experience, to begin to
serve as our Chief Financial Officer in connection with our IPO in October 2006;
(iii) in July 2005, we retained a certified public accountant as a consultant to
assist with our financial reporting obligations and improvement of our internal
controls over financial reporting and retained the services of this certified
public accountant until Mr. Gallantar commenced his service as our Chief
Financial Officer; and (iv) since August 2005, we have utilized a certified
public accountant as a consultant to assist management with internal control,
financial reporting and closing our books and records.


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<PAGE>

     We anticipate that remediation efforts relating to our internal financial
controls will continue throughout fiscal 2008, during such time we expect to
continue pursuing, with the advice and experience of our independent auditors,
appropriate additional corrective actions, including the following:

     o    hiring additional accounting staff as necessary, as determined from
          time to time by management;

     o    preparing appropriate written documentation of financial control
          procedures;

     o    scheduling training for accounting staff to heighten awareness of
          generally accepted accounting principles applicable to complex
          transactions; and

     o    strengthening our internal review procedures in conjunction with our
          ongoing work to enhance our internal controls so as to enable us to
          identify and adjust items proactively.

Our management, including our Chief Financial Officer, together with our Audit
Committee, will closely monitor the implementation of our accounting remediation
plan. The effectiveness of the steps we intend to implement is subject to
continued management review, and we may make additional changes to our internal
control over financial reporting.

     There can be no assurance that the above-mentioned areas will be fully
remedied, if ever. Moreover, we cannot assure you that we will not, in the
future, identify further areas requiring improvement in our internal control
over financial reporting. We presently anticipate that the need for improvement
in these areas will continue to exist until we have fully implemented our
remediation plan. Except as set forth above, there have been no changes in our
internal controls over financial reporting that occurred during our last fiscal
quarter to which this Annual Report on Form 10-KSB relates that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.


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<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     We maintain disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to
ensure that information required to be disclosed in our Exchange Act reports are
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to management, including our
Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Due to the inherent
limitations of control systems, not all misstatements may be detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons; by collusion of two or more people, or by management override of the
control. Our controls and procedures can only provide reasonable, not absolute,
assurance that the above objectives have been met.

     As of the end of March 31, 2007, we carried out an evaluation, with the
participation of our management, including our Co-Chief Executive Officers and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation as
of March 31, 2007, our Co-Chief Executive Officers and Chief Financial Officer
concluded that our disclosure controls and procedures are effective to
reasonably ensure that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is accumulated and communicated to
our management including our Co-Chief Executive Officers and Chief Financial
Officer, to ensure that such information is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     This Annual Report on Form 10-KSB does not include a report of management's
assessment regarding internal control over financial reporting or an attestation
of our registered public accounting firm due to the transition period
established by the rules of the Securities and Exchange Commission for newly
public companies.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     In March 2006, our former auditors identified the following areas of
deficiencies in our internal control over financial reporting in connection with
our financial statements as of March 31, 2005 and for the year then ended: (i)
lack of staff with technical accounting expertise to independently apply our
accounting policies in accordance with accounting principles generally accepted
in the United States, (ii) improper cut off procedures for the periods presented
and (iii) lack of adequate back-up and documentation procedures with respect to
our inventory prior to March 31, 2005 and with respect to stock options
previously granted by us. Our management has determined that, due to the reasons
described above, we had not consistently followed established internal control
over financial reporting procedures related to the analysis, documentation and
review of selection of the appropriate accounting treatment for certain
transactions.

     We have assigned the highest priority to the improvement in our internal
control over financial reporting and have taken, and will continue to take,
action in furtherance of such improvement. Our management is committed to
implementing strong control policies and procedures and ensuring that our
financial reporting is accurate and complete. We have undertaken the following
initiatives with respect to our internal control and procedures that we believe


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<PAGE>

are reasonably likely to improve our internal control over financial reporting:
(i) we hired a certified public accountant with prior public company experience
to begin to serve as our Corporate Controller; (ii) we hired Alan V. Gallantar,
a certified public accountant with prior public company experience, to begin to
serve as our Chief Financial Officer in connection with our IPO in October 2006;
(iii) in July 2005, we retained a certified public accountant as a consultant to
assist with our financial reporting obligations and improvement of our internal
controls over financial reporting and retained the services of this certified
public accountant until Mr. Gallantar commenced his service as our Chief
Financial Officer; and (iv) since August 2005, we have utilized a certified
public accountant as a consultant to assist management with internal control,
financial reporting and closing our books and records.

     We anticipate that remediation efforts relating to our internal financial
controls will continue throughout fiscal 2008, during such time we expect to
continue pursuing, with the advice and experience of our independent auditors,
appropriate additional corrective actions, including the following:

     o    hiring additional accounting staff as necessary, as determined from
          time to time by management;

     o    preparing appropriate written documentation of financial control
          procedures;

     o    scheduling training for accounting staff to heighten awareness of
          generally accepted accounting principles applicable to complex
          transactions; and

     o    strengthening our internal review procedures in conjunction with our
          ongoing work to enhance our internal controls so as to enable us to
          identify and adjust items proactively.

Our management, including our Chief Financial Officer, together with our Audit
Committee, will closely monitor the implementation of our accounting remediation
plan. The effectiveness of the steps we intend to implement is subject to
continued management review, and we may make additional changes to our internal
control over financial reporting.

     There can be no assurance that the above-mentioned areas will be fully
remedied, if ever. Moreover, we cannot assure you that we will not, in the
future, identify further areas requiring improvement in our internal control
over financial reporting. We presently anticipate that the need for improvement
in these areas will continue to exist until we have fully implemented our
remediation plan. Except as set forth above, there have been no changes in our
internal controls over financial reporting that occurred during our last fiscal
quarter to which this Annual Report on Form 10-KSB relates that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

ITEM 8B. OTHER INFORMATION

None.


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<PAGE>

                                    PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
        GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

                                    DIRECTORS

     Set forth below are the names, ages and titles of all of our directors as
of June 19, 2007, and the years in which such directors became directors. All
directors hold office until the next annual meeting of shareholders or until
their respective successors are elected and qualified.

<TABLE>
NAME                                   AGE     TITLE                                DIRECTOR SINCE
<S>                                    <C>     <C>                                       <C>
Steven M. Gluckstern                   56      Chairman of the Board and Director        2006
Andre' A. DiMino                       51      Vice Chairman of the Board,               2004
                                               Co-Chief Executive Officer and
                                               Director
David Saloff                           54      President, Co-Chief Executive             2004
                                               Officer and Director
Kenneth S. Abramowitz (1)(2)(4)        56      Director                                  2006
Louis J. Ignarro, Ph.D. (3)(4)         66      Director                                  2006
Pamela J. Newman, Ph.D. (1)(2)(3)(4)   59      Director                                  2006
Jeffrey A. Tischler (1)(2)(3)(4)       51      Director                                  2006
</TABLE>

--------------------------------------
(1)  Member of the Compensation Committee
(2)  Member of the Audit Committee
(3)  Member of the Nominating Committee
(4)  This director is an independent director as defined under the American
     Stock Exchange listing standards.

     The biographies of each of our directors are set forth below.

     STEVEN M. GLUCKSTERN began to serve as our Chairman of the Board and a
director in October 2006. Mr. Gluckstern is an active private investor within
numerous areas including alternative healthcare and non-traditional healing
modalities. From March 2002 until February 2005, Mr. Gluckstern served as CEO of
Azimuth Trust Company, LLC, a specialized alternative asset management firm,
which he co-founded, offering asset allocation, portfolio construction, manager
selection and comprehensive risk management. From 1988 to 1998 and then from
2001 to 2002, Mr. Gluckstern held a range of entrepreneurial, executive and
financial positions within Zurich Financial Services including: Member of the
Executive Committee of its Group Management Board; CEO of Zurich Global Assets;
CEO of the then NYSE-traded Zurich Re (now Converium Holdings); and Chairman of
both Zurich Capital Markets (hedge funds and specialty finance) and Zurich
Scudder Investments (mutual funds). In 1998, Mr. Gluckstern co-founded Capital Z
Partners, an alternative asset management firm that managed over $4 billion in
two global funds. In 1988, Mr. Gluckstern and a partner co-founded Centre
Reinsurance, the first specialty financial reinsurer which was subsequently
acquired by the Zurich Group in 1993. Mr. Gluckstern served as general manager
of a unit of the Berkshire Hathaway Insurance Group from December 1985 to
December 1986. Prior to this, Mr. Gluckstern served as CFO of Healthco Inc., the
then largest distributor of dental products in the world and as an investment
banker at Lehman Brothers Kuhn Loeb. An Arjay Miller Scholar and 1982 M.B.A.
graduate of the Stanford Graduate School of Business, Mr. Gluckstern also holds
degrees from the University of Massachusetts at Amherst and Amherst College,
where he currently serves as a member of its Board of Trustees.


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<PAGE>

     ANDRE' A. DIMINO has served as our Vice Chairman of the Board and Co-Chief
Executive Officer since October 2006 and as a director since January 2004. From
January 2004 until October 2006, Mr. DiMino served as our Chairman of the Board
and our Chief Financial Officer. Mr. DiMino served as our President from 1989
until December 2003. Mr. DiMino also serves as the President and Chief Financial
Officer of ADM Unlimited, Inc., a publicly traded technology-based developer and
manufacturer of a diversified line of products and our largest shareholder,
positions he has held since December 2001 after the passing of his father, Dr.
Alfonso DiMino - the founder of ADM. Mr. DiMino served as the Chief Operating
Officer and Chief Financial Officer of ADM from July 1991 to December 2001, and
served as the Technical Director of ADM from January 1982 to June 1991. In
addition to his finance and operating responsibilities, Mr. DiMino has been
involved in research and product development for us and ADM. He holds several
patents which have been assigned to us or ADM and has been responsible for the
commercialization of medical device products and for regulatory aspects related
to our business and the business of ADM. Mr. DiMino holds a Bachelor of Science
degree in engineering and an MBA in Finance both from Fairleigh Dickinson
University.

     DAVID SALOFF has served as our Co-Chief Executive Officer since October
2006 and as our President and a director since July 2004. Mr. Saloff served as
our Chief Executive Officer from July 2004 until he resigned from such position
and began to serve as Co-Chief Executive Officer. Mr. Saloff has also served as
a director of ADM since December 2001. From September 2003 to December 2003, Mr.
Saloff was the President of Palisades Partners, a management consulting company.
>From November 1999 to September 2003, Mr. Saloff was the President of LifeWaves
International, a health and wellness start-up company. In 1992, Mr. Saloff
founded Electropharmacology, Inc., and was responsible for the design,
development and subsequent FDA clearance of the original device (the MRT) for
the adjunctive use in the palliative treatment of post-operative pain and edema
in superficial tissue. Prior to starting EPI, Mr. Saloff served as a consultant
for DH Blair, Inc. in connection with the start up of Xsirius, Inc., a publicly
traded research and development company involved in researching and developing
advanced detection systems. In 1991, Mr. Saloff became the Chief Operating
Officer of Xsirius, and Executive Vice President and Director of Advanced
Photonix, Inc. (API), which was involved in the design and development of
advanced solid state light detection systems as well as the production and
marketing of conventional solid state detection components and a subsidiary of
Xsirius which commenced trading on the Nasdaq Capital Market (formerly known as
the Nasdaq SmallCap Market) in 1992. In 1982, Mr. Saloff joined Akros
Manufacturing as President and co-owner, a medical device company, which was
sold to Lumex (Cybex) Corp. in 1986. Mr. Saloff earned his Bachelor of Science
degree in business from Adelphi University.

     KENNETH S. ABRAMOWITZ began to serve as a director of our company in
October 2006. Mr. Abramowitz is a Managing General Partner and a co-founder of
NGN Capital, a $250 million worldwide healthcare venture capital fund. In 2003,
he joined NGN from The Carlyle Group in New York where he was Managing Director
from 2001 to 2003, focusing on U.S. buyout opportunities in the healthcare
industry. In July 2003, he transitioned to Senior Advisor at The Carlyle Group
in order to devote the time necessary to create a dedicated healthcare fund on
behalf of The Carlyle Group. Prior to joining The Carlyle Group, Mr. Abramowitz
worked as an Analyst at Sanford C. Bernstein & Co., where he covered the
medical-supply, hospital-management and HMO industries for 23 years, after which
he was an EGS Securities Healthcare Fund Manager. Mr. Abramowitz has published
several notable studies on healthcare service companies, major medical mergers
and cardiovascular device innovation. Mr. Abramowitz currently sits on the Board
of Directors EKOS Corp., OptiScan Biomedical Corp., Power Medical Inventions,
Inc. and Small Bone Innovations LLC, each a privately held medical device
company, and Option Care, Inc., a provider of home infusion pharmacy services
and specialty pharmacy services that files reports pursuant to the Securities
Exchange Act of 1934. Mr. Abramowitz received a B.A. from Columbia University in
1972 and an M.B.A. from Harvard Business School in 1976.


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<PAGE>

     LOUIS J. IGNARRO, PH.D., began to serve as a director of our company in
October 2006. Dr. Ignarro has been a Professor of Pharmacology at the UCLA
School of Medicine since 1985. His current endowed position is the Jerome J.
Belzer, MD, Distinguished Professor of Pharmacology. Dr. Ignarro's first
research position after training was with the CIBA-Geigy Pharmaceutical Company
and in 1973 took on his first academic position at Tulane Medical Center in the
Department of Pharmacology. Dr. Ignarro has received many awards, including: The
Basic Research Prize of the American Heart Association, Election into the
National Academy of Sciences, Election into the Academy of Arts and Sciences,
and the 1998 Nobel Prize in Physiology and Medicine. Dr. Ignarro received his
Bachelor of Science degree in Pharmacy/Chemistry from Columbia University in
1962, and a Doctorate degree in Pharmacology/Physiology from the University of
Minnesota in 1966. Dr. Ignarro did a postdoctoral fellowship at the N.I.H. in
the Laboratory of Chemical Pharmacology from 1966 to 1968.

     PAMELA J. NEWMAN, PH.D. began to serve as a director of our company in
October 2006. Since 1979, Dr. Newman has served as an international insurance
broker, specializing in Fortune 500 clients worldwide, for AON Corporation, a
world leader in integrated risk management, insurance and reinsurance brokerage.
Before joining AON, Dr. Newman worked for Marsh & McLennan for 12 years and
before that she worked for Peat, Marwick, Mitchell & Co. Dr. Newman also serves
on the Board of Directors of each of RKO Pictures, an entertainment provider,
and Interactive Metronome, Inc., on the Medical Center Advisory Board of the New
York Hospital-Cornell Medical Center and on the Board of the McGowan Transplant
Center, the Brain Trauma Foundation and American ORT. Dr. Newman also serves on
the Board of Trustees of The American University of Paris, the Corporate Board
of Carnegie Hall and the Associate Committee of The Julliard School and is a
Fellow of the Foreign Policy Association. Dr. Newman earned her Bachelor of Arts
degree in English her Masters degree in English and her Doctorate degree in
Communications from the University of Michigan.

     JEFFREY A. TISCHLER began to serve as a director of our company in October
2006. Since May 2005, Mr. Tischler has served as the Chief Financial Officer of
Acies Corporation, a provider of electronic payment processing solutions and a
corporation which files reports pursuant to the Securities Exchange Act of 1934,
and since May 2006 has also served as Executive Vice President, Treasurer and a
director of Acies Corporation. From 2000 to 2005, Mr. Tischler served as Vice
President of Asta Funding, Inc., a consumer receivables asset management
company, where his responsibilities included involvement in operational and
financial functions ranging from strategic planning to strengthening the
company's infrastructure. From 1993 to 2000, Mr. Tischler served as Executive
Vice President and Chief Financial Officer of LandAmerica Financial Group, Inc.,
including serving as Executive Vice President and Chief Financial and
Administrative Officer of LandAmerica's acquired predecessors, Commonwealth Land
Title Insurance Company and Transnation Title Insurance Company. From 1980 to
1993, Mr. Tischler was with Reliance Group Holdings, Inc., where he held the
position of Vice President of Financial Planning and Analysis. A certified
public accountant, Mr. Tischler was a senior accountant with KPMG Peat Marwick
from 1978 to 1980. Mr. Tischler received an M.B.A. degree in Finance and
Accounting from the University of Rochester's Simon School of Business in 1978,
and a B.A. in Economics from the University of Rochester in 1977.

     There are no family relationships between any of our executive officers or
directors.


COMMITTEES OF THE BOARD OF DIRECTORS

     The standing committees of our Board of Directors include an Audit
Committee, a Compensation Committee and a Nominating and Corporate Governance
Committee.

     AUDIT COMMITTEE. The Audit Committee, which is a separately designated
standing audit committee established in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), oversees
and monitors our financial reporting process and internal control system,


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<PAGE>

reviews and evaluates the audit performed by our outside auditors and reports to
our Board of Directors any substantive issues found during the audit. The Audit
Committee is directly responsible for the appointment, compensation and
oversight of the work of our independent auditors. The Audit Committee also
reviews and approves all transactions with affiliated parties. All members of
the Audit Committee are independent directors as defined under the American
Stock Exchange listing standards. Each of Kenneth Abramowitz, Pamela Newman and
Jeffrey Tischler began to serve as members of the Audit Committee and Jeffrey
Tischler began to serve as the Chairman of the Audit Committee and our "audit
committee financial expert," as such term is defined by the Securities and
Exchange Commission, on October 18, 2006.

     COMPENSATION COMMITTEE. The Compensation Committee provides advice and
recommendations to the Board of Directors in the areas of employee salaries and
benefit programs. The Compensation Committee also reviews the compensation of
our President and our Co-Chief Executive Officers and makes recommendations in
that regard to the Board of Directors as a whole. All members of the
Compensation Committee are independent directors as defined under the American
Stock Exchange listing standards. Each of Kenneth S. Abramowitz, Pamela J.
Newman, and Jeffrey A. Tischler began to serve as a member of the Compensation
Committee on October 18, 2006.

     NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and Corporate
Governance Committee meets to recommend the nomination of directors to the full
Board of Directors to fill the terms for the upcoming year or to fill vacancies
during a term. All members of the Nominating and Corporate Governance Committee
are independent directors as defined under the American Stock Exchange listing
standards. Each of Pamela Newman, Louis Ignarro and Jeffrey Tischler began to
serve as a member of the Nominating and Corporate Governance Committee on
October 18, 2006.

     The Nominating and Corporate Governance Committee will consider
recommendations for nominations from shareholders if submitted in a timely
manner in accordance with the procedures established in our bylaws and will
apply the same criteria to all persons being considered. Nominations must be
delivered to our Secretary at our principal executive offices not later than the
close of business on the ninetieth (90th) day nor earlier than the close of
business on the one hundred twentieth (120th) day prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced more than thirty (30) days prior
to or delayed by more than thirty (30) days after the anniversary of the
preceding year's annual meeting, notice by the shareholder to be timely must be
so delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving of
a shareholder's notice as described above. The nomination notice must set forth
as to each person whom the proponent proposes to nominate for election as a
director: (a) all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected) and (b) as
to the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (1) the name and address of such
shareholder, as they appear on our books, and the name and address of such
beneficial owner, (2) the class and number of shares of common stock which are
owned beneficially and of record by such shareholder and such beneficial owner
and (3) whether either such shareholder or beneficial owner intends to deliver a
proxy statement and form of proxy to holders of a sufficient number of holders
of our voting shares to elect such nominee or nominees.


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<PAGE>

BOARD OBSERVER

     We have agreed, for a period of at least three years following the
consummation of our initial public offering, to engage a designee of Maxim Group
LLC, one of the lead managing underwriters of our initial public offering, as an
observer to our Board of Directors, where the observer shall attend meetings of
our Board of Directors and receive all notices and other correspondence and
communications sent by us to members of our Board of Directors. In addition, the
observer is entitled to reimbursement for all costs incurred by it in attending
any meetings of our Board of Directors.

CODE OF ETHICS

     We have a code of ethics that applies to our Co-Chief Executive Officers,
Chief Financial Officer and Controller and other persons who perform similar
functions. A copy of our code of ethics can be found on our website at
www.ivivitechnologies.com. Our code of ethics is intended to be a codification
of the business and ethical principles that guide it, and to deter wrongdoing,
to promote honest and ethical conduct, to avoid conflicts of interest, and to
foster full, fair, accurate, timely and understandable disclosures, compliance
with applicable governmental laws, rules and regulations, the prompt internal
reporting of violations and accountability for adherence to this code.

                               EXECUTIVE OFFICERS

     Set forth below are the names, ages and titles of all of our executive
officers as of June 19, 2007, and the years in which such executive officers
became our executive officers. All executive officers serve at the discretion of
the Board of Directors with no fixed term.

                                                                     EXECUTIVE
NAME                    AGE    TITLE                               OFFICER SINCE
Andre' A. DiMino        51     Vice Chairman of the Board and          2004
                               Co-Chief Executive Officer
David Saloff            54     Co-Chief Executive Officer and          2004
                               President
Alan V. Gallantar       49     Chief Financial Officer                 2006
Edward J. Hammel        57     Executive Vice President                2004


     ANDRE' A. DIMINO, our Vice Chairman of the Board, has served as our
Co-Chief Executive Officer since October 2006. From July 2004 until October
2006, Mr. DiMino served as our Chief Financial Officer. See Mr. DiMino's
biographical information above.

     DAVID SALOFF, one of our directors, has served as our Co-Chief Executive
Officer since October 2006 and as our President since July 2004. From July 2004
until October 2006, Mr. Saloff served as our Chief Executive Officer. See Mr.
Saloff's biographical information above.

     ALAN V. GALLANTAR, CPA, began to serve as our Chief Financial Officer in
October 2006. From April 2004 until October 2006, Mr. Gallantar served as an
executive consultant to a variety of clients, providing management consulting
and chief financial officer services. From October 1999 until April 2004, Mr.
Gallantar served as Chief Financial Officer of Advanced Viral Research Corp, a
publicly traded corporation. Mr. Gallantar served as Treasurer and Controller of
AMBI, Inc. (currently Nutrition 21, Inc.), a nutraceutical company, from 1998 to
1999, and as Senior Vice President and Chief Financial Officer of Bradley
Pharmaceuticals, Inc., a pharmaceutical manufacturer, from 1992 to 1997. Mr.
Gallantar also served in senior financial positions at PaineWebber Incorporated
(currently UBS Paine Webber, Inc.), Chase Bank (currently JPMorgan Chase),
Phillip Morris, Inc. (currently Altria Group) and Deloitte & Touch LLP. Mr.
Gallantar is a Certified Public Accountant and received a B.A. in accounting
from Queens College in 1979.


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<PAGE>

     EDWARD J. HAMMEL has served as our Executive Vice President since July
2004. From September 2003 to June 2004, Mr. Hammel was a partner in Palisades
Partners, a management consulting company. From March 2001 until September 2003,
Mr. Hammel served as the Chief Financial Officer of LifeWaves International, a
health and wellness start-up company. From 1999 to 2001, Mr. Hammel was the
managing director and founder of Hillcrest Consulting Services, Inc., a
healthcare consulting company. From 1997 to 1999, Mr. Hammel served as Senior
Vice President and Chief Financial Officer of WellMed Medical Management, a
physician practice management company. From 1993 to 1997, he served as Senior
Vice President and Chief Financial Officer of Riscorp, Inc., a worker's
compensation insurance company. From 1978 to 1993, he was employed by Reliance
Group Holdings, a diversified financial holding company eventually serving as
Vice President. Mr. Hammel received a B.A. from the University of Denver in 1972
and a Masters Degree in Management from Northwestern University in 1977.

KEY EMPLOYEES AND CONSULTANTS

Set forth below is information concerning our key employees and consultants.

NAME                                       AGE             POSITION
Arthur A. Pilla, Ph. D.                    71              Science Director
Berish Strauch, M.D.                       72              Consultant
Sean D. Hagberg, Ph. D.                    48              Chief Science Officer

     ARTHUR A. PILLA, PH. D. has served as our Science Director and Chairman of
our Scientific Advisory Board since April 2004. Dr. Pilla is a Professor in the
Department of Biomedical Engineering, Columbia University, NY and Professor
Emeritus of Orthopedic Research in the Department of Orthopedics at Mount Sinai
School of Medicine, NY. Dr. Pilla offered the first graduate course in
Bioelectromagnetics at Columbia University in 1973, currently still being
offered in the Department of Biomedical Engineering. Dr Pilla has published
nearly 200 peer-reviewed studies in Bioelectromagnetics. His early research led
to the invention of specially configured electromagnetic fields for clinical use
on recalcitrant bone fractures. Dr. Pilla is the inventor of the first
bone-growth electromagnetic stimulator device cleared by the FDA and the
cofounder of Electrobiology, Inc. (EBI), now part of Biomet, an orthopedic
device manufacturer. His patents with EBI were seminal, leading to devices
commercially available for clinical use. Dr. Pilla continues to make progress in
the understanding of the basic biophysical mechanisms involved in the bioeffects
of electromagnetic signals. Dr. Pilla received his PhD, cum laude, from the
University of Paris, France in 1965 and commenced studies of the bioeffects of
weak magnetic and electric fields in 1969.

     DR. BERISH STRAUCH has served as Chairman of our Medical Advisory Board
since August 2004 and directs the "Center for Excellence in Bioelectromagnetic
Studies" we established at Montefiore Medical Center. Dr. Strauch is an
internationally known plastic surgeon, board certified in general surgery,
plastic and reconstructive surgery and hand surgery. Dr. Strauch has conducted
extensive clinical research using our technology and is the author of the 2000
study demonstrating the angiogenic properties of the technology. He has served
as the Chairman of the Department of Plastic Surgery at Montefiore Medical
Center and is a founder and first president of the American Society of
Reconstructive Microsurgery, and has been an officer and committee member in
numerous regional, national, and international professional organizations. Dr.
Strauch is the senior editor of the three-volume Encyclopedia of Flaps, the
senior author of the Atlas of Microsurgical Flaps, and co-author of the Atlas of
Hand Anatomy and is also the founder and ongoing Editor-in-Chief of the Journal
of Reconstructive Microsurgery. He received his medical degree form Columbia
University in 1959, completed a general surgery residency at Montefiore Medical
Center from 1960 to 1964, had a surgery fellowship at Roosevelt Hospital in 1961
and had a plastic and reconstruction surgery fellowship at Stanford University
Hospital from 1966 to 1968.


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<PAGE>

     SEAN D. HAGBERG, PH. D. has served as our Chief Science Officer since July
2004. Prior to joining Ivivi, Dr. Hagberg served as the Chief Knowledge Officer
for LifeWaves International, a health and wellness startup company, from 2000 to
2004, where he oversaw knowledge based development, multiple clinical trials,
raising investment capital, hardware and software development, technical and
marketing writing, and FDA/FTC compliance. Prior to joining LifeWaves, Dr.
Hagberg was a post-doctoral fellow in community medicine at Brown University
medical school (1998-2000), served as technical analyst on the Rhode Island
state-wide TOPPS II behavioral health program (1998-2000), as well as a
consultant with the Decision Science Institute (1999-2001), and a principal in
Brewer's Heaven, a start-up brewing concern (1999-2004). From 1997-1998 Dr.
Hagberg served as associate administrator for Good Hope Hospital (owned by
publicly traded Pioneer HealthCare), where he was responsible for building a
successful adolescent behavior health program, outside marketing and contract
management to private payors, including unions and other organizations. Dr.
Hagberg has been responsible for building behavioral health triage systems for
Managed Behavioral Healthcare Organizations and written and testified on
significant healthcare legislation at the state level and co-authored
Congressional reports on behavioral healthcare. Dr. Hagberg has co-authored NIH,
SAMSHA and foundation grants and protocols. Dr. Hagberg received his Ph.D. in
cultural anthropology from SUNY-Buffalo, where he was a Fellow in cognitive
science. Dr. Hagberg completed a two-year NIH-funded post-doctoral training at
the Brown University Department of Community Medicine, 1998-2000 and on was on
the medical faculty from 1998-2004.

MEDICAL ADVISORY BOARD

     We have established a panel of eight medical advisors to assist management
in its efforts with respect to clinical applications of our products. The
medical advisors are set forth below:

     BARRY E. DIBERNARDO, M.D., FACS, is a board certified plastic surgeon with
a diversified private surgical practice in Montclair, New Jersey. He is a
Clinical Associate Professor in the Department of Surgery University of Medicine
and Dentistry of New Jersey. He received his M.D. from Cornell University
Medical College, New York in 1984 with general surgical training at Mt. Sinai
Medical Center, Miami Beach, Florida from 1984 to 1989 and plastic surgical
training at Montefiore Medical Center - Albert Einstein College, Bronx, NY from
1989 to 1991. He is a member of the American Society of Plastic Surgeons.

     MEG JORDAN, PHD, RN, is a medical anthropologist, an international health
journalist, editor and founder of American Fitness Magazine, and a radio/TV
personality known as the Global Medicine Hunter(TM). Her syndicated columns,
television reports, and special media projects cover health, wellness,
integrative medicine, indigenous healing traditions and cultural trends. Dr.
Jordan is the CEO of Global Medicine Enterprises, Inc., a health communications
and research firm, which provide groundbreaking reports to television,
newspapers and magazines. Her syndicated columns on health and wellness are
distributed to over major newspapers and magazines worldwide. Dr. Jordan is a
national keynote speaker, author of five books, editor of American Fitness
magazine, and health talk radio host on Sirius Satellite and Health Radio
Networks. She has served on numerous advisory boards, including the National
Wellness Institute, California Association of Naturopathic Physicians, the
California Institute of Integral Studies, Health Medicine Institute, and
ValleyCare Health System. Dr. Jordan currently teaches holistic health at San
Francisco State University.

     RICHARD LINCHITZ, MD, received his medical education at both the University
of Lusanne, Switzerland, and Cornell University, where he received his M.D. in
1973. Dr. Linchitz is certified by the American Board of Psychiatry and
Neurology, Pain Medicine and Medical Acupuncture. For many years, Dr. Linchitz
served as medical director of his own pain clinic in New York, was a regular
speaker and media expert on the topic of chronic pain and served on numerous
committees for the American Academy of Pain Medicine, where he served on the


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Board of Directors from 1995 to 1998. Dr. Linchitz has significant experience in
the clinical practice of pain medicine, was active in establishing the field as
a specialty and has been involved in the development of the field for over 20
years. In addition to his expertise in pain medicine, Dr. Linchitz has been
studying alternative and complementary forms of therapy, and is writing a book
on this topic.

     DR. COURTNEY H. LYDER, ND, GNP, FAAN, is Professor of Nursing, Internal
Medicine & Geriatrics and holds the first University of Virginia Medical Center
Professorship in Nursing. He is currently Chairman, Department of Acute and
Specialty Care at the University of Virginia. Dr. Lyder has received as a
Principal Investigator or Co-Investigator nearly $7 million in research and
training grants, published 2 books, 50 journal articles and book chapters. Dr.
Lyder is a Past President of the National Pressure Ulcer Advisory Panel. He is
also a senior consultant to the U.S. Department of Health and Human Services
Centers for Medicare and Medicaid Services where he has influenced the
development of wound care regulations.

     DR. LEONARD MAKOWKA, M.D., PH.D., FRCS(C), FACS, has served as a consultant
to us since February 2004. Dr. Makowka received his M.D. degree from the
University of Toronto Medical School in 1977, and Ph.D. from the University of
Toronto's Department of Pathology in 1982. He has published over 400 articles
and chapters in both clinical and basic scientific research and has lectured
worldwide. Dr. Makowka is a distinguished clinical and transplantation surgeon
and medical researcher. Between 1989 and 1995, Dr. Makowka was the Chairman of
the Department of Surgery and Director of Transplantation Services at
Cedars-Sinai Medical Center in Los Angeles, California. He was also Professor of
Surgery at the UCLA School of Medicine. Dr. Makowka has retired from the active
practice of medicine to pursue investment strategies and business development in
healthcare, life sciences, finance and other industry sectors. Dr. Makowka was a
Founding Partner in the syndicated radio company After MidNite Entertainment,
Inc., which was purchased by Premiere Radio Networks in 1997 and now resides
within the Clear Channel portfolio of companies. He was a shareholder in Metro
Capital, Inc., a Canadian based company with significant real estate holdings in
the Toronto area. Dr. Makowka was a Managing Director of Innovative Technology
Partners LLC, a late stage technology venture fund. In 1999, Dr. Makowka founded
Drive Thru Technology, a national provider of wireless and surveillance
equipment for the restaurant and hospitality industries. He is currently a
Managing Director of ITF Global Partners, an international financial advisory,
strategic and a capital investment company. Dr. Makowka is actively involved as
an advisor to or member of the Board of Directors of several companies. He has
been a Corporate Member of Blue Shield of California since 1995. He served from
1998 until June 2003, on the Board of Directors of Hollis Eden Pharmaceuticals
(NASDAQ: HEPH). He is a member of the Board of Directors of Kinemed, Inc., a
biotech company. He is the Chief Scientific Advisor for Universal Detection
Systems, a publicly traded company developing environmental monitoring
technologies for bio-terrorism. Most recently, Dr. Makowka is a member of the
Advisory Board for the UCLA School of Public Affairs.

     G. PATRICK MAXWELL, M.D., is a plastic surgeon and an assistant clinical
professor of surgery at Vanderbilt University. Dr. Maxwell received his M.D.
from Vanderbilt University, and subsequently trained in general and then plastic
surgery at the Johns Hopkins Medical Center in Baltimore, MD. He completed a
fellowship in microsurgery at the University of California, San Francisco and in
hand surgery at the Curtis Hand Center in Baltimore, MD. Dr. Maxwell was a
co-founder of, and currently serves as, Executive EVP for Diversified Specialty
Institutes, a healthcare and specialty hospital development company. He is also
a founder and board member of the non-profit Aspen Center for Integrative
Health.

     ROBERT J. SNYDER, D.P.M., F.A.C.F.A.S., CWS, is nationally and
internationally recognized for his expertise in wound healing. In addition to
his many board certifications, honors and awards, he is a Diplomat, American
Academy of Wound Management; Diplomat, American Board of Podiatric Surgery;
Fellow, American College of Foot and Ankle Surgery; and a Certified Wound
Specialist. Dr. Snyder also published over 75 papers in the field of wound
healing and has conducted research for major wound care companies.


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<PAGE>

     DR. BERISH STRAUCH, one of our key consultants, serves as the Chairman of
our Medical Advisory Board.

SCIENTIFIC ADVISORY BOARD

     We have established a panel of two scientific advisors to assist management
in its efforts with respect to the physical parameters of the technologies we
use. The scientific advisors are set forth below:

     DR. ARTHUR A. PILLA, one of our key consultants, serves as the Chairman of
our Scientific Advisory Board.

     DAVID J. MUEHSAM is a research associate at the Bioelectrochemistry
Laboratory, Mt. Sinai School of Medicine in New York City, where he is involved
in, among other things, mathematical modeling of electromagnetic field
bioeffects, and design and biomedical applications of therapeutic
electromagnetic field signals. Mr. Muehsam received his B.A. degree in Physics,
Mathematics and Music from Hampshire College in 1987, and has published over 25
articles in both clinical and basic scientific research, with a primary emphasis
on mathematical modeling and interpretation.


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<PAGE>

ADVISORY BOARD COMPENSATION

     Other than reimbursement for their expenses incurred on our behalf, members
of our Medical Advisory Board and Scientific Advisory Board do not receive any
compensation for services in their capacities as such. From time to time,
members of our Medical Advisory Board and Scientific Advisory Board do receive
consulting fees for consulting services they provide to us in their capacities
as consultants.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires our executive officers,
directors and persons who own more than 10% of a registered class of our equity
securities to file statements on Form 3, Form 4 and Form 5 of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10% shareholders are required by the regulation to
furnish us with copies of all Section 16(a) reports that they file.

     Based solely upon a review of Forms 3 and 4 and amendments to these forms
furnished to us, all parties subject to the reporting requirements of Section
16(a) filed all such required reports during and with respect to the fiscal year
ended March 31, 2007.

ITEM 10. EXECUTIVE COMPENSATION

CASH AND OTHER COMPENSATION

     The following table, which should be read in conjunction with the
explanations provided below, provides certain compensation information
concerning our Co-Chief Executive Officers, our Chief Financial Officer and our
Executive Vice President, who are sometimes referred to in this Part III of our
Annual Report on Form 10-KSB as our "named executive officers" for the fiscal
year ended March 31, 2007.

<TABLE>
<S>     <C>
                                SUMMARY COMPENSATION TABLE

      Name and                                                      Option
 Principal Position         Year         Salary        Bonus       Awards(1)      ($)Total
 ------------------         ----         ------        -----       ---------      ---------

Andre' A. DiMino (1)        2007        $185,731        --        $   4,870      $ 190,601
   Vice Chairman and        2006          84,500        --                          84,500
   Co-Chief Executive       2005          17,800        --                          17,800
   Officer

David Saloff (2)            2007        $190,574        --        $  31,283      $ 221,857
   President and Co-        2006         152,300        --                         164,292
   Chief Executive          2005         124,000        --                         130,500
   Officer

Alan V. Gallantar (2)       2007        $ 95,192        --        $  51,579      $ 146,771
   Chief Financial          2006              --        --
   Officer                  2005              --        --

Edward J. Hammel            2007        $139,593        --        $   5,777      $ 145,370
   Executive Vice           2006         107,000        --                         118,992
   President                2005         117,000        --                         123,500
</TABLE>


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----------------
(1)   Represents the expense to us pursuant to FAS 123(R) for the respective
      year for restricted stock or stock options granted as long-term incentives
      pursuant to our 2004 Amended and Restated Stock Option Plan. See notes to
      our Financial Statements for the fiscal years ended March 31, 2007 and
      2006 for the assumptions used for valuing the expense under FAS 123(R).

(2)   In October 2006, (i) Mr. DiMino resigned from his positions as Chairman of
      the Board and Chief Financial Officer and began to serve as Vice Chairman
      of the Board and Co-Chief Executive Officer, (ii) Mr. Saloff resigned from
      his position as Chief Executive Officer and began to serve as President
      and Co-Chief Executive Officer and (iii) Mr. Gallantar began to serve as
      Chief Financial Officer.

               GRANTS OF PLAN-BASED AWARDS FOR THE FISCAL YEAR END

     The following table provides information concerning grants of stock options
to each of our named executive officers during the fiscal year ended March 31,
2007.

<TABLE>
<S>     <C>
                                     -----------------------------------------------------
                                         Number of        Exercise or        Grant Date
                                         Securities      Base Price of     Fair Value of
                                         Underlying      Option Awards     Options Awards
Name (1)               Grant Date        Options (#)       ($/share)           ($)(1)
------------------------------------------------------------------------------------------
                            -                -                  -                 -
Andre' A. DiMino            -                -                  -                 -
David Saloff                -                -                  -                 -
Alan V. Gallantar       10/18/06          140,000             6.00             337,613
Edward J. Hammel            -                -                  -                 -
</TABLE>

(1)  This column represents the fair value of the stock option awards granted in
     the fiscal year, determined in accordance with SFAS No. 123R, based on the
     assumptions set forth in Note 2 - "Significant Accounting Policies" to the
     financial statements.


                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

     The following table provides certain information concerning outstanding
equity awards held by each of our named executive officers at March 31, 2007.

<TABLE>
<S>     <C>
                                              Option Awards                                Stock Awards
------------------------------------------------------------------------------- -----------------------------------
                        Number of        Number of                                   Number of      Market Value
                       Securities       Securities                                   Shares or        of Shares
                       Underlying       Underlying                                   Units of        or Units of
                       Unexercised      Unexercised      Option        Option       Stock That       Stock That
                       Options (#)      Options (#)     Exercise     Expiration      Have Not         Have Not
      Name (1)         Exercisable     Unexercisable    Price ($)       Date       Vested (#)(2)    Vested ($)(2)
------------------------------------------------------------------------------- -----------------------------------
Andre' A. DiMino          165,750         78,000          0.06       1/13/2014        74,750          310,213
                           55,250         26,000          0.31       2/19/2014
David Saloff              165,750         78,000          0.06       1/13/2014       141,050          585,358
                           55,250         26,000          0.31       2/19/2014
Alan V. Gallantar            -           140,000          6.00       10/18/2016          -               -
Edward J. Hammel           22,100         10,400          0.06       1/13/2014        35,750          148,363
</TABLE>


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<PAGE>

----------------
(1)  In October 2006, (i) Mr. DiMino resigned from his positions as Chairman of
     the Board and Chief Financial Officer and began to serve as Vice Chairman
     of the Board and Co-Chief Executive Officer, (ii) Mr. Saloff resigned from
     his position as Chief Executive Officer and began to serve as President and
     Co-Chief Executive Officer and (iii) Mr. Gallantar began to serve as Chief
     Financial Officer.

(2)  Based upon the closing market price of our stock of $4.15 on March 31,
     2007.

EMPLOYMENT AGREEMENTS

     On October 18, 2006, we entered into employment agreements with David
Saloff to secure his continued service as President and his service as Co-Chief
Executive Officer, with Andre' DiMino to secure his service as Vice Chairman of
the Board (for so long as Mr. DiMino continues to be a member of the Board of
Directors) and as Co-Chief Executive Officer and with Edward Hammel to secure
his service as Executive Vice President. As of July 13, 2006, we entered into an
employment agreement with Alan Gallantar to secure his service as Chief
Financial Officer, effective as of October 18, 2006. Each of these employment
agreements has a five-year term except in the case of Mr. Gallantar's agreement,
a three-year term, which will be automatically extended prior to the end of then
current term for successive one-year periods until either we or the executive
notifies the other at least 120 days prior to the end of the term that such
party does not wish to further extend it. Each of these agreements provides for
a minimum annual salary of $240,000 and a fixed annual bonus equal to 10% of
such annual salary, in the case of Messrs. DiMino and Saloff, a minimum salary
of $225,000 in the case of Mr. Gallantar, and a minimum salary of $180,000, in
the case of Mr. Hammel, discretionary annual cash bonuses and participation on
generally applicable terms and conditions in other compensation and fringe
benefit plans. Mr. DiMino's employment agreement requires Mr. DiMino to devote
at least a majority of his work-time toward Ivivi.

     The terms of the employment agreements provide that each executive will be
entitled to severance benefits in the amount of such executive's base salary for
a period of 12 months following the date of termination if his employment is
terminated without "cause" or if he resigns for "good reason" (as such terms are
defined below), or 18 months following the date of termination if his employment
is terminated without "cause" or if he resigns for "good reason" within 12
months following a "change in control" (as such terms are defined below), in
each case subject to the execution and delivery to us by the employee of a
general release.

     For purposes of the employment agreements, the following terms have the
following meanings:

     "CAUSE" means the executive's (i) conviction of, plea of guilty or nolo
contendre to, or confession of guilt of, a felony or criminal act involving
moral turpitude (ii) commission of a fraudulent, illegal or dishonest act (which
dishonest act results in material damage to us) in respect of us, (iii) willful
misconduct or gross negligence that reasonably could be expected to be injurious
in our reasonable discretion to our business, operations or reputation
(monetarily or otherwise), (iv) material violation of our policies or procedures
in effect from time to time, subject to applicable cure periods after written
notice thereof, (v) after a written warning and a reasonable opportunity to cure
non-performance, continued failure to perform the executive's duties as assigned
to the executive from time to time, or (vi) any other material breach of the
employment agreement.

     "GOOD REASON" means, in the absence of the consent of the executive, (i)
our failure to pay any amounts due to the executive or to fulfill any other
material obligations thereunder, other than failures that are remedied by us
within 30 days after receipt of written notice thereof given by the executive;
(ii) action by us that results in a material diminution in the executive's
title, position, authority or duties from those contemplated in the employment
agreement, subject to certain exceptions; (iii) for purposes of the employment


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<PAGE>

agreements with Messrs. DiMino, Gallantar and Hammel, any move of our offices
that would require the executive to commute more than 10 miles more each way
than such executive commutes immediately prior to such move; or (iv) any
material reduction in the amount of our director and officer liability insurance
coverage in effect as of the consummation of our initial public offering.

     "CHANGE IN CONTROL" means (i) any person becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of our securities
representing more than 50% of the total voting power represented by the
executive's then outstanding voting securities; provided, however, that the
consummation of our initial public offering in and/or the exercise or conversion
of any instruments as of the consummation of our initial public offering will
not be deemed a "change of control;" (ii) our merger or consolidation with any
other corporation, other than a merger or consolidation which would result in
our voting securities outstanding immediately prior thereto continuing to
represent at least fifty percent (50%) of the total voting power represented by
the voting securities of our company or such surviving entity outstanding
immediately after such merger or consolidation; or (iii) the sale or disposition
by us of all or substantially all of our assets.

     During the term of the employment agreements and for a period of 18 months
thereafter, subject to applicable law, the executives will be subject to
restrictions on competition with us and restrictions on the solicitation of our
customers and executives. For all periods during and after the term, the
executives will be subject to nondisclosure and confidentiality restrictions
relating to our confidential information and trade secrets.

     Section 280G of the Internal Revenue Code denies a corporation a deduction
for "excess parachute payments." Excess parachute payments generally consist of
payments to specified individuals that are contingent upon a change in ownership
or control of a corporation, or a change in a substantial portion of the
corporation's assets, and that exceed a statutorily determined base amount. In
the event that any payment, coverage or benefit provided under the employment
agreements would not be deemed to be deductible in whole or in part in the
calculation of the Federal income tax of the executive or any other person
making such payment or providing such coverage or benefit, by reason of Section
280G of the Internal Revenue Code, the aggregate payments, coverages or benefits
provided under the employment agreement will be reduced to the "safe harbor"
level under Section 280G of the Internal Revenue Code so that the entire amount
which is paid or provided to the executive will be deductible notwithstanding
the provisions of Section 280G of the Internal Revenue Code. As of June 19,
2007, the "safe harbor" level under Section 280G of the Internal Revenue Code is
2.99 times the average of five years of W-2 compensation.

2004 AMENDED AND RESTATED STOCK OPTION PLAN

     In February 2005, our board of directors and shareholders adopted the 2004
Amended and Restated Stock Option Plan, which was amended and restated in
February 2005, November 2005 and May 2006. The purpose of the 2004 Amended and
Restated Stock Option Plan is to advance our interests by encouraging and
enabling the acquisition of a personal financial interest in us for those
employees and directors whose judgment and efforts we are largely dependent on
for the successful conduct of our operations, and by those consultants, agents,
independent contractors, advisors, professionals and other third parties whose
contributions to our welfare may be recompensed in a manner that provides an
ownership interest in us. An additional purpose of this Plan is to provide a
means by which our employees and directors can acquire and maintain ownership in
us, thereby strengthening their commitment to our success and their desire to
remain in our employ.

     In furtherance of that purpose, the 2004 Amended and Restated Stock Option
Plan authorizes the grant to our directors, executives and other key employees
and consultants of incentive and/or non-qualified stock options.


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<PAGE>

     The maximum number of shares of our common stock with respect to which
options may be granted pursuant to the 2004 Amended and Restated Stock Option
Plan is initially 2,437,500, 1,869,350 shares of which have been granted at per
share exercise prices ranging from $.062 to $6.00. No participant may be granted
options that exceed the number of shares issuable under the plan during any
fiscal year.

     Shares issuable under the 2004 Amended and Restated Stock Option Plan may
be either treasury shares or authorized but unissued shares. The number of
shares available for issuance will be subject to adjustment to prevent dilution
in the event of stock splits, stock dividends or other changes in our
capitalization. If an option is forfeited or expires without having been
exercised, the shares subject to such option will again be available for
issuance under the Plan.

     The 2004 Amended and Restated Stock Option Plan will be administered by a
committee consisting of not less than two (2) members of the Board of Directors
who are directors who are not also employees of Ivivi, or in the absence of such
committee, the entire Board. The Board has designated its compensation committee
as administrator of the 2004 Amended and Restated Stock Option Plan. Except for
certain options granted to non-employee directors (see "Director Options" and
"Committee Chairman Options" below), the Committee will determine the persons to
whom options will be granted, the type of option and the number of shares to be
covered by the option.

TYPES OF OPTIONS

     STOCK OPTIONS. Options granted under the 2004 Amended and Restated Stock
Option Plan may be "incentive stock options" ("Incentive Options") or stock
options which are not incentive stock options ("Non-Qualified Options" and,
collectively with Incentive Options, hereinafter referred to as "Options").
Incentive Options generally provide the employee with more effective tax
treatment if the requirements described in the 2004 Amended and Restated Stock
Option Plan are satisfied by the holder of the option. The Committee may
determine the number of shares subject to each Option and the prices at which
Options may be exercised (which, in the case of Incentive Options, shall not be
less than the Fair Market Value, as defined by the Plan, of our common stock on
the date of grant). Whether an Option will be an Incentive Option or a
Non-Qualified Option, the time or times and the extent to which Options may be
exercised and all other terms and conditions of Options, will be determined by
the Committee.

     Each Incentive Option shall terminate no later than ten years from the date
of grant, (five years in the case of an Incentive Option granted to a person
possessing more than 10% of the total combined voting power of all shares of our
stock or of a parent or subsidiary of ours ("10% Stockholder")). The exercise
price at which the shares may be purchased with respect to Incentive Options may
not be less than the Fair Market Value of shares of our common stock at the time
the Option is granted (and not less than 110% of the Fair Market Value at the
time the Option is granted with respect to Incentive Options granted to a 10%
Stockholder. The exercise price at which the shares may be purchased with
respect to Non-Qualified Options may not be less than 85% of the Fair Market
Value of shares of our common stock at the time the Option is granted. The
exercise price of the shares to be purchased pursuant to each Option shall be
paid in full in cash, by tendering other shares of our common stock owned by the
optionee, or such other method as may be authorized by the Committee.

     DIRECTOR OPTIONS. Each non-employee director (other than Steven Gluckstern
in his capacity as Chairman of the Board) was automatically granted
Non-Qualified Options ("Director Options") to acquire 20,000 shares of our
common stock upon the consummation of our initial public offering and will be
granted an additional 20,000 shares of our common stock on the date of our
annual meeting of stockholders. The exercise price at which the shares may be
purchased with respect to Director Options may not be less than the Fair Market
Value of shares of our common stock at the time the Option is granted. Each
Director Option shall terminate ten years from the date of grant. Director
options shall vest as to one-third of the shares subject to the option upon the
date of grant, and one-third upon each of the first and second anniversaries of
the date of grant.


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<PAGE>

     COMMITTEE CHAIRMAN OPTIONS. Options may be granted Non-Qualified Options
("Committee Chairman Options") from time to time to each non-employee director
that serves as a chairman of our audit committee, compensation committee or
nominating and corporate governance committee. The exercise price at which the
shares may be purchased with respect to Committee Chairman Options may not be
less than the Fair Market Value of shares of our common stock at the time the
Option is granted. Each Committee Chairman Option shall terminate ten years from
the date of grant. Committee Chairman options shall vest as to one-third of the
shares subject to the option upon the date of grant, and one-third upon each of
the first and second anniversaries of the date of grant.

     CORPORATE TRANSACTIONS. Upon a Corporate Transaction (as defined), any
option carrying a right to exercise that was not previously exercisable shall
become fully exercisable, except in certain circumstances were the options are
assumed by the successor company.

     TRANSFERS. Options granted under the 2004 Amended and Restated Stock Option
Plan may not be transferred, pledged, mortgaged, hypothecated or otherwise
encumbered other than by will or under the laws of descent and distribution,
except that the Committee may permit transfers of options for estate planning
purposes.

     AMENDMENTS AND TERMINATIONS. The Board may amend, alter, suspend,
discontinue or terminate the 2004 Amended and Restated Stock Option Plan at any
time, except that any such action shall be subject to shareholder approval at
the annual meeting next following such Board action if such shareholder approval
is required by federal or state law or regulation or the rules of any exchange
or automated quotation system on which our common stock may then be listed or
quoted, or if the Board of Directors otherwise determines to submit such action
for shareholder approval. In addition, no amendment, alteration, suspension,
discontinuation or termination to the 2004 Amended and Restated Stock Option
Plan may materially impair the rights of any participant with respect to any
option without such participant's consent. Unless terminated earlier by action
of the Board of Directors, the 2004 Amended and Restated Stock Option Plan shall
terminate on January 5, 2014.

COMPENSATION OF DIRECTORS

     Until October 18, 2006, our directors did not receive compensation for
serving on our Board of Directors, but were entitled receive reimbursement for
travel and related expenses. From and after October 18, 2006, for each year of
service as a director of our company, each non-employee director (other than
Steven Gluckstern in his capacity as our Chairman of the Board, as discussed
below) will receive $10,000 ($2,500 per fiscal quarter). In addition, each
non-employee director (other than Steven Gluckstern in his capacity as our
Chairman of the Board) will receive non-qualified options to purchase 20,000
shares of our common stock when such person is initially elected to our Board of
Directors, and for each year of service as a director of our company thereafter,
options to purchase 20,000 shares of our common stock, in each case at an
exercise price per share equal to the fair market value price per share of our
common stock on the grant date. Each of such options will fully vest one-third
on the date of grant and one-third upon each of the first and second
anniversaries of the date of grant.

     On October 18, 2006, Steven Gluckstern, who began to serve as our Chairman
of the Board at such time, received options to purchase 775,000 shares of our
common stock at an exercise price equal to $5.11 per share, one-third of which
options vested upon the date of grant and one-third of which will vest on each
one-year anniversary thereafter. Such options will expire on the tenth
anniversary of the date of grant.


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<PAGE>

        The following table provides certain information with respect to the
compensation paid to our non-employee directors during the fiscal year ended
March 31, 2007.

                              DIRECTOR COMPENSATION

                                     Fees
                                   earned or
                                    paid in      Option Awards
               Name(1)              cash ($)       ($)(2)(3)        Total ($)
        ------------------------   ----------    -------------     ----------
        Steven Gluckstern              -           1,026,092       1,026,092
        Kenneth S. Abramowitz        5,000            23,444          28,444
        Louis J. Ignarro, Ph.D.      5,000            23,444          28,444
        Pamela J. Newman, Ph.D.      5,000            23,444          28,444
        Jeffrey A. Tischler          5,000            23,444          28,444

---------------
(1)  Each of Kenneth S. Abramowitz, Louis J. Ignarro, Ph.D., Pamela J. Newman,
     Ph.D. and Jeffrey A. Tischler began to serve as a director of our company
     on October 18, 2006.

(2)  Represents the expense to us pursuant to FAS 123(R) for the respective year
     for stock options granted as long-term incentives pursuant to our 2004
     Amended and Restated Stock Option Plan, other than Mr. Gluckstern's options
     which were granted outside the plan. See Notes to our Financial Statements
     for the fiscal years ended March 31, 2007 and 2006 for the assumptions used
     for valuing the expense under FAS 123(R).

(3)  At March 31, 2007, Steven Gluckstern had an option to purchase 775 000
     shares of our common stock and each of Kenneth S. Abramowitz, Louis J.
     Ignarro, Ph.D., Pamela J. Newman, Ph.D. and Jeffrey A. Tischler had an
     option to purchase 20,000 shares of our common stock.

CONSULTING AGREEMENTS

     ARTHUR A. PILLA, PH.D.

     On October 17, 2006 we entered into a consulting agreement with Dr. Arthur
A. Pilla, Ph.D. and Pilla Consulting, Inc., a corporation wholly-owned by Dr.
Pilla, pursuant to which we have engaged Pilla Consulting to render consulting
services to us for a term of five years, which will be automatically extended
prior to the end of then current term for successive one-year periods until
either we or Pilla Consulting notifies the other at least 90 days prior to the
end of the term that such party does not wish to further extend it. Pursuant to
the consulting agreement, Pilla Consulting agrees to cause Dr. Pilla, on its
behalf, to provide the consulting services thereunder, including, among other
things, serving as our Science Director and Chairman of the Scientific Advisory
Board and advising us on technological developments, future clinical and
research applications of our technology, technical and medical aspects of FDA
submissions and compliance and marketing, product development and efficacy in
the electromagnetic frequencies field.

     In exchange for the consulting services provided under our consulting
agreement during the term, we will pay Pilla Consulting $6,300 per month fee
(prorated for partial months), which will increase to $20,000 per month
(prorated for partial months) upon the consummation of this offering and be
subject to periodic increases as our board of directors or compensation
committee deem appropriate. During the term, Pilla Consulting will be eligible
for an annual performance-based fee, in the amount, if any, to be determined by
our board of directors or compensation committee, based on, among other things,


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<PAGE>

our performance, our assessment of Pilla Consulting's contributions to our
performance, and the level of discretionary bonuses and/or fees to be awarded to
our executive level employees and agents. During the term, Pilla Consulting will
be eligible to receive stock option grants in amounts, if any, to be determined
by our board of directors or our compensation committee, which grants, if any,
will be subject the terms and conditions established within our 2004 Amended and
Restated Stock Option Plan or any successor stock option plan.

     The consulting agreement provides that Pilla Consulting will be entitled to
monthly consulting fees for a period of 24 months following the date of
termination if the consulting agreement is terminated without "cause" or if for
"good reason" (as such terms are defined in the consulting agreement) prior to
the seventh anniversary of the date of the agreement, or 12 months following the
date of termination if the consulting agreement is terminated without "cause" or
for "good reason" after the seventh anniversary of the date of the agreement, in
each case subject to the execution and delivery to us by the Pilla Consulting
and Dr. Pilla of a general release. If the consulting agreement terminates upon
the expiration of the term as a result of our election not to renew it beyond
the initial five-year term or beyond the first one-year renewal of the term, we
will continue to pay to Pilla Consulting the monthly consulting fee for a period
of 24 months following such termination, subject to the execution and delivery
to us by Pilla Consulting and Dr. Pilla of a general release.

     On January 5, 2004, we issued Dr. Pilla 227,500 shares of our common stock,
including 26,000 shares that were vested immediately upon issuance and 201,500
shares subject to forfeiture that vest in five equal yearly installments on
January 5 of each year following the year of the grant through and including
January 5, 2009. In the event of a termination without "cause" or a "good
reason," the shares of common stock issued to Dr. Pilla on January 5, 2004 will
continue to vest in accordance with the vesting schedule; provided, however,
that in the event of a termination without "cause" or "good reason" within 12
months following a "change of control" (as such term is defined in the
agreement), all such shares be deemed fully vested upon the date of termination.

     During the term of the consulting agreement and thereafter for a period
equal to the longer of: (i) 18 months and (ii) the period, if any, following
termination that we continue to pay Pilla Consulting monthly consulting fees,
Pilla Consulting and Dr. Pilla shall be subject to restrictions on competition
with us and restrictions on the solicitation of our customers and employees For
all periods during and after the term, Pilla Consulting and Dr. Pilla will be
subject to nondisclosure and confidentiality restrictions relating to our
confidential information and trade secrets.

     BERISH STRAUCH, M.D.

     On January 1, 2004, we entered into a consulting agreement with Dr. Berish
Strauch pursuant to which we engaged Dr. Strauch to render consulting services
to us for a term of six years with automatic one-year renewals. Pursuant to the
consulting agreement, Dr. Strauch serves on our Medical Advisory Board and
advises us on technological developments, future clinical and research
applications and product development and efficacy in the pulsed magnetic
frequencies field.

     In exchange for Dr. Strauch's consulting services pursuant to our
consulting agreement, Dr. Strauch received 130,000 shares of our common stock,
16,250 of which vested immediately upon our entering into our consulting
agreement with him, 17.5% of which vested on January 5, 2005 and the remaining
70% of which shall vest in four equal yearly installments on January 5 of each
year from January 5, 2006 through January 1, 2009. In addition, if our annual
revenues exceed $20 million, we have agreed to pay Dr. Strauch an annual bonus
(not to exceed $500,000) equal to the sum of 0.5% of that portion of our annual
revenues in excess of $20 million, 0.25% of that portion of our annual revenues
in excess $80 million and 0.1% of that portion of our annual revenues in excess
of $120 million. We have also agreed to pay Dr. Strauch a royalty equal to 0.5%
of revenues we receive for practicing and/or commercializing any "new
inventions" (as such term is defined in the agreement) developed by Dr. Strauch
under our agreement. Bonuses and royalties payable for the fiscal years ended
March 31, 2006 and 2007 are subject to adjustment and a cap of 10% of our
pre-tax profit (after deduction of such bonuses and royalty payments) for such
fiscal years.

     Dr. Strauch is entitled to benefits if our consulting agreement is
terminated without "cause" or if he resigns for "good reason" or following a
"change in control" (as such terms are defined in the consulting agreement) In
the event of a termination without "cause" or if Dr. Strauch resigns for "good
reason," the shares of common stock to which Dr. Strauch is entitled under the
consulting agreement shall continue to vest in accordance with the terms
thereof, and Dr. Strauch shall continue to receive royalties in accordance with
the terms of the agreement and any bonuses earned by him prior to the


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<PAGE>

termination or resignation. In the event of a termination following a change of
control, all of the shares issuable to Dr. Strauch under the consulting
agreement will automatically vest, and Dr. Strauch will continue to receive
royalties in accordance with the terms of the agreement and bonuses for the
remainder of the then-current term if we terminate Dr. Strauch, or bonuses
earned prior to such termination if Dr. Strauch resigns.

     During the term of the consulting agreement and for a two-year period
thereafter, Dr. Strauch will be subject to (i) restrictions on competition with
us and (ii) restrictions on the solicitation of our customers and employees.
During the term and for a five-year period thereafter, Dr. Strauch shall be
subject to nondisclosure and confidentiality restrictions relating to our
confidential information and trade secrets.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

     The following table provides information about our common stock that may be
issued upon the exercise of options and warrants under our equity compensation
plans. Our 2004 Amended and Restated Stock Option Plan was our only equity
compensation plan approved by our shareholders in existence as of March 31,
2007.

<TABLE>
<S>     <C>
                                                                                           NUMBER OF SECURITIES
                                                                                            REMAINING AVAILABLE
                                         NUMBER OF SECURITIES TO      WEIGHTED AVERAGE      FOR FUTURE ISSUANCE
                                         BE ISSUED UPON EXERCISE     EXERCISE PRICE OF          (EXCLUDING
                                         OF OUTSTANDING OPTIONS,    OUTSTANDING OPTIONS,   SECURITIES REFLECTED
                                           WARRANTS AND RIGHTS      WARRANTS AND RIGHTS      UNDER COLUMN (a))
PLAN CATEGORY                                      (a)                      (b)                     (c)
----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by           1,885,600                  $2.40                  551,900
 security holders

Equity compensation plans not                   1,177,899*                 $5.39                     -
 Approved by security holders

Total                                           3,063,499                  $3.67                  551,900
================================================================================================================
</TABLE>

*Includes 775,000 of options issued to Steven Gluckstern and 402,899 of warrants
issued to consultants.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth information regarding ownership of shares of
our common stock, as of June 19, 2007:

     o    by each person known by us to be the beneficial owner of 5% or more of
          our common stock;

     o    by each of our directors and executive officers; and

     o    by all of our directors and executive officers as a group.


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<PAGE>

     Except as otherwise indicated, each person and each group shown in the
table below has sole voting and investment power with respect to the shares of
common stock indicated. For purposes of the table below, in accordance with Rule
13d-3 under the Exchange Act, a person is deemed to be the beneficial owner of
any shares of our common stock over which he or she has or shares, directly or
indirectly, voting or investment power or of which he or she has the right to
acquire beneficial ownership at any time within 60 days. As used in herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" includes the power to dispose or direct the disposition of
shares. Common stock beneficially owned and percentage ownership as of June 19,
2007 were based on 9,588,908 shares outstanding. Unless otherwise indicated, the
address of each beneficial owner is c/o Ivivi Technologies, Inc., 224-S Pegasus
Ave., Northvale, NJ 07647.

<TABLE>
<S>     <C>
                                                                     SHARES BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER, OFFICERS AND DIRECTORS                        NUMBER            %

ADM Unlimited, Inc. (1)                                              3,250,000           33.9
Andre' A. DiMino (1)(2)                                              1,716,000           17.5
David Saloff (3)                                                       619,125           6.3
Alan V. Gallantar (4)                                                        0             0
Edward J. Hammel (5)                                                   123,663           1.3
Kenneth Abramowitz (6)                                                 104,706           1.1
Steven M. Gluckstern (7)                                               731,740           7.3
Louis J. Ignarro (8)                                                     6,666            *
Pamela J. Newman (9)                                                     6,666            *
Jeffrey A. Tischler (10)                                                 6,666            *
Sherleigh Associates Defined Benefit Pension Plan (11)               1,058,665           9.9
ProMed Partners, L.P. (12)                                             642,665           6.4
All directors and executive officers as a group (9 persons)(13)      2,734,294           25.8
</TABLE>

----------------
*    Less than 1%.

(1)  Andre' DiMino, our Vice Chairman and Co-Chief Executive Officer, has the
     right to vote approximately 26% of the outstanding common stock of ADM
     Unlimited, Inc. In addition, Mr. DiMino, together with other members of the
     DiMino family, has the right to vote approximately 29% of the outstanding
     common stock of ADM Unlimited, Inc.

(2)  Represents: (i) 221,000 shares of common stock issuable upon exercise of
     options that are exercisable within 60 days of June 19, 2007; (ii) 16,250
     shares of common stock subject to a share purchase right agreement among
     Mr. DiMino, David Saloff, Edward Hammel, Sean Hagberg, Ph.D., Arthur Pilla,
     Ph.D. and Steven Gluckstern pursuant to which Mr. Gluckstern has the right
     to purchase such shares from Mr. DiMino during the period from November 8,
     2005 to November 8, 2010; (iii) 186,875 shares of common stock beneficially
     owned of record by Mr. DiMino; and (iv) 1,308,125 shares of common stock
     beneficially owned by Fifth Avenue Capital Partners, David Saloff, Edward
     Hammel and certain other of our shareholders (excluding shares underlying
     options held by such shareholders) which are subject to a voting agreement
     under which Mr. DiMino has the right to vote such shares. Mr. DiMino
     disclaims beneficial ownership of the shares beneficially owned by Fifth
     Avenue Capital Partners, David Saloff and Edward Hammel and such other
     shareholders. The voting agreement, with respect to shares held by, and
     shares underlying options held by, the shareholders party thereto, other
     than Fifth Avenue Capital Partners, shall terminate on October 24, 2009,
     and with respect to 65,000 shares of such common stock, shall terminate
     upon the earlier to occur of October 24, 2009 and the purchase of such
     shares by Mr. Gluckstern pursuant to the share purchase right agreement.
     Mr. DiMino shall have the right to vote the 349,375 shares of common stock
     beneficially owned by Fifth Avenue Capital Partners indefinitely unless and
     until such right is terminated by Mr. DiMino and Fifth Avenue Capital
     Partners. Of the shares beneficially owned by Mr. DiMino, 94,750 shares are
     subject to forfeiture and vest in equal yearly installments on January 5 of
     each year through January 5, 2009. Excludes 104,000 shares of common stock
     issuable upon exercise of options that are not exercisable within 60 days
     of June 19, 2007.


                                       100

<PAGE>

(3)  Includes: (i) 221,000 shares of common stock issuable upon exercise of
     options that are exercisable within 60 days of June 19, 2007; (ii) 30,875
     shares of common stock subject to a share purchase right agreement among
     Mr. Saloff, Mr. DiMino, Mr. Hammel, Dr. Hagberg, Dr. Pilla and Mr.
     Gluckstern pursuant to which Mr. Gluckstern has the right to purchase such
     shares from Mr. Saloff during the period from November 8, 2005 to November
     8, 2010; and (iii) 398,125 shares of common stock beneficially owned by Mr.
     Saloff, all of which shares are subject to a voting agreement under which
     Mr. DiMino has the right to vote such shares. The voting agreement, with
     respect to 536,250 shares of our common stock (including 221,000 shares
     underlying options to purchase shares held by Mr. Saloff that are
     exercisable within 60 days of June 19, 2007), shall terminate on October
     24, 2009 and with respect to 30,875 shares of our common stock, shall
     terminate upon the earlier to occur of October 24, 2009 and the purchase of
     such shares by Mr. Gluckstern pursuant to the share purchase right
     agreement. Of the shares beneficially owned by Mr. Saloff, 141,050 shares
     are subject to forfeiture and vest in equal yearly installments on January
     5 of each year through January 5, 2009. Excludes 104,000 shares of common
     stock issuable upon exercise of options that are not exercisable within 60
     days of June 19, 2007.

(4)  Excludes 140,000 shares of common stock issuable upon exercise of options
     that are not exercisable within 60 days of June 19, 2007.

(5)  Includes: (i) 22,100 shares of common stock issuable upon exercise of
     options that are exercisable within 60 days of June 19, 2007; (ii) 8,125
     shares of common stock subject to a share purchase right agreement among
     Mr. Hammel, Mr. DiMino, Mr. Saloff, Dr. Hagberg, Dr. Pilla and Mr.
     Gluckstern pursuant to which Mr. Gluckstern has the right to purchase such
     shares from Mr. Hammel during the period from November 8, 2005 to November
     8, 2010; and (iii) 101,563 shares of common stock beneficially owned by Mr.
     Hammel, all of which shares are subject to a voting agreement under which
     Mr. DiMino has the right to vote such shares. The voting agreement, with
     respect to 110,338 shares of our common stock (including 22,100 shares
     underlying options to purchase shares held by Mr. Hammel that are
     exercisable within 60 days of June 19, 2007) shall terminate on October 24,
     2009 and with respect to 8,125 shares of our common stock, shall terminate
     upon the earlier to occur of October 24, 2009 and the purchase of such
     shares by Mr. Gluckstern pursuant to the share purchase right agreement. Of
     the shares beneficially owned by Mr. Hammel, 35,750 shares are subject to
     forfeiture and vest in equal yearly installments on January 5 of each year
     through January 5, 2009. Excludes 10,400 shares of common stock issuable
     upon exercise of options that are not exercisable within 60 days of June
     19, 2007.

(6)  Includes: (i) 49,020 shares of common stock beneficially owned by Kenneth
     S. Abramowitz & Co., Inc., an investment fund wholly-owned by Mr.
     Abramowitz; (ii) 49,020 shares of common stock underlying warrants
     beneficially owned by Kenneth S. Abramowitz & Co., Inc., an investment fund
     wholly-owned by Mr. Abramowitz, that are exercisable within 60 days of June
     19, 2007; and (iii) 6,666 shares of common stock issuable upon exercise of
     options to purchase shares of our common stock that are exercisable within
     60 days. Excludes 13,334 shares of common stock issuable upon exercise of
     options that are not exercisable within 60 days of June 19, 2007.

(7)  Includes: (i) 196,078 shares of common stock beneficially owned by Ajax
     Capital LLC, an investment fund wholly-owned by Mr. Gluckstern; (ii)
     196,078 shares of common stock underlying warrants beneficially owned by
     Ajax Capital LLC that are exercisable within 60 days of June 19, 2007;
     (iii) 81,250 shares of common stock issuable upon exercise of rights to
     purchase an aggregate of up to 81,250 shares of common stock during the
     period from November 8, 2005 to November 8, 2010 granted by Mr. DiMino, Mr.
     Saloff, Mr. Hammel, Dr. Hagberg and Dr. Pilla pursuant to a share purchase
     right agreement, 65,000 shares of which are subject to a voting agreement
     under which Mr. DiMino has the right to vote such shares; provided,
     however, that the voting agreement with respect to such shares shall
     terminate on October 24, 2009 and the purchase of such shares by Mr.
     Gluckstern pursuant to the share purchase right agreement; and (iv) 258,334
     shares of our common stock issuable upon exercise of options to purchase
     shares of our common stock that are exercisable within 60 days of June 19,
     2007. Excludes 516,666 shares of common stock issuable upon exercise of
     options that are not exercisable within 60 days of June 19, 2007. See
     footnote numbers (2) and (3).


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<PAGE>

(8)  Represents 6,666 shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock that are exercisable within
     60 days of June 19, 2007. Excludes 13,334 shares of common stock issuable
     upon exercise of options that are not exercisable within 60 days of June
     19, 2007.

(9)  Represents 6,666 shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock that that are exercisable
     within 60 days of June 19, 2007. Excludes 13,334 shares of common stock
     issuable upon exercise of options that are not exercisable within 60 days
     of June 19, 2007.

(10) Represents 6,666 shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock issuable upon exercise of
     options to purchase shares of our common stock that that are exercisable
     within 60 days of June 19, 2007. Excludes 13,334 shares of common stock
     issuable upon exercise of options that are not exercisable within 60 days
     of June 19, 2007.

(11) Includes (i) 541,797 shares of common stock underlying warrants held by
     Sherleigh Associates Defined Benefit Pension Plan; and (ii) 516,869 shares
     of common stock underlying warrants held by Sherleigh Associates Defined
     Benefit Pension Plan. Jack Silver, trustee of Sherleigh Associates Defined
     Benefit Pension Plan, has voting and investment control over such
     securities. The address for Sherleigh Associates Defined Benefit Pension
     Plan is SIAR Capital LLC, 660 Madison Avenue, New York, New York 10021 The
     foregoing information is derived from a Schedule 13G/A filed on behalf of
     the reporting person on February 13, 2007.

(12) Includes (i) 260,395 shares of common stock held by ProMed Offshore Fund
     II, Ltd.; (ii) 149,177 shares of common stock underlying warrants held by
     ProMed Offshore Fund II, Ltd. that are execisable within 60 days of June
     19, 2007; and (iii) 193,421, 13,151 and 26,521 shares of common stock
     underlying warrants held by ProMed Partners, L.P., ProMed Partners II, L.P.
     and ProMed Offshore Fund I, Ltd., respectively, that are exercisable within
     60 days of June 19, 2007. Barry Kurokawa and David B. Musket, managing
     directors of each of such entities, have voting and investment control over
     such securities. The address for each of such entities is 237 Park Avenue,
     9th Floor, New York, NY 10021. The foregoing information is derived from a
     Schedule 13G/A filed on behalf of the reporting persons on February 13,
     2007.

(13) See footnotes (1) through (10).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
         INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We have entered into a management service agreement and a manufacturing
agreement with ADM Unlimited, Inc., our largest shareholder, each of which is
described below. In addition, some of our officers and directors are also
officers and directors of ADM. These relationships may cause conflicts of
interests to arise between us and ADM.

     REPAYMENT OF AMOUNTS TO ADM

     In October 2006, we used approximately $2.6 million of the net proceeds of
our initial public offering to repay amounts payable to ADM, our largest
shareholder, that were incurred in connection with the funding of operations
under the terms of our management services agreement with ADM, as well as in
connection with the manufacturing of our products under the terms of our
manufacturing agreement with ADM since 1998. No interest was payable on this
amount. Mr. DiMino, our Vice Chairman and Co-Chief Executive Officer, together
with members of his family, own approximately 29% of the outstanding common
stock of ADM.


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<PAGE>

     REPAYMENT OF AMOUNTS TO AJAX CAPITAL LLC

     In October 2006, we used approximately $250,000 of the net proceeds of our
initial public offering to repay amounts payable to Ajax Capital LLC, an
investment fund wholly-owned by Steven Gluckstern, our Chairman of the Board. In
June 2006, Ajax Capital LLC loaned us $250,000, pursuant to an unsecured
promissory note. The principal amount of the unsecured promissory note accrued
interest at a rate of 8% per annum and the principal amount outstanding,
together with all accrued and unpaid interest, was due and payable upon the
consummation of our initial public offering. If the principal amount, together
with all accrued and unpaid interest, was not paid on or before the maturity
date, the interest rate would have increased by 1% every year after the maturity
date to a maximum of 13% per annum until all amounts due and payable under the
note were paid in full. The proceeds of this note were used for working capital
purposes.

     SALE OF UNITS AND REVENUE SHARING AGREEMENT WITH AJAX CAPITAL LLC

     On August 28, 2006, we sold to Ajax Capital LLC, an investment fund
wholly-owned by Steven Gluckstern, 15 units of the Roma(3) and five units of the
SofPulse M-10 at a purchase price of $14,500 per unit, the then-published
wholesale unit price for the Roma3 and the SofPulse M-10, for an aggregate
purchase price of $290,000. In connection therewith, we entered into a revenue
sharing agreement with Ajax Capital LLC, which was subsequently terminated in
December 2006 (as described below). Pursuant to the revenue sharing agreement,
we had agreed to use our commercially reasonable efforts to rent to third
parties all of the units of the Roma(3) and the SofPulse M-10 purchased by Ajax
Capital LLC. Ajax Capital LLC was entitled to receive revenues in respect of
rentals of the units of the Roma(3) purchased by it in an amount equal to 50% of
the aggregate of the gross proceeds from such rentals received by us during each
month of the term. Ajax Capital LLC was also entitled to receive revenues in
respect of rentals of the units of the SofPulse M-10 purchased by it in an
amount equal to the net proceeds from such rentals received by us during each
month of the term, reduced by (i) 11.5% of the gross proceeds for services
related to marketing, billing, collections and account maintenance to be
performed by us with respect to such units, received by us during such month,
and (ii) in the case of each of the first three months during the term, a set up
fee of $2,000. Ajax Capital LLC was also entitled to receive 50% of any and all
gross proceeds we received from our sale of applicators for use in connection
with the units of the Roma(3) rented to third parties during the term of the
agreement. The term of the agreement was to expire on August 28, 2011.

     On December 22, 2006, our Audit Committee approved the termination of the
Revenue Sharing Agreement with Ajax Capital LLC. In connection with the
termination, Ajax Capital LLC transferred to us all of its rights, title and
interest in and to the units of the Roma(3) and the SofPulse M-10 purchased by
Ajax Capital LLC on the date of the revenue sharing agreement, and we paid Ajax
$296,136. As a result of the termination, we are entitled to all revenues
generated by the rental and sales of such units and the related applicators from
and after the termination date.

     MANAGEMENT SERVICES AGREEMENT

     In order to keep our operating expenses manageable, we entered into a
management services agreement, dated as of August 15, 2001, with ADM under which
ADM provides us and its other subsidiaries, Sonotron Medical Systems, Inc. and
Pegasus Laboratories, Inc., with management services and allocates portions of
its real property facilities for use by us and the other subsidiaries for the
conduct of our respective businesses.


                                      103

<PAGE>

     The management services provided by ADM under the management services
agreement include administrative, technical, engineering and regulatory services
with respect to our products. We pay ADM for such services on a monthly basis
pursuant to an allocation determined by ADM and us based on a portion of its
applicable costs plus any invoices it receives from third parties specific to
us. As we have added employees to our marketing and sales staff and
administrative staff following the consummation of initial public offering, our
reliance on the use of the management services of ADM has been reduced.

     We also use office, manufacturing and storage space in a building located
in Northvale, NJ, currently leased by ADM, pursuant to the terms of the
management services agreement to which we, ADM and two of ADM' other
subsidiaries are parties. Pursuant to the management services agreement, ADM
determines, on a monthly basis, the portion of space utilized by us during such
month, which may vary from month to month based upon the amount of inventory
being stored by us and areas used by us for research and development, and we
reimburse ADM for our portion of the lease costs, real property taxes and
related costs based upon the portion of space utilized by us. We have incurred
$47,105 and $43,883 for the use of such space during the fiscal years ended
March 31, 2007 and 2006, respectively.

     ADM determines the portion of space allocated to us and each other
subsidiary on a monthly basis, and we and the other subsidiaries are required to
reimburse ADM for our respective portions of the lease costs, real property
taxes and related costs.

     We have incurred $242,595 and $226,807 for management services and the use
of real property provided to us by ADM pursuant to the management services
agreement during the fiscal years ended March 31, 2007 and March 31, 2006,
respectively.

     MANUFACTURING AGREEMENT

     We, ADM and one other subsidiary of ADM, Sonotron Medical Systems, Inc,
are parties to a second amended and restated manufacturing agreement. Under the
terms of the agreement, ADM has agreed to serve as the exclusive manufacturer of
all current and future medical and non-medical electronic and other devices or
products to be sold or rented by us. For each product that ADM manufactures for
us, we pay ADM an amount equal to 120% of the sum of (i) the actual, invoiced
cost for raw materials, parts, components or other physical items that are used
in the manufacture of the product and actually purchased for us by ADM, if any,
plus (ii) a labor charge based on ADM Tronic's standard hourly manufacturing
labor rate, which we believe is more favorable than could be attained from
unaffiliated third-parties. We generally purchase and provide ADM with all of
the raw materials, parts and components necessary to manufacture our products
and, as a result, the manufacturing fee paid to ADM is generally 120% of the
labor rate charged by ADM. On April 1, 2007, we instituted a procedure whereby
ADM invoices us for finished goods at ADM's cost plus 20%.

     Under the terms of the agreement, if ADM is unable to perform its
obligations under our manufacturing agreement or is otherwise in breach of any
provision of our manufacturing agreement, we have the right, without penalty, to
engage third parties to manufacture some or all of our products. In addition, if
we elect to utilize a third-party manufacturer to supplement the manufacturing
being completed by ADM, we have the right to require ADM to accept delivery of
our products from these third-party manufacturers, finalize the manufacture of
the products to the extent necessary and ensure that the design, testing,
control, documentation and other quality assurance procedures during all aspects
of the manufacturing process have been met. Although we believe that there are a
number of third-party manufacturers available to us, we cannot assure you that
we would be able to secure another manufacturer on terms favorable to us or at
all or how long it will take us to secure such manufacturing. The initial term
of the agreement expires on March 31, 2008, subject to automatic renewals for
additional one-year periods, unless either party provides three months' prior
written notice to the other prior to the end of the relevant term of its desire
to terminate the agreement.

     We have incurred $75,584 and $62,656 for ADM' manufacture of our products
pursuant to the manufacturing agreement during the fiscal years ended March 31,
2007 and March 31, 2006, respectively.


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<PAGE>

     STOCK ISSUANCES AND VOTING AGREEMENT

     In January 2004, we issued an aggregate of 186,875 and 398,125 shares of
our common stock to Andre' DiMino, our Vice Chairman and Co-Chief Executive
Officer, and David Saloff, our President and Co-Chief Executive Officer,
respectively. Of the shares of our common stock issued to Mr. Saloff, 141,050 of
the shares are subject to forfeiture and vest in equal yearly installments on
January 5 of each year through January 5, 2009. In addition, all of the shares
issued to Mr. Saloff are subject to a voting agreement among Mr. DiMino, Mr.
Saloff, Edward Hammel, our Executive Vice President, Sean Hagberg, Ph.D., our
Chief Science Officer, Arthur Pilla, Ph.D., one of our consultants, our Science
Director and the Chairman of our Scientific Advisory Board, Berish Strauch,
M.D., one of our consultants and a member of our Medical Advisory Board, and
Fifth Avenue Capital Partners, one of our shareholders. Under the voting
agreement, in addition to the shares of common stock beneficially owned by Mr.
DiMino, Mr. DiMino has the right to vote the shares of common stock held by such
shareholders, representing, as of June 19, 2007, an aggregate of 1,772,225
additional shares of our common stock (including shares underlying options held
by such shareholders that are exercisable within 60 days of the date hereof).
The voting agreement, with respect to shares of common stock, and shares of
common stock underlying options, held by all of the shareholders party thereto,
will expire on October 24, 2009. Mr. DiMino shall continue to have the right to
vote an additional 349,375 shares of our common stock held by Fifth Avenue
Capital Partners indefinitely unless otherwise agreed to by Mr. DiMino and such
shareholder.

     PRIVATE PLACEMENT

     Pursuant to our private placement that was completed in November 2005, we
issued to Ajax Capital LLC, an investment fund wholly-owned by Steven
Gluckstern, our Chairman of the Board, and Kenneth S. Abramowitz & Co., Inc, a
director of our company, (i) unsecured convertible promissory notes in the
aggregate principal amount of $1,000,000 and $250,000, respectively, bearing
interest at a rate of 8% per annum payable in cash, increasing by 1% every 365
days from the date of issuance of the notes to a maximum of 12% per annum, which
automatically converted upon the consummation of our initial public offering
into shares of our common stock at a conversion price equal to $5.10 per share,
or 85% of the initial public offering price per share and (ii) warrants to
purchase up to the same number of shares of our common stock, subject to
adjustment, at a per share exercise price equal to $6.00 per share, or 100% of
the initial public offering price per share. The holders of these unsecured
convertible promissory notes waived their right to receive interest payments on
a quarterly basis through the consummation of our initial public offering
(approximately $25,000 per quarter), and in October 2006, we used $244,365 of
the proceeds from our initial public offering to pay to such holders any and all
interest with respect to such notes then due and payable. We also granted the
purchasers of the notes and warrants demand and piggy-back registration rights
with respect to the shares of common stock underlying the notes and warrants.

     SHARE PURCHASE AGREEMENT

     On November 8, 2005, each of Andre' DiMino, David Saloff, Edward Hammel,
Sean Hagberg, Ph.D. and Arthur Pilla, Ph.D., granted Steven Gluckstern, our
Chairman of the Board, the right to purchase up to 16,250, 30,875, 8,125, 8,125
and 17,875 shares of common stock, respectively, at an exercise price per share
equal to the lesser of (i) the initial public offering price per share and (ii)
$5.11 (subject to adjustment for any recapitalization, stock-split or other
similar event); provided, however, that if an initial public offering of our
common stock was not consummated on or before May 8, 2006, the exercise price


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<PAGE>

per share would be $4.31 and be decreased by $.31 each month after May 8, 2006
until the earlier to occur of (i) November 8, 2006 and (ii) the date a
registration statement with respect to an initial public offering of our common
stock was declared effective by the Securities and Exchange Commission; provided
further, however, that in no event would the exercise price be less than $100
per share. Since the consummation of our initial public offering occurred on
October 24, 2006, the exercise price is $2.76 per share. These purchase rights
are exercisable at any time and from time to time during the period from
November 8, 2005 to November 8, 2010.

     We believe that all of the transactions set forth above were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. At the time of the above referenced transactions, we did not have
sufficient disinterested directors to approve or ratify such transactions.
However, all such transactions have been reviewed by the audit committee of our
Board of Directors and ratified by them. All future transactions between us and
our officers, directors and principal shareholders and their affiliates will be
on terms no less favorable than could be obtained from unaffiliated third
parties and will be approved by our audit committee or another independent
committee of our Board of Directors.

DIRECTOR INDEPENDENCE

     We have seven directors, Steven M. Gluckstern, Andre' A. DiMino, David
Saloff, Kenneth S. Abramowitz, Louis J. Ignarro, Ph.D., Pamela J. Newman, Ph.D.
and Jeffrey A. Tischler. Our Board of Directors has determined that each of
Kenneth S. Abramowitz, Louis J. Ignarro, Ph.D., Pamela J. Newman, Ph.D. and
Jeffrey A. Tischler are "independent" as defined under the American Stock
Exchange listing standards.

ITEM 13.   EXHIBITS

Exhibit No.    Description
-----------    -----------

    3.1        Restated Certificate of Incorporation of Ivivi Technologies,
               Inc. (1)

    3.2        Amended and Restated By-Laws of Ivivi Technologies, Inc. (1)

    4.1        Form of Stock Certificate of Ivivi Technologies, Inc. (2)

    4.2        Warrant issued to certain investors (one in a series of warrants
               with identical terms (3)

    4.3        Form of Warrant issued to Placement Agent(3)

    4.4        Warrant issued to certain investors (one in a series of warrants
               with identical terms)(4)

    4.5        Registration Rights Agreement among Ivivi Technologies, Inc. and
               certain investors (included as Exhibit E to form of Subscription
               Agreement filed as Exhibit 10.19)

    4.6        Registration Rights Agreement among Ivivi Technologies, Inc. and
               certain investors (included as Exhibit C to form of Subscription
               Agreement filed as Exhibit 10.20)

    4.7        Registration Rights Agreement among Ivivi Technologies, Inc. and
               certain investors (2)

    4.8        Form of Warrant issued to consultants (2)

    4.9        Form of Warrant issued to certain advisors (2)

    10.1       Form of Lock-up Agreement (5)

    10.2       2004 Amended and Restated Stock Option Plan( 1)


                                      106

<PAGE>

    10.3       Second Amended and Restated Manufacturing Agreement, dated as of
               June 15, 2006, among Ivivi Technologies, Inc., ADM Tronics
               Unlimited, Inc., and certain subsidiaries of ADM
               TronicsUnlimited, Inc. (6)

    10.4       Management Services Agreement, dated August 15, 2001, among Ivivi
               Technologies, Inc., ADM Tronics Unlimited, Inc. and certain
               subsidiaries of ADM Tronics Unlimited, Inc., as amended (7)

    10.5       Sponsored Research Agreement, dated October 17, 2004, between
               Ivivi Technologies, Inc. and Montefiore Medical Center(8) +

    10.6       Consulting Agreement, dated January 1, 2004, between Ivivi
               Technologies, Inc. and Berish Strauch, M.D.(3)

    10.7       Form of Indemnification Agreement between Ivivi Technologies,
               Inc. and each of its directors and officers(9)

    10.8       Amended and Restated Voting Agreement among the parties named
               therein (9)

    10.9       Agreement, effective as of February 10, 2005, between Ivivi
               Technologies, Inc. and ADM Tronics Unlimited, Inc. (5)

    10.10      Master Clinical Trial Agreement, dated as of January 9, 2006,
               between Ivivi Technologies, Inc. and Cleveland Clinic Florida (6)

    10.11      Form of Distribution Agreement(6)

    10.12      Employment Agreement, dated October 18, 2007, between Ivivi
               Technologies, Inc. and Andre' DiMino*

    10.13      Employment Agreement, dated October 18, 2007, between Ivivi
               Technologies, Inc. and David Saloff*

    10.14      Employment Agreement, dated as of July 13, 2006, between Ivivi
               Technologies, Inc. and Alan Gallantar (7)

    10.15      Employment Agreement, dated October 18, 2007, between Ivivi
               Technologies, Inc. and Edward Hammel *

    10.16      Option Agreement, dated as of June 16, 2006, between Ivivi
               Technologies, Inc. and Steven M. Gluckstern (6)

    10.17      Share Purchase Agreement, dated as of November 8, 2005, between
               Ivivi Technologies, Inc. and Steven Gluckstern (6)

    10.18      Consulting Agreement, dated October 17, 2006, between Ivivi
               Technologies, Inc and Arthur Pilla *

    10.19      Subscription Agreement between Ivivi Technologies, Inc. and
               certain investors (2)

    10.20      Subscription Agreement between Ivivi Technologies, Inc. and
               certain investors (2)

    10.21      Exclusive Distribution Agreement, dated as of November 9, 2006,
               between Ivivi Technologies, Inc. and Inamed Medical Products
               Corporation(10) +

    10.22      Lease Agreement, dated as of June 18, 2007, between Ivivi
               Technologies, Inc. and Mack-Cali East Lakemont LLC *

    14.1       Ivivi Technologies, Inc. Code of Ethics for Senior Financial
               Officers, Executive Officers and Directors (2)

    23.1       Consent of Raiche Ende Malter & Co. LLP *

                                      107

<PAGE>

    31.1       Certification of Co-Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 *

    31.2       Certification of Co-Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 *

    31.3       Certification of Chief Financial Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002 *

    32         Certification pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

    99.1       Audit Committee charter (2)

---------------------

*    Filed herewith.

+    Portions of this document have been omitted and filed separately with the
     Securities and Exchange Commission pursuant to a request or confidential
     treatment in accordance with Rule 406 of the Securities Act.

(1)  Incorporated by reference to Ivivi Technologies, Inc.'s Registration
     Statement on Form S-8, filed with the Securities and Exchange Commission on
     February 13, 2007.



(2)  Incorporated by reference to Amendment No. 7 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on October 13, 2006.

(3)  Incorporated by reference to Ivivi Technologies, Inc.'s Registration
     Statement on Form SB-2, filed with the Securities and Exchange Commission
     on February 11, 2005.

(4)  Incorporated by reference to Amendment No. 3 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on April 20, 2006.

(5)  Incorporated by reference to Amendment No. 2 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on May 13, 2005.

(6)  Incorporated by reference to Amendment No. 4 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on June 19, 2006.

(7)  Incorporated by reference to Amendment No. 5 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on August 29, 2006.

(8)  Incorporated by reference to Amendment No. 1 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on March 3, 2005.

(9)  Incorporated by reference to Amendment No. 6 to Ivivi Technologies, Inc.'s
     Registration Statement on Form SB-2, filed with the Securities and Exchange
     Commission on September 14, 2006.


                                      108

<PAGE>

(10) Incorporated by reference to Ivivi Technologies, Inc.'s Quarterly Report on
     Form 10-QSB for the quarter ended September 30, 2006, filed with the
     Securities and Exchange Commission on December 4, 2006.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Raich Ende Malter & Co. LLP served as the independent registered public
accounting firm that audited our financial statements for the fiscal years ended
March 31, 2007 and 2006.

AUDIT AND AUDIT RELATED FEES
----------------------------

     The aggregate fees billed by Raich Ende Malter & Co. LLP for professional
services rendered for the audit of our annual financial statements for the
fiscal years ended March 31, 2007 and 2006, and for the review of the financial
statements included in our Quarterly Reports on Form 10-QSB for the fiscal years
ended March 31, 2007 and 2006 were as follows:

<TABLE>
<S>     <C>
-----------------------------------------------------------------------------------------
                                                     March 31, 2007      March 31, 2006
-----------------------------------------------------------------------------------------
Audit fees including quarterly reviews                   $89,165            $35,057
-----------------------------------------------------------------------------------------
Audit related fees                                         --                  --
-----------------------------------------------------------------------------------------
Tax fees                                                 27,194                --
-----------------------------------------------------------------------------------------
All other fees including Registration Statements         116,979            141,658
-----------------------------------------------------------------------------------------
Total fees                                              $233,338            $176,715
-----------------------------------------------------------------------------------------
</TABLE>

AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
------------------------------------------------------

     The Audit Committee pre-approves all services, including both audit and
non-audit services, provided by our independent accountants. For audit services,
each year the independent registered public accounting firm provides the Audit
Committee with an engagement letter outlining the scope of the audit services
proposed to be performed during the year, which must be formally accepted by the
Audit Committee before the audit commences. The independent registered public
accounting firm also submits an audit services fee proposal, which also must be
approved by the Audit Committee before the audit commences.


                                      109

<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Annual Report on Form 10-KSB to be signed on its behalf by the
undersigned, thereunto duly authorized on June 29, 2007.


                                                IVIVI TECHNOLOGIES, INC.

                                                By: /s/ Andre' A. DiMino
                                                   -----------------------------
                                                   Andre' A. DiMino
                                                   Co-Chief Executive Officer

     In accordance with the Exchange Act, this Report has been signed below by
the following persons on behalf of the registrant and in the capacities
indicated, on June 29, 2007.

<TABLE>
<S>     <C>
         SIGNATURE                             CAPACITIES                         DATE
------------------------------   ---------------------------------------   -----------------

/s/ Andre' A. DiMino
--------------------------       Co-Chief Executive Officer                  June 29, 2007
Andre' A. DiMino                 (Principal Executive Officer) and
                                 Director

/s/ David Saloff
--------------------------       President and Co-Chief Executive            June 29, 2007
David Saloff                     Officer (Principal Executive Officer)
                                 and Director

/s/ Alan V. Gallantar
--------------------------       Chief Financial Officer                     June 29, 2007
Alan V. Gallantar                Principal Financial Officer and
                                 (Principal Accounting Officer)

/s/ Steven M. Gluckstern
--------------------------       Chairman of the Board                       June 29, 2007
Steven M. Gluckstern


/s/ Kenneth S. Abramowitz
--------------------------       Director                                    June 29, 2007
Kenneth S. Abramowitz


/s/ Louis J. Ignarro, Ph.D.
--------------------------       Director                                    June 29, 2007
Louis J. Ignarro, Ph.D.


/s/ Pamela J. Newman, Ph.D.
--------------------------       Director                                    June 29, 2007
Pamela J. Newman, Ph.D.


/s/ Jeffrey A. Tischler
--------------------------       Director                                    June 29, 2007
Jeffrey A. Tischler
</TABLE>


                                      110